The multi-manager team at Octopus Investments is maintaining an overweight position in equities in anticipation of a rally in the second half of the year.
The team did not like equity markets in May because prices were drifting down and buyers were thin on the ground. It held more in equities than its peers and wanted to reduce its weighting slightly because markets were trading sideways.
To equip its portfolios for these market conditions, it increased its allocation to alternative asset classes through the Aspect diversified trends fund, a commodities trading adviser or managed futures fund, and the Melchior European absolute return fund.
The team sat tight during the market correction in June and then took some profits when the market rallied later in the month.
It believes equities are now set up for a good second half, driven by better than expected US corporate results and mergers and acquisitions activity. Fund manager Bish Limbu says: “Equities are cheap and getting cheaper by the day. As long as companies make profits, we think there will be a second half rally, with capital expenditure and M&A driving the growth that is coming through.”