The brief wobble in markets may seem like a long time ago now, but nevertheless Asset Allocator was intrigued to hear how DFMs acted in response.
A recent chat with Premier Miton exemplified the dilemma that all allocators will encounter during periods of high volatility: act fast or ride it out? The answer, according to head of multi-manager Ian Rees, is neither.
“If you're taking bets and trying to be speculative on where the markets are going, then you've got a real danger that not only do you get to place your call on the new bet, but if you're already leaving an existing position, you've got to bet that it is not favoured by the market either,” he said.
“I think sitting on your hands when you've got market volatility reflects a lack of confidence in the portfolio and in the outlook, and I don't think that is often the way to behave either.”
For Rees, the answer lies in refraining from speculation and instead ‘actively responding’ to investment opportunities that present themselves.
Indeed Premier Miton decided to crystallise its duration positions that had performed quite well, and chose that moment of volatility to recycle into equities.
Get off my property
One area Rees and co found ‘disappointing’ in recent times was the property sector, which has seemingly come to resemble the bond market in terms of yield, without the benefit of liquidity.
“Now the alternative types of property that we look at, such as primary care, health care facilities, food and accommodation, these have still been punished with the same brush,” he said.
He said this part of the sector remained robust because the assets were of good quality and there were no issues with the underlying tenancies, allowing them to sit on decent yields until the sector fully recovered.
Another area they are longtime fans of is UK equities, an asset class in which they hold a 26.5 per cent position.
The incumbent Labour government has improved their outlook for the UK further still, owing to two reasons: political stability and a shift in mood.
Take your pick
Last month Premier Miton finally joined the realm of model portfolio providers, and they recently hired Chris Robinson from Tatton to head it up.
“I think it's fair to say that we could recognize that we weren't providing all the solutions that an adviser needs these days in front of their clients,” said Rees.
As we noted previously, the target OCFs of 0.25 per cent and 0.45 per cent for their respective index and blend solutions comes at a far lower price point than their Multi-Asset Distribution fund, which has a headline OCF of 1.85 per cent.
We’ll be checking in with Chris soon, so do stay tuned.
