Our strategy through much of 2019 was to fade the rallies as asset classes across the board were trading at the top end of historical valuations. In an environment of record low interest rates, valuations were constantly pushed higher as investors trawled the investment universe for yield.
In December 2019, we chose to trim our equity exposure slightly and put the proceeds into the ‘Alternatives’ asset class. The primary objective for our Alternatives portfolio is to generate returns non-correlated to traditional asset classes. The Pimco Trends Managed Futures Strategy is a trend following strategy that uses futures to capture momentum across equities, fixed interest, currencies and commodities. The fund follows short term trends and is aptly placed to respond quickly to market movements by scaling up or down positions depending on the strength of the trend.