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Multi-managers continue to snub bonds

Multi-managers continue to snub bonds

During the third quarter of 2017, bonds continued to receive the cold shoulder from both multi-manager funds and model portfolios.

Across the £5.5 billion assets under management (AUM) balanced models and multi-manager sector, allocations to bonds fell by 0.74 percentage points to 23.45%, a three-year low, as more and more managers are beginning to lose faith in the traditional 60/40 model.

According to research by Harrington Cooper, covering 32 multi-manager funds and model portfolios, exposure to investment grade dropped by 0.51 percentage points to 11.18%, while investor sentiment gilts shifted slightly with allocations up 0.14 percentage points to 1.94%.

 

 

On the other side of the spectrum, equity allocations rose by 0.84% to an average of 52.7% in balanced models over the three-month period. However, this is still down significantly from the average of 59.8% during the highs of Q4 2014 from the tail end of quantitative easing (QE).

 

 

During the quarter ahead of the Japanese election, which saw a landslide victory for incumbent Shinzo Abe, exposure to Japanese equities rose by 0.55% to 4.82%.

Meanwhile, UK equities held steady around 14.87% and global emerging markets fell in popularity, down 0.51% to 2.79%.

 

Managers holding cash across balanced models climbed by 1.1% to 5.96%. This compares to an average cash pile of 5.96% across income models.

Alternatives also proved popular with an average allocation of 14.02%, and 7.06% across income models.

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