Swip multi-managers Mark Harries and Simon Wood are overweighting equities and commodities across the diversity, select boutiques and optimal multi-asset funds.
The managers build their asset allocation decisions around the views of the managers running the underlying funds in the Swip portfolios. Harries and Wood prefer experienced fund managers that have managed money throughout the economic cycle. Bond managers will be asked for their views on equity markets and vice versa.
The Swip managers are cautiously optimistic on equities because companies with strong balance sheets and a low level of debt are generating cash and spending it. Valuations are also low relative to the earnings that have been generated and the results that have yet to come through.
The flipside of Swip’s positive outlook on equities is its underweight of alternative strategies such as hedge funds and absolute return strategies, which are preferred when the managers are not keen on equities.
Commodities exposure in the Swip funds is a play on emerging market growth but the team expect prices to be volatile, as shown by last week’s falls.
Harries says commodities tend to have low correlation to traditional asset classes such as equities, so it can bring diversification into the Swip portfolios.