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We’ve rebalanced our portfolios

The situation in Ukraine is developing quickly, with tragic consequences for millions. We condemn the Russian violence and we stand with the people of Ukraine; our thoughts are with anyone affected. As the world hopes for a swift, peaceful resolution to the conflict, it is sadly becoming clear that this is unlikely.

Throughout the crisis, it has been our role as a wealth manager to, first and foremost, protect our investors’ portfolios. It’s our job to manage your investments and to keep you fully up to date on how major world events might be impacting your account. 

From this perspective, what we have seen over the past couple of weeks is just how important diversification can be in turbulent periods. Our portfolios have held up relatively well despite the high volatility we’re seeing – this is a point we regularly stress, but it’s in times like these that you can see it working.

Our exposure to dollar-denominated assets has been important as sterling has fallen. Global bonds have also held up well, behaving as they are expected to in times of equity turmoil. This is particularly true of inflation-linked bonds. The commodity exposure we added in the last rebalance has helped to reduce volatility and risk in portfolios at all levels.

What we’ve changed

As the situation continues to unfold, our aim is to keep portfolios resilient in the medium term. We feel that we can manage the risk by:

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Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.

  • Increasing our current positions further, particularly commodities and our dollar-denominated assets. 
  • Reducing our position in European equities; while they have suffered already, we feel the medium-term effect on European economic growth is yet to be seen.

It’s worth noting that some of the trades will be slightly different in our Socially Responsible portfolios, due to a different starting position, but that the objective of the rebalance is the same. We will continue to monitor the situation closely and we will remain ready to make any further changes if the need arises. 

Looking ahead

The key things we think about when rebalancing our portfolios are the long-term prospects of the asset classes we invest in and risk management. This rebalance takes both into account and is designed to position our portfolios to be resilient in a broad range of potential scenarios. We have also factored in the potential for a lasting impact on the economies of certain regions. 

The key trends for us to consider going forward are European growth, inflation, market volatility and any potential change in the expected course of action from the Central Banks. These are all likely to be impacted by the unfolding crisis, to differing extents. 

If you have any questions about the rebalance and what it means for your portfolio, please don’t hesitate to get in touch with a member of our investment consultant team. 

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Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.