Boutique wealth manager Berry Asset Management PLC (Berry) has rebalanced its portfolios to maximise potential returns from the areas in which it sees the greatest opportunities for longer term growth.
Addressing clients and introducers in the firm’s latest Review, Berry CIO, Mark Robinson (pictured), says: “At our latest Investment Committee meeting, we resolved to maintain our overall equity positioning at pretty much the same levels across all five investment strategies. However, we took the decision to reallocate our modest exposure to Japan in favour of the US and Asia (ex-Japan), where we see greater opportunities for longer term growth. We are also extending our theme of an equity income bias in the US, whereas in Asia our tilt is now towards the anticipated rise in internally generated demand rather than export led growth – not just in China, but throughout the region.
“Outside of conventional equity market investments, we recognise the need to be sufficiently diversified, to counteract the continuing volatility in stockmarkets. Whilst many alternative investments did a good job in protecting portfolios during the market falls over the course of the Summer period, some so-called ‘absolute return’ investments did not live up to their name. We have been proactive in trimming our alternatives exposure, and building our index-linked bond exposure in the process. At the same time we continue to take advantage of the recent weakness in the price of gold, rebuilding exposure, where in the Summer we had been taking profits.”
Berry’s ‘Balanced’ model strategy, which enjoys a 12-year track record, is one of five investment strategies to benefit from the revised asset allocation. Always operating with an equity quotient of between 40% and 60%, the strategy has enjoyed strong performance against numerous indices and benchmarks.
Tracking the performance of the Balanced strategy since the formation of the ARC Private Client Indices (Q1 2004 – Q4 2011), which are growing increasingly popular in the broader wealth management community, Berry has delivered a cumulative return of 59.2%. This compares handsomely with the IMA Mixed Investment 40-85% Shares sector (formerly IMA Balanced) (52.3%) and the ARC Balanced Asset PCI Indices figures (48.0%) – outperforming the latter by some 11.2% over the past eight years.
Robinson says: “The diversified, multi-asset approach taken in managing the Balanced strategy, developed as a direct response to our belief that capital preservation was the primary concern for most private investors, has proven advantageous over the past decade, when markets have been exceptionally volatile.” Robinson highlights a number of good calls as the key contributors to the strategy’s proven track record, which include eliminating exposure to continental European stockmarkets in 2008 and directing increased cash weightings at the height of the financial crisis into short-term government bonds. In the post-financial crisis period, good allocations to the US, Asia and emerging markets have delivered strong returns, and as economic growth has subsequently faded a strong bias towards more defensive equity income funds in the UK and abroad has also proved successful.
Like many other firms, Berry has been reluctant to commit much capital to what it has seen as increasingly expensive conventional government bonds, preferring instead to allocate to index-linked bonds and gold, which have reduced portfolio risk and have provided attractive returns during periods of market instability.
Chief Executive Officer, Jamie MacLeod, is delighted with the long-term performance of the Balanced strategy. “Our numbers underline a number of astute asset allocation calls, through different market cycles – and it is this consistency over the longer term which is attracting growing numbers of intermediaries and introducers to our firm,” he says. “Our performance underlines the value of a longstanding and deeply experienced investment management team.”
