David Coombs has increased his exposure to Asian equities in Rathbone’s multi-asset funds after identifying them as a rare area of the market where reasons can be found to invest.
Coombs, the head of multi-asset investments at Rathbone Unit Trust Management, further extended the Rathbone Enhanced Growth Portfolio and the Rathbone Strategic Growth Portfolio’s overweight to the region over the past two weeks. Some 19 per cent of the first fund and 8.7 per cent of the second is now in Asia – a two percentage point increase in each fund.
The manager planned to add to his equity exposure and scale back investment-grade corporate bond weightings at the start of the new year. However, the market rally sparked by the partial resolution of the US fiscal cliff brought these plans to a “grinding halt” as equity valuations began to get too rich.
Coombs says: “The markets went gangbusters and we had to slow down the implementation of that strategy. We still want to be heavily weighted in equities but when we look across the world, there are no compelling markets.”
Coombs says the decision to add to Asian equities stemmed from his view that Asia and the US will experience more growth than the rest of the world. Although equity valuations in the US seem too stretched for him to act now, Asia looked more attractive on a relative basis.
In the Rathbone Enhanced Growth Portfolio, Coombs has added to Soo Hai Lim’s Baring ASEAN Frontiers fund. This portfolio’s largest weightings are in Singapore, Indonesia and Thailand, while almost two-fifths of the portfolio is held in financials.
The Rathbone Strategic Growth Portfolio’s allocation to Edgbaston Asia Pacific Ex Japan fund is being added to at the moment, although flows into the fund are managed on a monthly basis. Coombs has bought an Asia Pacific exchange-traded fund to give beta exposure in the interim until he can put more money into the Edgbaston portfolio.
Coombs has kept the Rathbone Total Return Portfolio’s weighting to Asia at about 3 per cent, as he considers valuations in the region to be too stretched for his lowest risk fund.