Intra-Quarter Fund Changes

IBOSS Fund Change September 2022

Most fund changes made to the IBOSS portfolios are effective from the first day of August, November, February and May. There are times, however, when we feel it prudent to make an intra-quarter change.

Everybody reading this will be familiar with the historically significant moves in sovereign bond markets. In 2022, in particular, we have benefited from our underweight in sovereign bonds and our short-duration positioning. In light of these seismic shifts in yields, we now feel it is appropriate to increase our exposure to US treasuries via the Vanguard US Government Bond fund. To facilitate this, we are slightly reducing our cash positioning and, in some cases, shorter-dated bond funds. These moves still leave us with a relatively short duration position, i.e. reduced sensitivity to interest movements. We will also still be underweight to sovereigns compared to our own history.

Apart from the prices for treasuries now being much more attractive than they have been for some time, they can also act as a dampener to portfolio volatility. Much has been written about the death of the 60/40 portfolio, and it’s undoubtedly true that the strategy has been enduring its most challenging period for many years. In our view, however, the bond markets understood the Fed’s newfound resolve to tackle inflation, while equities were slower to accept the new normal.

We expect to make further moves in keeping with these portfolio changes in the coming weeks. This is not an attempt at short-term market timing but rather an acceptance that prices have moved significantly in a few weeks from where they were. Although there is currently no sign of a Fed pivot, if the US economic data worsens, inflation cools, or there is an earning recession, we may see less hawkish behaviour. We saw after the carnage of the pandemic sell-off in February and March 2020 how fast things can turn around if the Fed make the right noises. Often, it’s as much as what they say, as what they do that will influence markets the most. An example of this would be to remember the famous Powell pivot in Q4 2018. It’s also worth highlighting that he thought inflation was transitory as late as October 2021. Even though it’s not our base case, with that track record, we would not rule out changes in Fed policy.

These intra-quarter changes will be submitted on the 28th September 2022. The portfolios that will be updated and rebalanced on this date are Core MPS 0-7, Passive MPS 0-7 and Income MPS 1-7.


This communication is designed for professional financial advisers only and is not approved for direct marketing with individual clients. These investments are not suitable for everyone, and you should obtain expert advice from a professional financial adviser. Investments are intended to be held over a medium to long term timescale, taking into account the minimum period of time designated by the risk rating of the particular fund or portfolio, although this does not provide any guarantee that your objectives will be met. Please note that the content is based on the author’s opinion and is not intended as investment advice. It remains the responsibility of the financial adviser to verify the accuracy of the information and assess whether the OEIC fund or discretionary fund management model portfolio is suitable and appropriate for their customer.

Past performance is not a reliable indicator of future performance. The value of investments and the income derived from them can fall as well as rise, and investors may get back less than they invested.

IBOSS Asset Management is authorised and regulated by the Financial Conduct Authority. Financial Services Register Number 697866.

IBOSS Limited (Portfolio Management Service) is a non-regulated organisation and provides model portfolio research and outsourced white labelling administration service to support IFA firms, it is owned by the same group, Kingswood Holding Limited who own IBOSS Asset Management Limited.

Registered Office is the same: 2 Sceptre House, Hornbeam Square North, Harrogate, HG2 8PB. Registered in England No: 6427223.

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