- With the company earnings season coming to an end, this week we are focusing on its impact on some of our key direct equity holdings in flagship portfolios.
- Our direct equity holdings generally reported earnings that exceeded analyst expectations, particularly within the tech sector, while our low exposure to real estate and utilities proved to be the right choice.
- At the individual stock level, heavyweights such as Apple, Microsoft and LVMH once again performed credibly. In addition, in the industrials sector Siemens and Fortive reported solid results.
- We previously discussed our financial sector exposure, which is biased to higher quality companies. Here, companies such as JP Morgan, Blackrock or Berkshire Hathaway also posted good quarterly results.
- The picture was more mixed in the health care sector, where we saw results above expectations for our investments for the most part, but the sector as a whole is not currently an investor favourite judging from a range of ‘technical’ and other indicators.
- This positioning should help our flagship portfolios better navigate potential market turbulence, which may emerge following the sharp rise in interest rates and increased recessionary pressures. Given the risk of heightened earnings disappointments over the next few quarters, we maintain a prudent approach to company selection, focused on larger cap companies with stronger balance sheets.
Our near-term asset-allocation strategy for flagship portfolios remains:
- a slight underweight equity exposure and slight overweight fixed income exposure,
- a bias towards quality investments within equities, and
- holding more developed market government bonds than riskier bonds within fixed income.
Past performance is not a reliable indicator of future returns.