Q4 2024 Rebalance

12 Nov 24 5 min read

We rebalanced the Passive, Hybrid and Global ESG themes models on the 11 November. We changed the mix of active UK equity funds in the Hybrid models and the emerging market equity fund in the Passive models. 

Our tactical asset allocation, which is our shorter-term views, remains the same; we continue to have more in equities and less in bonds. 

  • Stocks have had a good run in 2024. The US is cutting interest rates and the economy is strong. Historically, interest rate reductions when the economy is not in recession have been positive for equities.
  • The US remains our favourite equity market, supported by solid profit growth and rising margins. We also have more in Asia, Europe and Japan equities.
  • Government bonds will provide good returns if the global economy deteriorates but a fading economy isn’t what we expect. US growth has been consistently underestimated. We think bond yields will stay around current levels and the return in equities will be better. A summary of our short-term positioning in the models is below.

Summary of Tactical Asset Allocation: 

Broad Equity view

Broad Fixed Income view

Fund changes:

Active UK equity funds: We removed the Lindsell Train UK Equity fund. We’d already reduced the allocation in the Hybrid models, following a review of the fund. We added the Liontrust UK Sustainable Growth Fund. The Liontrust fund favours more mid-sized companies with higher expected growth rates and is a complement to the more value-focused M&G UK Dividend fund.  

Emerging market equities tracker fund: We’ve altered the index we track in emerging markets in the Passive models to be more aligned with our views. This lifts the allocation to China and India while reducing the allocation to South Korea.

Reduction in fund costs: We added another preferential share classes to platforms which reduces the ongoing fund charge of the UK government index-linked bond tracker fund. We’ve also switched the money market fund in the lower risk profiles. 

Changes in Global ESG Themes models: We’ve removed the allocation to the M&G Better Health Solutions Fund, due to the fund share class being closed. We also switched from passive ETFs to index funds for UK and Japan equities to lower the trading costs on platforms.  

Past performance is not a reliable indicator of future performance. The value of an investment can go down as well as up and your client may get back less than they’ve paid in.