Market shocks over the past week have highlighted the need for diversification, according to James Klempster, deputy head of Liontrust’s multi-asset team.
In a week, trade tariffs imposed and then paused by US President Donald Trump sent global markets into a spin.
Klempster said an emotional reaction from investors was to be expected but stressed the importance of taking a step back during big financial events.
In times like these, Liontrust provides advisers with information they can pass on to worried clients.
“It is an extraordinary environment to navigate,” said Klempster.
“Invariably clients have an emotional experience – we are all subject to that.
“Generally people get spooked and worried so we produce public service slides and we have a lot of advisers that use these.
“They can say to their clients, ‘there is a lot of bad news out there but there are examples in history that show if you stay the course it is better’.”
US stocks
Klempster said the Liontrust view for some time has been that US stocks were overvalued.
He said this is reflected in the firm’s nine UK domiciled multi-asset funds.
He added: “For some time we were worried about valuations in the US. Overall, we have been more positive on places like the UK, Japan and Asia.
“Having less reliance on the US in good times means you also are less impacted in bad times.
“In our view the UK looks very cheap. It seems to be pretty unloved which has driven compelling valuations and over the past 12 months we have moved up the table of political stability.
“Rather than trying to time these decisions in a binary way we are trying to mitigate some of these market moves through diversification.”
In January, Liontrust’s global fixed income team was integrated into its multi-asset team.
It said this would allow the multi-asset team to have more control over the management of the fixed income allocation, around £1.4bn in assets, within funds and portfolios.
The company’s half-year results, published at the end of 2024, showed assets under management and administration in the team stood at around £4.2bn.
Three months after the change, Klempster said it “makes sense”.
“Fixed income has a very important part to play in diversification,” he added.
In November, Liontrust announced it would reduce staff headcount by 12 per cent, equivalent to 25 roles, as part of cost-cutting plans.
Last month it also completed a £5mn share buyback.
tara.o’connor@ft.com
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