Trading Activity - September rebalance
In September, we submitted a strategy rebalance, adjusting asset allocations and tilting exposures towards international equities, both in Europe and emerging markets. Depending on the strategy this was funded by reducing UK equities, hedge & absolute return, or cash.
Within our Building Block funds, we made several trades.
- In the US we initiated a new position in Broadcom, a leading manufacturer of semiconductors. We view Broadcom as another structural winner of the AI race, alongside our other semiconductor holdings Nvidia, AMD and TSMC. The position was funded by exiting our holding in Salesforce, the CRM software company – which despite its quality, is under threat from potential AI disruption.
- The Mygale Event Driven Fund was removed from the Diversified Returns and Alternative Assets Building Block following the announcement that the fund would be closing – despite strong performance this year. A replacement will be introduced next quarter.
Outlook
Looking forward into the final quarter of the year, a quiet news cycle could allow the positive momentum in equity markets to continue. Markets have recovered rapidly from April’s lows, with most regions now at or near all-time highs, driven by trade deals and the scaling back of US tariffs but more importantly, we’ve seen earnings growth both in the US and across the rest of the world. The US market is looking expensive by historical standards, which is a cause for concern, but it’s largely a growth premium – tech businesses in the US are demonstrating their ability to reliably grow earnings at a faster rate than the broader market and investors are happy to continue paying up for that growth opportunity. We retain our optimistic stance for the short term – labour markets in the UK and US are not as strong as they were a year ago, but we’ve not yet seen any significant weakness, which keeps fears of recession at bay. Inflation is higher than most central banks would like it to be, so interest rates may stay higher for longer – but this shouldn’t inhibit further earnings growth globally and if that earnings growth continues, our investment portfolios will continue to benefit.
