Quilter’s WealthSelect managed portfolio service (MPS) has taken profits from its equity allocations to top up exposure to fixed income and alternatives in its latest quarterly rebalance.

The WealthSelect portfolio managers, Stuart Clark, Helen Bradshaw, and Bethan Dixon, retained their cautious stance amid current equity valuations and credit spreads against a backdrop of higher barriers to trade and heightened risks to growth and inflation.

While they recognised the resilience of markets, the managers felt there were signs that the impacts of the US administration’s tariffs were starting to appear in inflation statistics and risked becoming a headwind to corporate earnings and the expected path of interest rates towards the end of 2025.

The overall positioning at the asset allocation level across the WealthSelect range was therefore maintained, allowing the portfolios to rebalance back to model weighting through taking profit in the equity allocation.

Proceeds from equity profits were allocated to fixed income, alternative assets, and cash.

While the portfolios have seen a steady increase in fixed income exposure in recent rebalances, they have maintained an underweight position versus their strategic asset allocation.

The latest increase saw the Quilter Investors Diversified Bond fund, managed by Premier Miton, being added across its Managed and Responsible ranges.

Meanwhile, in the Responsible Active and Sustainable Active portfolios, the managers added the Aegon Global Sustainable Government Bond fund, which aims to invest in financially strong countries that contribute to the improvements in sustainability targets as defined by the UN Sustainable Development Goals.

"We continue to maintain a steady, long-term approach to investing, with our clients’ goals guiding our decisions, particularly given the noise of late in both the US and Europe,” said Quilter Investors portfolio manager, Bethan Dixon.

“In the current environment, resilience and adaptability are vital, and our portfolios are well placed to support both.

“Given the market backdrop, we retain our cautious stance. Recognising that corporate credit spreads are at all time tights, interest rate uncertainty and increasing political risk being priced into government bond markets, we have directed the top up in fixed income towards the Quilter Investors Diversified Bond fund.

“The fund is dynamic in terms of its duration and credit positioning, and we believe its approach will continue to add value in the current environment.

“We are also delighted to add the Aegon Global Sustainable Government Bond to the Sustainable portfolios. Achieving positive sustainable outcomes in sovereign fixed income can be challenging given the structural biases in traditional fixed income markets and the more complex nature of sovereign engagement.

“However, we believe this fund will significantly enhance the positive sustainability outcomes being achieved in this part of the portfolio.”

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