All funds rose in the second quarter of the year as ongoing economic growth and supportive central bank policies proved fruitful for markets. Share prices slipped in May largely due to renewed US-China trade tensions, but they recovered in June.

Global economic growth continues to slow, however. Against this backdrop, while remaining cautiously positive, we have tilted our portfolios and funds away from riskier markets and towards more defensive areas.

This move, which means we now have a more-or-less neutral position in equities, has benefitted performance. We are also holding cash to allow us to move quickly when we see investment opportunities in the event of any pull-back after the steep rebound so far this year.

We have sold our health care investments for now, as the sector is facing challenges in the US. Investors are concerned about political rhetoric against pharmaceutical prices – made with next year’s presidential election in mind. The worry is that such comments could be a prelude to profit-cutting policies for the industry. We will continue to monitor developments, however, and may well return to the sector when we feel conditions are more favourable.

We added to holdings in UK gilts and US Treasuries earlier in the year, as we believe they stand to benefit from the slower rate rises and lower inflation expectations brought on by central bank activity. We bought more Treasuries than gilts because the latter are vulnerable to Brexit-fuelled uncertainty. Our overall government bond position remains negative, however – just less so than at the start of the year.

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

• Diversification – our decision to increase our investment in UK and US government bonds highlights the importance we place on having a diversified portfolio. Government bonds are attractive at times of greater uncertainty as they provide good hedging characteristics and therefore help to reduce risk.

• Value and selectively contrarian – many investors have been avoiding sterling because of the cloud of uncertainty hanging over the UK while parliament continues to debate the best way ahead on Brexit. But we have increased our position in the currency as we see it as undervalued and actually showing strength on the world stage. Taking positions in currently ‘unloved’ assets – that are therefore good value – but that we think have long-term potential is a core aspect of our investment approach.
  

• Patience – economic growth is slowing, but we had expected this and have positioned our portfolios and funds accordingly, keeping a close eye on the long-term outlook. Markets will always rise and fall day to day, but we believe patience is crucial. For us, the best move as investors is to stay focused on the future while maintaining a dynamic asset allocation to navigate markets.