Investment Quorum’s Peter Lowman has been adding to emerging market funds with high exposure to regions such as Vietnam and India after easing off on US equities.
Mr Lowman, who works on the firm’s risk-rated portfolios in his role as chief investment officer (CIO), took profits on some US exposure following a series of fresh index highs.
He said: “We have just trimmed back, purely because we had an overweight and wanted to take some gains.”
With the S&P 500 index up 14 per cent since Donald Trump’s US election victory, Mr Lowman cut back tracker exposure by an average of 5 percentage points across the range. This now represents a 6 per cent holding in the firm’s Balanced portfolio.
Redeemed capital was allocated to emerging market vehicles with exposure to regions such as India and Vietnam in a bid to capture recent strong performance. Year-to-date the MSCI India and Vietnam indices have returned 16 and 9 per cent respectively in local currency terms, with the overall Emerging Markets benchmark up 14 per cent.
He said: “They are the best performing regions this year by a country mile. The emerging markets space has been a bit of a graveyard for a while. The ones that have performed best have captured regions that outperformed.”
The CIO added to funds including BlackRock Asia Special Situations, run by Andrew Swan, and the Baring Eastern Trust, an Asia ex-Japan product he described as “very stockpicky” with a 15 per cent allocation to India. Mr Lowman also upped his weighting to the Fidelity Emerging Markets fund despite the “painful” 2016 endured by manager Nick Price due to the portfolio’s growth investment style.
Mr Lowman said: “The Fidelity fund did go off the boil. He [the manager] wasn’t quite where the markets were running, but that doesn’t necessarily say he has lost the plot.”
In equities, which represent 65 per cent of the Balanced portfolio, he has backed established stockpickers, but attempted to add more of a value tilt. He has continued to hold more defensively positioned funds such as Fundsmith Equity, Evenlode Income and Lindsell Train UK Equity, but introduced a greater onus on the value trade.
“We wanted to put some value back in the portfolios,” he said.
He invested in the Polar Capital UK Value Opportunities fund, launched earlier this year for former Miton duo Georgina Hamilton and George Godber, and bought T Rowe Price US Large Cap Value despite his broad shift away from US stocks.
Generally within the range, Mr Lowman remains underweight fixed income, with it making up just 15 per cent of the Balanced portfolio. Here he favours the Axa Sterling Credit Short Duration Bond, M&G UK Inflation Linked Corporate Bond and M&G Global Macro Bond products. In more adventurous parts of the range he has continued to seek high-yield exposure, via the L&G High Income Trust and Invesco Perpetual Monthly Income Plus.