Last week, when equity markets were yo-yoing all over the place, we wondered how exactly DFMs were reacting to the news. 

From several conversations with allocators we ascertained that the message was very simple: don’t panic. 

Market volatility poses a difficult question for portfolio managers: buy the dip or stay the course? 

Well the team at Waverton has provided us with their client notes from the past week and we found it interesting to see how they’ve changed very little even as prices dropped and panic began to spread. 

Amid the turbulence, they made but one change to portfolios – reducing their fixed income duration by around six months by selling some long bond call options – and even that decision was restrained while they wait for the negative impact of tight monetary policy to fully pass. 

Chief investment officer Bill Dinning said their cautious view on bonds is driven by two factors: market complacency about the risk of a hard landing, and attractive government bond yields gave them confidence to sit defensively and wait.

"The recent market moves have been relatively sharp and seem like a short-term overreaction," he said. "It is important not to overreact to single data points, as there are several reasons why a soft landing should remain the base case."

Meanwhile, Waverton's equity position remains fixed on selecting stocks from large-cap industry leaders from a global, not regional, perspective. 

Dinning says they avoid making calls on specific markets and currencies, as currency moves, even when dramatic, “tend to wash out over time”.

“It has been a difficult start to the month for global equity investors, but we remain comfortable with our current positioning,” he added. “While there is more value on offer than a week ago, it feels like a healthy reset in some areas and we believe markets could remain volatile near term.”