We remain positive on equities with monetary policy loose and growth likely to pick up over the coming year led by the U.S. consumer.
We have trimmed back our high yield exposure somewhat ahead of likely Fed rate hikes, however. Oil price weakness will also act as a drag on the US high yield market given its large energy sector. The money raised has gone to add to the gilts positions we have been building up in preference to index linked bonds.
Regionally we have deepened our underweights in UK equities, the emerging markets and Asia ex Japan, moving back to the position we held before the late summer correction. We are overweight Japanese and European equities, parts of the world where policy is likely to ease further and business confidence is strong.
Direction of arrows show change from previous tactical change.
There has been no change to the allocation of Governed Portfolio 7, other than the equity changes detailed above.