AS VICTOR plans to retire in nine years, I will do as I would for any client with medium to long-term goals, although, since this competition lasts just one year, I will be more active with tactical asset and fund allocation than usual.
My original portfolio’s low-to-medium attitude to risk had 35 per cent allocated to bond funds, 25 per cent in absolute returns/specialist funds and 40 per cent in global equities.
Now, I have consciously decided to exclude certain funds on performance, and to remove exposure in certain geographical areas. Recent poor export figures from some Japanese key electronic companies and car makers means I have removed the small holding invested here. The performance of funds here also reflects the Nikkei’s last three-to-six months’ rollercoaster ride.
Although the US has remained resolute this year with small signs of recovery in jobless figures and a slight increase on house sales, I’ve taken the decision to reduce exposure in North America with the looming US elections. Uncertain of the outcome, it would appear sensible to err on the side of caution.
A benefactor of these monies is a bond fund with a high proportion of investment grade bonds balanced with high yield which also took money removed from a gilt fund due to lack of value in this area.
A tactical switch has been a move into Schroder Income. The managers’ view on UK Income investing stands in stark contrast to their peers and has resulted in a stellar performance over the past few years.
With a watching eye on major government decisions, these changes should stand the portfolio in good stead.
Russell Provan is an IFA for KPW Investments