This week, we provide an overview of current positioning across different mandates, highlighting a cautious and diversified approach. Allocations reflect a preference for safety and stability, with significant weight in liquid and inflation-sensitive assets. We also address broader market dynamics, potential policy shifts, and the outlook for global equities, emphasizing flexibility and readiness to adjust as conditions evolve.
Key Points:
Barometer is maintaining a defensive positioning across mandates
- Equity mandates: 55% cash and equivalents, 7% gold → only 38% in stocks.
- Income mandate: 45% cash and equivalents, 13% gold, remainder in dividend growth equities.
- Balance mandate: 25% cash and equivalents, 6% gold, 5% gold miners, and 40% corporate bonds.
Heavy allocation to T-bills and short-dated corporate bonds
- 16% held in T-bills and short-term bonds.
- Additional 8% in corporate bonds.
- Emphasis on liquidity and capital preservation.
Gold is used strategically as a hedge
- 12% gold weighting in equity mandates
- Income and balance mandates also hold significant gold exposure (13% and 6% respectively).
- Barometer uses the PHYS ETF, backed by physical gold, for liquidity and security.
Energy weighting is focused and deliberate
- 11% total weight, split between:
- Pipelines (defensive, yield-focused).
- Natural gas producers selling into the liquefied natural gas (LNG) market.
Reduction in cyclicals: financials and industrials
- Financials weight trimmed before recent market weakness.
- Industrial exposure also brought down as part of the firm’s defensive posture.
- Expectation that even sector leaders can be hit in down markets.
Minimal exposure to technology and consumer communications
- Technology weighting is almost zero across mandates.
- Barometer sees limited near-term upside in this area.
Well-positioned if markets decline further
- If conditions worsen, Barometer expects relative outperformance from its defensive stance.
- The team is ready to redeploy capital when leadership in the market re-emerges.
- Not in a rush—will act when internal signs improve.
Big picture: liquidity cycle favors inflation-oriented assets
- Central banks globally are likely to loosen monetary policy, increasing liquidity.
- This favors assets like gold and commodities.
- Pullbacks are seen as normal, with positive returns expected on the other side.