Here’s how we are positioned in our flagship portfolios:
- Despite the volatility in March as concerns grew in the market over the health of the banking system, portfolios showed positive returns across risk profiles over the first quarter. The key performance drivers were:
- Our focus on quality within fixed income, with higher-than-normal exposure in government bonds, and reduced exposure to high yield and emerging market debt;
- Our selection of equity investments, as several technology stocks, for instance, have performed strongly and a lower exposure to the struggling banking sector;
- Our strategic gold position, which proved to be a good diversifier amid rising uncertainty.
- Markets remain volatile, with bouts of pessimism and financial instability alternating with optimism. We think this volatility implies a need for more portfolio diversification, which is why we are adding a global value fund. It brings exposure to some ‘traditional’ economic sectors we previously had limited exposure to.
- Central banks need to balance financial risks vs inflation risks. While financial volatility remains elevated, inflation could be stickier than expected – given the recent oil price spike following OPEC+ supply cut. This is why we are adding inflation-linked bonds (US TIPS).
- At this stage of the cycle, we maintain our overall positioning but want to highlight two key points:
- We believe the ongoing reopening of China will continue to accelerate, underscoring our overweight positioning in Asia-Pacific equities.
- Similarly, as we approach the peak in interest rates, we remain confident in holding high quality government bonds as we believe monetary policy tightening will continue to feed through the economy with a lag, which will weigh on growth.
Past performance is not a reliable indicator of future returns.