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Evelyn Partners Active Managed Portfolio Service (MPS) has taken a new position in Monks Investment Trust following its latest re-balance of portfolios.
It comes as the division reduced its headline exposure to equities and hedge funds in favour of increasing its overall allocation to fixed income.
The firm said the move is a response to the team continuing to see yields on both government and corporate bonds “looking attractive”.
The managers introduced exposure to US government bonds hedged back to sterling across the range as well as adding to shorter duration corporate bonds in the lower and medium risk models.
As well as the new position in Monks Investment Trust, the team also initiated a new position in Vanguard US Government Bond Index). After exiting Redwheel Enhanced Income ahead of its mandate changing and its yield target reducing considerably, the proceeds were re-invested into Redwheel UK Equity Income.
James Burns, lead manager of the Evelyn Partners Active MPS, said: “The overall reduction in equities reflects a prudent move following the strong recovery witnessed in markets since the fourth quarter of last year combined with the more uncertain outlook as to what terminal interest rate levels will be, particularly in the US.
“We reduced the allocation to the US and to a lesser extent the UK. Although the bulk of these proceeds were used to fund the increased bond allocation, we did selectively add to the overseas exposure in most models. We still believe that hedge funds play an important role in portfolio diversification but feel the fixed income opportunity set currently looks more compelling.”
He added: “Monks Investment Trust takes a very growth focused approach and complements our other US holdings well. It currently trades at an attractive discount to net asset value having suffered in the rotation out of growth stocks the markets have seen over the past 18 months. Redwheel UK Equity Income employs a value style to investing which we believe is well suited to the current macro backdrop.”
