The firm remains overweight equities across the board, believing that the asset class continues to offer strong return potential for the foreseeable future.

UK wealth manager Smith & Williamson Investment Management yesterday said that its managed portfolio service has cut its bullish position on European and Asian equities, arguing that it was time to rebalance its stance after being overweight these assets for some time.

The business didn’t explicitly refer to the pandemic as a particular reason for the change of tack. It did, however, refer to inflation as a reason for cutting some debt exposure.

The MPS team has reduced its exposure to Europe and Asia in its medium risk models but remains overweight equities across the board, saying that the asset class continues to offer strong return potential for the foreseeable future, according to a statement yesterday. 

“We have been overweight equities since almost the first day of the service,” James Burns, co-manager of Smith & Williamson Investment Management’s MPS, said. “The current environment isn’t the best time to be making particularly big calls but we were conscious some equity overweights had perhaps got a bit too high in the medium models, and it was time to rebalance them.”

Part of the shift happened by a cut in allocation to the Schroder Asia Total Return Investment Company, although the team said it remained happy to hold it. “The investment company will remain a core position for us across the range, we simply felt the need to ensure it was not too big a position on an individual level,” the firm said. 

Elsewhere, the team has reduced its underweight to corporate bonds at the lower end of the risk models and changed its fund exposure to inflation-linked bonds, it said.

“With inflation remaining at its current elevated levels, we have reviewed our positioning and made the decision to sell out of the ASI Global Inflation-Linked Bond Fund and replace it with the Sanlam Global Inflation-Linked Bond Fund,” the firm said.