Portfolio protection: 20 wealth managers' top 'crash' shelters

Citywire – Wealth manager

Christopher Peel, CIO, Tavistock Wealth, Bracknell

The strongest line of defense for any investment portfolio during a market crash is diversification within and between asset classes, coupled with a highly disciplined approach to risk management.

It’s difficult to predict the exact timing of a sell-off, but bear markets are typically preceded by periods of ‘irrational exuberance’ in which asset prices become overvalued.

This is the case in the UK government bond market. Gilt yields have fallen to the lowest on record and the bubble is about to burst. Inflation is climbing rapidly due to the steep fall in sterling and gilt issuance is expected to rise in the Autumn Statement.

A perfect storm is forming and multi-asset portfolios need to reduce allocations to the gilt market and replicate the risk exposure by combining cash, short duration UK corporate bond and sterling hedged currency share classes of global investment grade, high yield and emerging market debt funds.