HOW HAVE OUR CLIENTS RESPONDED TO RISING VOLATILITY?

CIO MONTHLY | MAY 2018

Markets have had a difficult start to the year, with bond yields moving noticeably higher and equity markets only starting to deliver solid returns in April.


Through early 2018 we have been recommending to our clients to 'stay cautiously engaged' with risk and to start looking to increase allocations to alternative assets. These have low correlations to bonds and equities and can increase diversification at more uncertain points in the macro cycle. 

This month, we take a look at how our high and ultra-high net worth clients, family office and not-for-profit organisations are invested, and how thy have managed their portfolios through this period of rising volatility.

We find that, collectively, our funds under advice are well diversified and align increasingly closely to our recommended growth (rather than balanced) strategic asset allocation (with a correlation of over 85%).

Moreover, broadly paralleling our early-year assessment, we find that during Q1 2018, our clients have been reducing some of their precautionary cash holdings to both accumulate more attractively-valued international equities and lift their allocation to more market-neutral alternative assets.