INVESTMENT LINE: OUR CURRENT THINKING ON ASSET ALLOCATION - NOVEMBER 2021

After moving to reduce fixed income last month, we are not making any changes to asset allocation in November.

OVERSEAS EQUITIES

No changes to our preferences here. Valuations remain high across most markets making a range of properly diversified equities even more important. China and India represent the bulk of the emerging markets exposure with developed markets represented across all the main regions as the global recovery continues.

UK EQUITIES

New concerns have surfaced over the Brexit deal with the EU, though markets are unfazed by this for now. Domestic equities look to be decent value, but our positions seem sensible given the balance of arguments for the UK relative to peers.

SPECIALIST

The environment theme should continue to be bolstered by investors' minds being focused on climate change. The blend of other specialist themes offers access to what appear to be the most likely secular winners on a medium term view.

FIXED INCOME

Inflation does look like becoming more entrenched than the transitory thesis suggests. We have already trimmed allocations in this area and further action is likely if rate rises look likely to materialise at a faster pace than previously expected.

PROPERTY

Real assets look well positioned given the persistent, inflationary concerns which are swirling around markets. Property has attractive characteristics in this environment and allocations are held at existing levels, as indeed they are for infrastructure.

ALTERNATIVE STRATEGIES

Allocations to alternative and protective strategies remain unchanged this month.

CASH

We still have tactical cash from our moves last month but are not deploying this time round, allowing ourselves more time for reflection.