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Tier One Capital: structured product move will protect against rate risk

by Elsa Buchanan on Jun 30, 2014 at 11:56

‘In the smart beta space, I hold the Powershares RAFI Europe , as they are not market weighted but are based on four fundamentals, including dividends, cashflows, book value and sales,’ he added. ‘I prefer this strategy to the new iShares low volatility one.’

Clean energy

The portfolio also has a 4% allocation to global clean energy, having recently introduced the iShares Global Clean Energy ETF.

‘The scale of pollution in China and the resources needed to address the country’s environmental issues should spark a clean energy boom which could provide extremely attractive returns for investors.’

De Gabiole declined to disclose performance figures, saying the business has only been trading for 18 months.

Buy: SPDR MSCI Beyond BRIC ETF, DB X-Trackers S&P Select Frontier (GBP):

‘We reduced global emerging markets, and reallocated beyond the Brics, giving more weight to smaller countries and frontier markets.’

Hold: US equities

‘We remain cautious on the US as valuations are higher than in other developed markets. But it shows strong signs of recovery, with steady jobs growth in May.’

Sell: Gilt and UK Corporate bonds

‘We have been allocating into structured products that benefit from lower interest rate sensitivity as well as varying equity risk.’

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