INVESTMENTS
70 %
Asset Allocation
60 % 50 % 40 % 30 % 20 % 10 %
0 %
DM Equity
EM Equity
Private Equity
DM Sovereign Bonds
EM Sovereign Bonds
Investment Grade Bonds
High Yield Bonds
Distribution Fund
Convertible Bonds
Other Bonds
Property
Energy Storage
60 / 40 Equity-Bond Portfolio
Song Royalties
Real Assets 29.2 %
Source : Internal , MSCI and ICE , 31 / 12 / 2021 . Portfolio of 60 % equities represented by MSCI World All Cap , 40 % bonds represented by ICE BofA Global Broad Market Hedge GBP
Ships
Infrastructure
Resources ( inc . Precious Metals )
Cash
Equity valuations at current levels imply disappointing annualised returns over the next 10 years . Against this backdrop of incredibly low government bond yields and elevated equity valuations , the future return prospects for a traditional equity-bond portfolio look uninspiring . Indeed , with valuations where they are today it is hard to formulate a scenario where traditional portfolios continue to deliver the level of returns seen in recent years .
There is another way With this in mind , we think it sensible for investors to look beyond mainstream equities and bonds . We believe that achieving attractive risk-adjusted returns in the years ahead will require an approach that embraces alternative and real assets including less liquid investments like property , alternative credit , song royalties , ships and infrastructure . Many of these have low economic sensitivity , inflation-hedging qualities and low correlations with other financial assets , and so bring diversification benefits to a multi-asset portfolio . Many are also generous income generators helping address the problem posed by low bond yields . An unconstrained approach to asset allocation and a willingness to zero weight very expensive markets , however big they might be , is also important , as is the adoption of a more targeted approach within public markets . Investing actively and with conviction allows access to pockets of value that remain . UK small caps , Japanese cyclicals and US structured credit fit the bill here but these on the whole are under-represented in benchmark orientated multi-asset approaches .
The Hawksmoor Funds : truly multi-asset The chart at the top of the page compares the Hawksmoor Distribution Fund ’ s asset allocation with that of a market-cap weighted 60 / 40 portfolio , starkly illustrating the highly diversified nature of the former and the concentrated exposure of the latter . In a world of elevated asset prices , having access to a fuller set of investments not only increases our opportunity set when scouring the globe for attractive opportunities , but just as importantly helps dampen portfolio volatility , effectively replacing the once effective hedging capabilities of government bonds . Our award-winning funds can be used as standalone solutions for clients , but given their highly differentiated positioning , also blend well with other multi-asset funds that invest using a more traditional framework .
We strongly believe that the combination of our investment process and our current portfolio positioning is the best way to protect and grow our clients ’ wealth in the years ahead , but equally recognise that humility in investing is important and that we might be wrong . Perhaps equity markets will continue to defy gravity and maybe government bond yields will continue to head lower , in which case the trusty 60 % equity 40 % bond portfolio might have life in it yet . Following the longest equity and bond bull markets in history however , it might be reasonable to take a few chips off this particular table and consider , in part at least , a different , more creative approach .
To find out more , please visit hawksmoorim . co . uk
This financial promotion is issued by Hawksmoor Fund Managers , which is a trading name of Hawksmoor Investment Management (“ Hawksmoor ”). Hawksmoor is authorised and regulated by the Financial Conduct Authority . Hawksmoor ’ s registered office is 2nd Floor Stratus House , Emperor Way , Exeter Business Park , Exeter , Devon EX1 3QS . Company Number : 6307442 . This document does not constitute an offer or invitation to any person , nor should its content be interpreted as investment or tax advice for which you should consult your financial adviser and / or accountant . The information and opinions it contains have been compiled or arrived at from sources believed to be reliable at the time and are given in good faith , but no representation is made as to their accuracy , completeness or correctness . Any opinion expressed in this document , whether in general or both on the performance of individual securities and in a wider economic context , represents the views of Hawksmoor at the time of preparation and may be subject to change . Past performance is not a guide to future performance . The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations . You may not get back the amount you originally invested . FPC40 .
Source : MSCI . Neither MSCI nor any other party involved in or related to compiling , computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data ( or the results to be obtained by the use thereof ), and all such parties hereby expressly disclaim all warranties of originality , accuracy , completeness , merchantability or fitness for a particular purpose with respect to any of such data . Without limiting any of the foregoing , in no event shall MSCI , any of its affiliates or any third party involved in or related to compiling , computing or creating the data have any liability for any direct , indirect , special , punitive , consequential or any other damages ( including lost profits ) even if notified of the possibility of such damages . No further distribution or dissemination of the MSCI data is permitted without MSCI ’ s express written consent .
The index data referenced herein is the property of ICE Data Indices , LLC , its affiliates (“ ICE Data ”) and / or its Third Party Suppliers and has been licensed for use by Hawksmoor Investment Management Limited . ICE Data and its Third Party Suppliers accept no liability in connection with its use . See https :// www . hawksmoorim . co . uk / ice-data-indices-disclaimer / for a full copy of the Disclaimer .
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