23.08 Liontrust MA Quarter In Review Q2 Literature (Single) - Flipbook - Page 6
Current positioning
• Changes in our latest Tactical Asset Allocation (TAA) review
were more positive than negative, albeit quite limited. From a
tactical point of view. Although market pricing has become more
attractive, we are still cautious and expect more volatility.
• After the equities sell-off in 2022, we are gradually increasing
our exposure to equities as we see opportunities to buy them at
better value in certain areas. Investors should also remember that
equities have proved time and again to be the best asset class
to beat inflation over the long term.
• We are more neutral on fixed income. We struggle to get excited
about government bonds, even when yields have risen to 400
basis points-plus. This does mean they offer more diversification
potential than in the ultra-low yields seen previously. We are,
however, positive on emerging market debt, both government
and corporate, given prices are favourable versus what is
available in more developed markets.
• From an asset allocation perspective, we are not excited about
the prospect of absolute returns and gains from bonds, but from
a diversification perspective they are more valuable than they
have been for over a decade.
6 - Liontrust Multi-Asset Funds and Portfolios Quarterly Report: Q2 2023
• There are certainly benefits to diversifying towards non-UK
government bonds, with several other central banks further ahead
of the curve than the Bank of England in raising interest rates.
• Equity regions we rate most favourably from a tactical viewpoint
include the UK, Asia Pacific and emerging markets.
• The UK stock market outperformed many others in 2022 but
its equities are still relatively cheap after being disregarded
by many international investors since the Brexit vote in 2016.
Despite this recent outperformance, the UK still has a long way
to go.
• Asian economies fared well during Covid and the re-opening of
China will provide more support. Asian stocks will also benefit
from strong and favourable demographics.
• Emerging markets have proven themselves to be better at
implementing appropriate policies to deal with inflation than
developed countries, creating a supportive environment for
companies.
• We continue to maintain diversified portfolios to reap returns
from across the asset classes.
