Smith & Williamson Reduces Exposure To European & Asian Equities For New Year

Smith and Williamson Investment Management’s portfolio management department has announced that it has reduced its overweighting in European and Asian equities as it positions its lineup for the new year.

The team said it had reduced its exposure to Europe and Asia in its medium risk models, but remained overweighted in overall equities, believing the asset class to continue to decline. ” offer high potential returns for the foreseeable future.

The company said this was in part achieved by a “reduction in the allocation to the Schroder Asia Total Return Investment Company”, although it said it “remains happy to hold it”.

The move comes following the team’s switch to the cheapest share classes of some of its UK funds, which was made possible by the increased scale created by the merger between Smith and Williamson and Tilney in September 2020.

James Burns, MPS co-manager of Smith and Williamson Investment Management, said: “We have been overweight equities since almost day one of the service. The current environment isn’t the best time to make particularly big calls, but we were aware that some equity overweightings may have gotten a little too high in the mid-models, and it was time to rebalance them.

“The investment company will remain a key position for us across the range, we just felt the need to make sure it wasn’t too big an individual position. “

Elsewhere, the team reduced their underweighting to corporate bonds in the lower end of the risk models and shifted their fund’s exposure to inflation-linked bonds.

Burns added: “With inflation remaining at its current high levels, we have reviewed our positioning and made the decision to sell the ASI Global Inflation-Linked Bond Fund and replace it with the Sanlam Global Inflation-Linked Bond Fund.

“The Sanlam fund, managed by a manager we know well at Tom Wells, presents an interesting proposition. It has virtually identical exposure to the Aberdeen fund, but it is a much smaller and more nimble fund. It has a greater weighting in Europe than the Aberdeen fund, and brings with it a reduced cost base – it has an OCF of just 0.27%.

He continued, “Since the merger, we have been able to access cheaper share classes for the benefit of our clients,” he says. “Due to the advantageous position we find ourselves in now, we have shifted Ninety One UK Alpha (which is held on all models) and the RWC UK Equity Income Fund (held in the first two models) into the classes of cheapest stocks available for actively managed funds.

“Now every fund we own across all models is in the cheapest share class we can access. While there may be more progress to come, we believe we’ll be starting the year in a great place. “

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