Fundquest is neutrally positioned in equities as it is taking a more cautious stance after the extreme market volatility in August.
Before August, the firm had been overweight in developed market equities as it felt valuations were attractive relative to other asset classes and that stockmarkets could progress on the back of a move towards economic recovery. But since using a stop-loss on August 3, Fundquest has had a neutral asset allocation in equities and is now broadly negative.
The company sees emerging markets in a different light to developed market equities. Before August, it had been underweight in emerging market equities due to concerns about high inflation hitting profits of companies in those regions. Despite its current neutral positioning, Fundquest is starting to have a more favourable view of emerging market equities but still remains cautious.
Senior portfolio manager Jim Snow says: “We are still neutral on emerging market equities but we think they are looking more attractive. We have seen some central banks like Brazil and Turkey reduce interest rates so we are warming up to emerging market equities but there are risks. We still have some concerns and there is not much transparency in those markets.”