20 March 2025
Quilter’s WealthSelect Managed Portfolio Service (MPS) has reduced its exposure to government bonds following a sharp rally in prices in recent weeks.
In January the portfolios undertook an ad hoc rebalance following the moves higher in government bond yields as investor sentiment soured around further inflationary fears and sluggish growth in the UK.
With bond yields since moderating, this presented the portfolio management team with an opportunity to take some profits and lower the government bond exposure within the portfolios once more. Proceeds from the reduction have been used to increase cash and/or alternatives depending on the risk level.
Within the Managed range of portfolios, the team has also been changing the regional equity mix, taking some profit from the recent outperformance of the UK as well as increasing the allocation to Emerging Markets and Japan. Within the US the team continue to take advantage of opportunities outside of the Magnificent Seven technology stocks.
Meanwhile, in recognition of risks to the macroeconomic outlook, the allocation to Quilter Investors Precious Metals has been allowed to naturally increase despite the already strong performance seen in the year to date.
Similar moves were made in the Responsible range of WealthSelect portfolios, alongside the addition of the AllianceBernstein International Health Care Portfolio. This is a high conviction core global healthcare fund that complements the portfolios’ more specialist healthcare holding in Candriam Oncology. The team saw current valuations within the healthcare sector as a good opportunity to increase exposure to the market in place of other thematic holdings.
Finally in the Sustainable range, Impax Global Social Leaders was introduced within the social transition theme. The team selected Impax on the basis of its reputation as a pioneer in sustainable investing as well as the managers’ well defined and differentiated investment process. Elsewhere within the Sustainable portfolios, the allocation to the energy transition was increased, adding to a theme with strong structural tailwinds at attractive valuations – with the Schroders Global Energy Transition Fund topped up.
The Responsible and Sustainable portfolios have just celebrated their third anniversary and have seen both strong demand from advisers and good performance. Responsible is available in active, blend or passive management styles, while Sustainable is a fully active MPS solution.
Stuart Clark, WealthSelect portfolio manager at Quilter, said:
“Earlier this year the opportunity presented itself to carry out an ad hoc rebalance following the spike in government bond yields. We believed the market reaction was a little exaggerated and we are pleased the trade has added value for clients.
“Donald Trump’s return to office has brought a flurry of activity, and as such we need to be vigilant to the opportunities as they present themselves. This year has seen a broadening of return drivers, and we expect this trend to continue as the world adjusts to the new normal.
“When we make decisions, it is not on the basis of expecting a short-term payoff but reflecting our expectations of opportunities over the next six to twelve months. The heightened levels of volatility allowed us to take this profit much sooner but has also allowed us to add value from this rebalance following the sharp rotation in sentiment in the week following the trades.
“We’ve also added new holdings to the Responsible and Sustainable ranges. Thematic sectors like healthcare and the energy transition are particularly attractive, with structural tailwinds that should keep blowing for years to come, despite current events in the US.
“We have been really pleased with the support for our Responsible and Sustainable ranges over the past three years. With the additions we have made, the portfolios continue to adapt as the responsible and sustainable investment market evolves. They are exciting spaces to operate portfolios in and we are looking forward to many more years supporting advisers and their clients who have such preferences.”
