Toby Nangle

After 18 months of exceptionally strong equity markets, most measures of valuations look high against their own absolute histories.

Maya Bhandari looks at how the team has managed its asset allocations over the past couple of months and where they believe the best risk-adjusted returns will come from.

At the end of last year, I reflected that you “gotta have faith in low discount rates” for risk assets, such as equities, to continue to perform well in 2021.

It's been a tumultuous 2020, but the year ahead will be different and we are positioning ourselves to get the best risk-adjusted returns over the next 12-18 months.

Find out about our latest asset allocation.

We all know – or rather, have heard of – Warren Buffet. One of his more famous mantras is: to get rich you need to be fearful when others are greedy, and greedy when others are fearful. Of course, this is much harder than it sounds, particularly over the long term. But it captures well how we have traversed asset markets in the short but tumultuous recent months, raising our appetite for risk near the March nadir, and then reversing back down to neutral at the end of June.

The ultimate public health costs and economic impact of Covid-19 are at this time unknown. Public health responses have weighed the human cost of intensive care units being overwhelmed and the number of preventable deaths exploding against the jump higher in unemployment, collapse in investment and demand destruction attached to social distancing. Governments have, understandably, chosen life over wealth.

Multi Asset Portfolio Manager, Maya Bhandari, addresses the recent move to raise UK equities to “favour” from “neutral”, thereby lifting equities overall to a preferred asset class.