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Investment trust portfolio: Rebalancing defensively

John Baron highlights the reasoning behind some recent changes to his portfolios that give them a more defensive bent
Investment trust portfolio: Rebalancing defensively

Recent columns have emphasised the importance of maintaining portfolio balance both by way of reducing the extent of their overweight exposure to ‘growth’ companies after a strong period of outperformance, and by ensuring an adequate balance within their now larger ‘value’ component by reducing exposure to commodities after a strong run and adding to unloved assets in the UK. The importance of increasing exposure to investments that should benefit from a rise in inflation has also been highlighted.

But tweaks to investment style, value exposure and inflation preparedness apart, portfolio balance also crucially involves ensuring the right mix between equities in general and more defensive ‘alternative’ assets. Such assets include bonds, infrastructure, renewable energy and specialist debt – some of which have been out of favour recently. This important investment principle is particularly appropriate after a strong performance from equities and best not left until it is too late.

A more defensive stance

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