Quilter’s WealthSelect managed portfolio service (MPS) has made a ‘modest but deliberate shift’ towards value-oriented equities in its quarterly rebalance.
Passive US exposure has been reduced in favour of increased allocations to value, small and mid-cap stocks.
The wealth firm noted stockmarket leadership is heavily concentrated, particularly within US mega-cap tech firms.
The team believes the opportunity set is broadening beyond these names, and that markets are likely to become ‘increasingly discerning.’ This is creating a more favourable backdrop for active managers, value strategies and small and mid-caps.
The WealthSelect managers also implemented a tilt towards value in Europe by adding to the Quilter Investors Europe (ex UK) Equity Income fund in the managed portfolios, and Edentree European in the responsible portfolios.
In the sustainable offering, a similar tilt has been implemented through higher allocations to the Lyrical GIVES and CT Sustainable Global Equity Income funds.
Value exposure in emerging markets has been upped through the allocation to the Quilter Investors China Equity fund in the managed portfolios, reflecting the fund’s more valuation-sensitive approach and the attractive relative value in parts of the Chinese market.
There have been no changes to the headline asset allocation across WealthSelect, with high-level exposures returning to their previous model weights.
Within fixed income, portfolios have been shifted further away from passive gilt exposure towards active global government bonds.
See also: Licence to yield: Why bonds deserve a second look
Helen Bradshaw, portfolio manager, WealthSelect MPS, said: “While market momentum has stayed strong, we remain mindful of elevated valuations in parts of the market, ongoing concentration risks within AI-related sectors, continued geopolitical uncertainty and the upcoming Budget.
“As a result, while we didn’t feel we needed to increase overall portfolio risk at this stage, we did want to refine some of the holdings and style tilts to help take advantage of these conditions.
“This concentration in equity markets, together with heightened volatility in bond yields, is creating a broader opportunity set for skilled active managers.
“In equities, it provides greater scope to add value through stock selection; in fixed income, managers can use their flexibility across duration, country exposure and yield curve positioning to navigate changing market conditions.”
