T Bailey has added a global thematic class to the strategic asset allocation for its growth fund.
Strategic asset allocation refers to the portfolio weightings the multi-manager allocates to global assets, taking into account changing economic, investment and political circumstances.
The growth fund’s strategic asset allocation is reviewed every three years and T Bailey has just completed its latest review.
The new global thematic category comprises 20 per cent of the portfolio, while UK exposure has been reduced from 25 per cent to 10 per cent following the review. Exposure to Europe has been cut from 15 per cent to 10 per cent while emerging market exposure has increased by 2.5 per cent to comprise 20 per cent of the strategic allocation.
T Bailey feels global growth prospects and equity markets are becoming more correlated due to globalisation. It sees the global thematic category as a way to provide exposure to global themes such as agriculture, technology and infrastructure.
It sees exposure to growth in the Asia Pacific and emerging regions as important but as the investor base in these regions tends to be foreign rather than domestic, market sentiment comes and goes in waves, making these markets volatile.
Gaining additional exposure to these markets by investing in developed markets can lower the risk relative to direct investment.
An example of this is the fund’s 3 per cent holding in Pictet premium brands. This fund plays on growing emerging market consumption of luxury goods from developed markets.