Despite volatility over the summer, all strategies offered a solid return over the quarter. The defensive strategy in particular did its job, with a lower draw down than other portfolios during the difficult period in August, mainly reflecting strong performance from bonds.

This quarter we’ve moved some of our equity allocation out of the UK and into the US. This has been part of a general increase in quality assets in our portfolios as we take a more defensive position in the face of slower global growth. We still have confidence in larger UK companies, where valuations are attractive, and have retained exposure to this area of the market. This should help preserve our clients’ wealth while slower economic growth continues.

Central bank policy took a decisively supportive turn in the quarter, which should be beneficial for portfolios. The US Federal Reserve (Fed) reduced interest rates twice, the European Central Bank introduced a range of rate easing polices and the Bank of England signalled ‘lower for longer’ rates, and even the potential for rate cuts in some Brexit scenarios. This should be being positive for our equity exposure, as looser monetary policy typically leads to rising markets.

Our disciplined investment process and core investment principles underpin our decision making:

• Quality – We added to US equity, bringing our allocation up to a neutral weight. US equities typically display higher quality characteristics and tend to be better placed to perform over different economic conditions.

• Macro-driven – Our ‘curve steepener’ position – which favours short-term bonds over long-term bonds – is based on our analysis of underlying economic trends. As the global economic cycle enters a slower phase after a period of extended growth, we expect to see central banks reduce base interest rates. This should lead to falling prices for longer-term bonds and rising prices for shorter-term bonds.

• Value and selectively contrarian – Given sterling’s attractive valuation, we recognise the potential for gains if the political climate improves. While we’ve reduced exposure to sterling-based assets recently in recognition of short-term volatility, we retain a modest preference on the basis of our contrarian principles.