The firm’s chief investment officer said Iveagh’s economic indicators point to a ‘severe test’ of commodity price support levels, meaning this could be the next asset class to buckle.
In view of this, Wyllie has decreased exposure to natural resources by 50%.
Wyllie said: ‘On this basis we have tactically reduced the relevant exposures across the Iveagh Wealth fund and the Iveagh Core portfolios, exiting and halving our natural resource positions respectively, while maintaining a 5% allocation to gold.’
In the last week, gold has gone from reaching record highs above $1,900 to around $1,750 an ounce, marking a drop of $160 in two days.
Wyllie said the wealth fund remains defensively positioned amid the equity market corrections, with equity exposure of only 35%. Conversely, he added an additional option strategy should ensure the fund participates in any near-term rally.
The firm has also taken profits from its position in Australian bonds and the sale of its technology positions, to fund a larger exposure to longer duration treasuries.