Preparing to bunker down or full steam ahead? Part II

How multi-managers are allocating portfolios

In last month's piece I set the scene for the key issue facing today's multi-asset investor - where are we in the economic cycle? In this second part, we look at how active managers are re-shaping their fixed income and equity portfolios in order to navigate choppier waters.

Bond managers are typically more cautious, understandable given the marginal upside potential and the significant downside risk. For UK sterling corporate bond managers, the outlook is uncertain, leading to more discrepancy across portfolios. Hunker down or full steam ahead? Some remain bullish, expecting credit spreads over gilts to compress again. With no obvious economic deterioration in the offing, these managers expect an element of mean reversion to support shorter-term returns.       Others have turned bearish. In their portfolios they have reduced duration times spread (DTS...