Andrew Herberts, head of private investment management UK at Thomas Miller Investment, explains that overall his firm is staying close to the benchmark in terms of low-risk duration.
The wealth manager’s fixed interest position remains unchanged due to a pessimistic view on underlying fundamentals.“There is a pretty bleak global macroeconomic picture,” he says. “Inflation will not kick off in the next six months or so, so we are neutral on fixed income.”
Meanwhile, Thomas Miller Investment is currently underweight equities, again due to a weak macroeconomic picture.“Low-risk clients do not have large exposure to macroeconomic factors anyway. In terms of equities, we reduced that even further during the quarter,” says Herberts. In terms of alternatives, he still has exposure to property and infrastructure while reducing holdings in insurance.
“We have also started small positions ingold. It has to do with uncertainty of the actionsof central bankers. Given that negative rates are increasing – in Japan, Europe and Sweden – it is an unknown. We have bought gold as an insurance against that.” The firm is also keeping a “reasonably healthy level of cash”. On the other hand, it does not maintain much currency exposure.
“At the margin, there is good value in emerging markets,” says Herberts. “But we are not overweight against the backdrop ofan overall underweight in equities.“By our positioning we are showing that we believe there will not be much change in the near term. The Fed might move once more, but I can’t see it being aggressive. China, which is one of the leading indicators, is starting to pick up. Brazil is also picking up. It is something I am keeping an eye on, and if I was put in a corner, I would say that growth in both China and Brazil will perform better than markets expect.”
Ryan Hughes, fund manager at Apollo Multi Asset Management, says he is running equities just under 30% as a net position, which is slightly below the long-run average.