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View the article online at http://citywire.co.uk/wealth-manager/article/a756208

Performance Review: why Duncan Lawrie is backing Barnett

by Elsa Buchanan on Jun 17, 2014 at 12:58

In emerging markets, Humphreys is finding opportunities in Asia, with a 7% portfolio position in the Aberdeen Asia Pacific Equity and Newton Asian Income funds, managed by Hugh Young and Jason Pidcock respectively. Both are + rated.

‘Defensive funds performed well over the past years as the rest of the market underperformed,’ he said.

The team’s 22% fixed interest exposure is obtained through two A-rated managers: Ariel Bezalel’s Jupiter Strategic Bond fund and Richard Woolnough’s M&G Strategic Corporate Bond fund.

‘Although Woolnough‘s fund is large, the team seems to be able to keep up with the market, and performance hasn’t really suffered.’

Humphreys also backs the Twenty Four Dynamic Bond fund, which focuses on financial debt and asset-backed securities. The team has built up its alternatives exposure to 16%. Half of this is held in Standard Life Investment’s Gars , run by A-rated Guy Stern, and the Ignis Absolute Return Government Bond fund.

Humphreys remains bullish on the F&C Commercial Property and the UK Commercial Property trusts.

‘The latter cut its dividend last year, which we think was a positive step,’ he said.

BUY: Japan 

 Currently going through a period of consolidation as investors wait for further evidence that Abenomics is working.  However, for those clients happy to tolerate the volatility of the Japanese equity market, we believe that this is a buying opportunity as we expect Abenomics to be positive in the medium-term.

HOLD: Emerging Markets

We believe that emerging markets provide an excellent long-term growth opportunity and exposure remains an important element of a diversified portfolio.  Valuations are attractive and buying opportunities are appearing, although one must be selective and focus on those countries that are embracing structural reform.

SELL: Gilts

Yields may currently underestimate how soon interest rates are likely to be raised.  Also, if the Bank of England is determined to raise rates in a very gradual manner, the interest rate peak in this cycle may be higher than expected as they try to get ahead of the curve.

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