Evelyn Partners has increased its exposure to US equities and UK gilts in the latest rebalance of its Core Managed Portfolio Service (MPS).
New positions have been taken in the Premier Miton US Opportunities fund and two exchange-traded funds (ETFs), the iShares Up to Years Index-Linked Gilt Index and iShares Up To 10 Years Gilts Index.
“There is a huge amount of market noise at the moment around the AI boom, and the surging ‘Magnificent Seven’ stocks that are driving US, and even global indices higher,” said James Burns, lead manager of the Evelyn Partners Core MPS.
“With positions already benefiting from this trend, we believe there is value in seeking exposure to other areas of the US stockmarket where gains could broaden out from big tech,” he added.
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The increase in exposure to the US was done at the expense of UK equities, and to a lesser degree, Europe, which were both trimmed back.
In terms of fixed income, Burns said that since October 2022 the MPS had steadily been increasing its weighting to government bonds across the risk spectrums and this move continued in the latest rebalancing.
“We see short-to-medium dated gilts as the area of the bond market that offers the best value at the moment, so within fixed income we’re seeking more exposure there,” he said.
To fund this move, the Core MPS trimmed back its allocation to US government conventional and index-linked bonds, although Burns added they remain “dominant” positions within that segment of the portfolios.
Corporate bond positions were also reduced, as Burns said credit spreads have continued to tighten to levels which meant their protection characteristics have “become less obvious”.
“Where we retain exposure, it is significantly skewed to short-dated bonds that should fare relatively well in the event of any downturn,” he said.
