Investment Strategies

Evelyn Reshuffles Asset Allocation, Smiles On US Stocks, UK Government Bonds

Editorial Staff 27 February 2024

Evelyn Reshuffles Asset Allocation, Smiles On US Stocks, UK Government Bonds

The UK wealth management firm updates investors on how it has changed its investment stance. One feature was that it wants to spread US stocks' exposure, given the current dominance of the "Magnificent Seven" Big Tech names in the US equities market.

UK wealth management firm Evelyn Partners, which oversees £59.1 billion ($74.9 billion) in assets, said it has added exposures in UK government bonds (gilts) and US equities. 

The adjustment saw US equities increased while exposure to UK equities and, to a lesser degree, Europe was reduced, Evelyn said in a statement yesterday. The firm raised sovereign bond exposure at the cost corporate bonds, continuing the trend since October 2022 of steadily increasing the weighting to government bonds across the risk profiles.

The changes were enacted by the Evelyn Partners Core Managed Portfolio Service team.

A period of rising interest rates – which may have peaked – has boosted attractions of government bonds after an earlier period of painful adjustment, given that the “risk-free” rate – as measured by entities such as US Treasuries – is between 4 and 5 per cent. Strong gains to US equities, led by Big Techs such as Amazon, Apple and Microsoft, has also prompted the firm to diversify to avoid overly concentrated positions.

“There is a huge amount of market noise now around the AI boom, and the surging ‘Magnificent Seven’ stocks that are driving US and even global indices higher,” James Burns, lead manager of the Evelyn Partners Core MPS, said. “With positions already benefiting from this trend, we believe there is value in seeking exposure to other areas of the US stock market where gains could broaden out from big tech.”

“Meanwhile, we see short-to-medium dated gilts as the area of the bond market that offers best value at the moment, so within fixed income, we’re seeking more exposure there,” Burns said. 

Evelyn Partners said new positions have been taken in the Miton US Opportunities fund and two ETFs, iShares Up To 10 Years Index-Linked Gilt Index and iShares Up To 10 Years Gilts Index.

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