Portfolio strategy update: agriculture, natural gas, Indonesia, high dividends

Genevieve Signoret

(Hay una versión en español de este artículo aquí.)

We’ve revised our portfolio strategies.

Equity: Overweighting global high-dividend stocks and Indonesia

The equity move

We’re opening new overweight equity positions in global high-dividend stocks and Indonesia. This will add to existing equity overweights in Mexico, developed market energy, U.S. communication services, and U.S. and global energy.

The motive

We had five overweight equity positions and, to dilute our high concentration in volatile energy and underperforming U.S. communication services, wanted two or three more. So we were pleased when our quantitative models signaled that Indonesia and global high-dividend stocks are now “Strong Buys”.

In liquid alts, overweighting ags and natural gas

The move

For clients whose portfolios contain liquid alternative assets, we’re diluting our position in a broad basket of commodities derivatives to overweight exposures to U.S. agricultural commodities and natural gas.

The motive

Our quantitative models are signaling that these two subclasses of broad commodities, agricultural commodities (“ags”) and U.S. natural gas, exhibit sufficiently attractive valuations and upward momentum to meet our model criteria for Strong Buys.

Tax efficiency

Because some of these changes will have tax implications, especially for Mexico tax residents, implementation will vary across clients and may be partial in some cases. We will work with clients and their tax advisors to analyze tax implications on a case-by-case basis, balancing any negative fiscal implications against projected improved risk-adjusted returns.