Real governance needs to be transparent so you can see what action we've taken and why. This should give you and your clients peace of mind that we're looking after their investments.
The Investment Advisory Committee (IAC) meet every quarter to review our Governed Range and funds. Highlights from the most recent meetings can be found below.
Details of previous IAC meetings can be found on the governance meeting updates archive.
In January, we believed that equity markets had priced in a recession prematurely given strong labour market data and low real interest rates. At the same time investment sentiment indicator remained oversold. In our view, the recovery in stock prices had further to run and as such we purchases equities, increasing our above benchmark allocation, funded out of commodities. We did this with the outlook to sell into rallies, as strong economic activity in 2019 would probably spur a resumption of US rate hikes, ending the current business cycle.
In February, investor sentiment returned to normal levels, rebounding from very depressed readings recorded in Q4 2018. Having purchased in market weakness at the end of 2018, we reduced our equity exposure following rallies through January, taking profits. The proceeds of which were moved into government bonds, commodities and short duration global high yield debt. We looked to see evidence of Chinese stimulus measures and a pause in the US rate hikes boosting growth before moving more positive on equities again.
In March, investor sentiment seemed very optimistic. We continued to monitor Chinese stimulus measures and its effect on growth. As such, we continued to take profits from equity purchases made during market weakness early in the year and moved the proceeds into high yield bonds and cash.
In October, following market panic we began contrarian purchases of equities based on growth and risk outlooks. Further to this, we also increased commodity exposure but still remained under benchmark. These purchases were funded from government bonds and cash. Overweight positions across high yield bonds and corporate bonds were maintained.
In November, investor sentiment remained in panic territory and as such we added to equity exposure, funded out of cash and short duration high yield debt. We remained conscious that markets may retest recent lows however with a positive outlook for equities through 2019, albeit with increased volatility, we remained positive on equities. Neutral positions were maintained across property and index linked bonds.
In December, market volatility remained following US Federal Reserve signals of near neutral interest rate levels and US-China trade negotiations. With long term expectations of economic expansion across 2019, we continued to purchase equities, increasing our overweight position. As higher volatility is expected to remain, we expanded government bond allocation, funded from commodities, high yield corporate debt and cash.
In July, we continued to take profits on our equity positions reducing the overweight to its lowest level since 2012. We also reduced our overweight commodity allocation with the proceeds moved into government bonds and cash reducing these underweight positions. We were modestly overweight global equities, global high yield bonds and commodities.
In August, we continued to reduce exposures to equities and commodities, bringing the latter into line with the benchmark. The proceeds were moved into government bonds, short dated high yield debt and cash. We were modestly overweight global equities and short dated global high yield bonds.
In September, we continued to de-risk portfolios by reducing exposures to equities and commodities, moving the latter allocation to an underweight relative to the benchmark. The proceeds were moved into government bonds, short dated high yield debt and cash.