Asset Allocator recently popped in to see Olivia Geldenhuys, an investment director at Schroders who helps run the model portfolio range.

Those folks are right in the middle of putting together their latest strategic asset allocation document but Geldenhuys mentioned they have tweaked their equity allocations in some portfolios, taking a slightly bigger holding in US small- and mid-cap equities, and tilting the Japanese slug of the portfolio to embrace value. 

She said the bulk of US exposure in the various portfolios run by Schroders is accessed through an HSBC tracker, and in some mandates that continues to be the case. 

But in others that holding has been dialled down a notch, with an actively managed fund coming in. Geldenhuys said a desire to be exposed to the US economy in the event that recession is avoided is the reason for this holding - though she declined to say which active fund it was, presumably because it was being bought at the time.

That Japanese equities have recently hit an all time high is something our readers will be familiar with, Geldenhuys suspects the progress of Japanese equities may be structural in nature but prefers value exposure in a frothy market. 

As the coffees arrived, talk turned to alternative assets. Much higher bond yields may be the reason why the average balanced portfolio in our database has an alternatives exposure of 6 per cent compared to 8 per cent in November 2022 - 18 months ago. 

Geldenhuys is among those sceptical of the dash to fixed income, indeed their alternatives exposure at over 14 per cent is twice that of the average.

She remarked that there are such a wide delta of possible scenarios that could impact portfolios, that having assets that are not correlated with the rest of the world is prudent. 

Most of the alternatives exposure they have is in various hedge fund strategies, both of the event driven and the macro flavours, while there is also commodity exposure in the alternatives bundle.