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Performance review: Investment Quorum's 2014 'conundrum'
by Elsa Buchanan on Feb 04, 2014 at 14:14
In fixed income, Lowman has moved from neutral to negative, shaving seven percentage points off his exposure, taking it down to 18%. He anticipates the 10-year Treasury yield will move above 3% this year.
‘If it moves back to 3.5% or even 4%, that will be quite attractive. Looking at UK yields, we’re going to start seeing better yields on gilts. If the FTSE hits 7,000 people might start thinking about taking some profits and taking advantage of gilts yielding 3.5%.’
Ultimately, this could serve as a protection against a potential market shake out, he said.
Over 12 months the portfolio has returned 15.64%, outperforming its IMA Mixed Investment 40% - 85% shares benchmark, which rose 13.77% over the same period. Over three years, the model is up 18.98%, against the benchmark’s 17.68% rise.
Over the last year, performance was largely driven by the portfolio’s exposure to US and Japan. ‘The developed market performances over the year were brilliant. It was very much helped by all the central banks fronted by the US, which were all very accommodative with policy.’
His high yield exposure also boosted returns.
On a forward view, he said a potential US pull-back could be advantageous as a ‘healthy correction’ could translate into an opportunity to buy back into the market.
In the second half of 2014 he expects to find value in the developing world, which he describes as ‘the interesting one’. While Lowman acknowledges they could have ‘another leg down’, he believes a lot of the concerns about growth levels and the impact of tapering are already priced in.
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