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Why this wealth manager is sticking with emerging markets
by Elsa Buchanan on Oct 29, 2013 at 14:54
‘Property now looks less attractive in terms of returns and the asset class’s future looks less bright.’
In Japan, the team has participated in the market bounce through a 5% allocation to the Legg Mason Japan Equity fund.
The strategy’s UK corporate bond allocation currently stands at 26% and Gillibrand anticipates this position won’t change significantly in the near future.
While recent developments in bond markets have meant that returns are more difficult to generate, Gillibrand takes a balanced view of events. ‘The biggest challenge is now how to manage risk and this is pushing us to discuss risk with clients. This is no longer a safety net, and clients should know how much risk they are prepared to take.’
Over the past 12 months the model has returned 14.2% compared to a sector average of 15.2%.
UK equities buoyed performance and Gillibrand says particular mention goes to the 14.9% returned by Liontrust Special Situations .
‘What surprised me is that US equities were expected to do better than the UK. Instead, US equities returned 4% less,’ he added.
On the performance of the portfolio’s fixed income allocation, Gillibrand said: ‘What was a shock was M&G Strategic Corporate Bond fund’s performance, returning 23.36%. It was not a straightforward investment grade corporate bond play, instead big risks were taken, which luckily gave those returns.’
Conversely, Asia Pacific equities and global emerging markets detracted over the period, as US central bank policy weighed on countries with current account deficits, but Gillibrand says this was to be expected given the historic relationship between the two.
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- Invesco Perpetual Emerging Countries Acc
- Newton Asian Income GBP Inc
- Marlborough Special Situations
- Liontrust Special Situations Fund (R)
- Baillie Gifford European A Acc
- Old Mutual North American Equity A Acc
- First State Global Property Securities A GBP Acc
- Legg Mason Japan Equity A
- M&G Strategic Corporate Bond A Inc