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The case for private equity

John Baron highlights the attractions of an unloved sector and reports on Q3 activity
The case for private equity

Last month’s column focused on the importance of the portfolios achieving adequate diversification, relative to remit, to help protect against market setbacks. Over the past year, this has involved a modest shift away from equities toward more defensive ‘alternative’ assets, including those which should benefit from the rise in inflation. Within their equity exposure, it has also involved reducing the overweight exposure to ‘growth’ after strong outperformance, and ensuring a better balance within the larger ‘value’ component.

A further nuancing of this approach is the scrutiny of investment trust discounts, while remaining focused on the long-term. This can involve adding to sectors that look attractive relative to prospects and the regular questioning as to whether tight discounts or premiums remain justified. This helps to explain recent portfolio changes over the third quarter.

 

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