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WealthSelect continues to reduce underweight allocations to UK and Europe as markets hit new highs

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The Quilter platform’s WealthSelect Managed Portfolio Service has continued to reduce its underweight allocations to Europe and the UK following its recent quarterly rebalance.Markets continue to reach all-time highs following strong performance in the wake of multiple successful Covid-19 vaccine trials being announced. As a result, portfolio manager Stuart Clark has taken the decision to take profits from certain developed market and emerging market equities and rotate into European equities.

 
He has also used the recent strong performance of UK equities to reduce that underweight, however, the portfolios remain underweight to both regions compared to the peer group.
 
Clark made similar moves in the previous quarter too with reductions in growth managers which had outperformed, with more value orientated managers being topped up. 

Allocations to cash and fixed income have been reduced marginally in favour of alternatives with the introduction of the Allianz Fixed Income Macro fund. Meanwhile, despite recent weakness in the price of gold the portfolios are holding their allocation to precious metals to act as a hedge should there be a sudden reversal in risk assets and a further increase in volatility.
 
Stuart Clark, portfolio manager of WealthSelect, says: “Markets have clearly reacted positively to the numerous announcements of successful vaccines to fight against Covid-19. As a result, we have taken the decision to reduce our underweights to those countries who have arguably not struggled any more with respect to, or in their response to the virus but where sentiment has weighed on share prices.

“It was pleasing to see the reaction in the share prices of businesses who have struggled during the pandemic, and as the recovery plays out it will be important to find those companies that will survive and ultimately prosper again once restrictions can be lifted.

“However, we don’t want to be overly optimistic as there are still risks within the market that could bring about another bout of volatility. The Brexit negotiations remain unsolved at a very late stage, while the US senate race is one for investors to keep an eye on. As such, we feel it prudent to continue with our exposure to gold given its role as a hedge during times of market uncertainty.

“Meanwhile, we continue to add to alternatives to give us the flexibility and diversification within the portfolios that is needed during a period like this. We are excited to introduce the Allianz Fixed Income Macro fund to WealthSelect and working closely with them to complement our other holdings.”

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