*This article first appeared in Investment Week on 16th November 2020*
The CEO of Horizon by Embark, a range of five multi-asset portfolios, has said there had been some asset allocation changes this year, including a reduction in exposure to both UK equities and property.
The Embark Group acquired Horizon, which is the authorised corporate director of the five riskprofiled funds, as part of its purchase in November 2019 of Zurich’s platform Advance.
CEO Thomas Rostron (pictured) said: “On the one hand, we felt there was good potential for us to grow and accelerate the business. But, in terms of how the investments are managed, we felt it had been a successful formula over the years. So we
decided not to make any significant changes to the investment process.”
He called it a three-step process “where the ACD sets the overall strategy, decides who to outsource to and what briefs we give to our partners”, EValue carries out the asset allocation, and Columbia Threadneedle Investments then invest the portfolios with their funds.
Rostron said that while they do not make “big shifts” in asset allocation because of the “gradual” approach taken by EValue, at the end of the second quarter and the beginning of the third quarter the range did see a reduction in UK equities “of some
significance – around 5%” in favour of international equities.
“Globally, looking at the UK economy and UK economic indicators, the advice and views EValue took was that the long-term
growth potential of the UK has weakened,” he said. The other factor behind the asset allocation decision was “that the UK stockmarket has a lot of property, banks and mining/commodities-sensitive companies and all of these have increased risks in the weak growth environment both during and after Covid”.
Rostron explained that prior to the pandemic four of the funds had small allocations to property, of around 2.5% in two of the funds and 4.5% in two other funds. “Since then we felt it was prudent to reduce that further, so we have no property exposure in the funds. We’ve always erred on the conservative side with property.”
The fund range has been shortlisted in Investment Week’s Specialist Investment Awards 2020, in the Best Specialist Risk Targeted Fund/Fund Range category. Rostron said: “We feel maybe a bit frustrated that we are not that well-known in the UK marketplace. This [the awards] is an opportunity for us to get some more momentum and to build some more name
awareness of us, of the Embark Horizon funds, so that more financial advisers can use us.”
The £48.4m Embark Horizon Multi-Asset V (Z Acc share class) fund is the best-performing in the range over the 12 months to 10 November, delivering a total return of 8.8%, compared to 3.7% generated by the Horizon Multi-Asset I fund.
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