Swip’s multi-manager team has made several changes to the asset allocation on its Diversity fund, upping the equity weighting in anticipation of a rally.
Mark Harries and Simon Wood, the managers, have increased the portfolio’s weighting to equities to 34%, from a 10% underweight to the index, with the purchase of iShares. This weighting makes equities a neutral position in the fund.
Wood says he expects quantitative easing measures by the Bank of England to drive an upturn in equity markets. Following a 1.5% rise in the British market last week and a more dramatic rise of about 5% in global equities, Wood says there is scope for further increases. “There is the potential for upside so we don’t want to miss it by being in cash.”
The fund also has a 14% underweight to alternatives and a 10% underweight to bonds. “We are not as convinced as everyone else that there will be a rally in bonds,” Wood says. “We are underweight gilts because they are tight and there is not much room for manoeuvre. We are using Richard Woolnough’s M&G Optimal Income fund for our corporate bond exposure.”
In the alternatives space, Wood says the fund is underweight property and has a slight overweight to commodities through a Schroders offering. “Supply will be tight on commodities and demand will force prices back up. The oil price will not stay at $40 forever,” he says.