| Cash and short duration bonds: Positive |
- Given the ongoing uncertainty, and in order to manage portfolio risks, we maintain a preference for higher-quality and liquid opportunities.
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| Fixed income: Cautious |
- We see only limited opportunities in fixed income
- We maintain a small preference for developed market government bonds as a hedge against possible macroeconomic volatility
- In credit, we prefer the higher quality segment, although, as spreads have recovered remarkably from their highs, our risk budget is allocated towards equities
- In high yield, selection is key, and our exposure is low, given the tightness of spreads. We prefer high yield and emerging market (EM) hard currency debt over EM local currency debt, considering the risk facing their economies and currencies.
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| Equities: Most positive |
- We believe that equities remain relatively more appealing than bonds in the current environment
- Yet, we remain highly selective in our allocation
- In line with our long-term investment philosophy, our portfolios remain geared towards high-quality, cash-generative, and conservatively-capitalised businesses
- As a function of our bottom-up selection, we currently see more opportunities in developed market equities compared to their emerging peers.
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Alternative trading strategies (ATS): Cautious
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- There are a limited number of opportunities in the ATS space, as the cost/benefit trade-off can be challenging
- Our focus is on strategies offering diversification benefits thanks to their low-correlation to equity markets.
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| Commodities: Neutral |
- As a risk-mitigating asset, gold remains the only direct commodity exposure we hold in portfolios
- From a portfolio management perspective, we believe our risk budget is better spent outside of the asset class.
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