Rebalance – December 2020

Changes and the New Fund documents

Plans to Christmas 2020 and rebalancing the portfolios in line with our strategic thinking.

Our Investment Committee has been considering the way in which the World has been evolving and will continue to evolve through not just the COVID-19 era but taking on board technological, environmental and political issues that will shape the World after we have got on top of the pandemic.

We have been waiting to reduce the property funds in the portfolio, we can now do so as part of our latest rebalancing of your portfolios. Furthermore, we are continuing to reduce the extra cash we have been holding and using the combined proceeds in ways that are both more liquid and profitable.  

There has already been something of a recovery, following multiple positive vaccine results in a range of areas including financial, energy and retail/leisure related sectors that have struggled under the lockdown. Some have further to go on the recovery path while others are in structural decline and we reflect this conundrum in our asset allocations

At the same time, there is an argument that technology stocks are over-valued, our view is that this is unlikely as the new US president, Joe Biden, will not immediately take a hard line on technology or artificial intelligence which are low on the agenda compared to healthcare reform, the relationship with China, and economic recovery from the pandemic.  

More details of the exact changes are detailed below, it is also worth high lighting that next year will see further changes in our portfolios. There are different parts of the World that have suffered more than others, and some that will benefit from societal changes to a greater degree. We still must cope with Brexit, derisory interest rates the perennial issue of debt, taxes, future inflation and, perhaps most fundamentally, the twin challenges of ageing populations and climate change. Therefore, as we will start the New Year a fresh, we will no doubt see further changes thereafter.

Strategy update

As we reduce the amount of cash in the strategy, we are putting this towards more productive assets for the future.  In its place we are slightly increasing the fixed income element, through the Vanguard Global Credit bond, along with the Artemis Corporate bond, while reducing the L&G Sterling bond index.

We are reducing the commercial property exposure, given the liquidity issues since the summer, with part of the money released being added to the Aegon Diversified Monthly Income fund.

As the focus on sustainable investing increases, with good reason, we are adding to our position through the Ninety-One Global Environmental fund.  

In our Medium-High and High equity strategies, we are adding the VanEck Vector ETF to reflect the recent and potential growth in online entertainment.  As we will remain at home with less entertainment options for much longer than people expect, we see this type of entertainment continuing to expand with virtual reality etc.


As discretionary clients of KMG Investment Management we are advising you of the changes which will be made from the 14th December 2020 when the property funds open for trading. 

Risk profile

We have continued to asset-allocate your funds so that your total exposure to equities is within your risk profile and we will continue to monitor and manage the volatility of the strategy.

Tax and fees

Please remember that these changes will not incur fees from either KMG or the platform as neither of us charge for switches.  There will be a marginal increase by up to 0.04% in the fees for the funds within the portfolio or they will remain the same depending on which portfolio you hold.

Where funds are held outside of an ISA, pension or bond, the changes will be subject to capital gains tax.  Where profits are made, we make no apologies for creating taxable gains – no pain no gain. We never let the tax tail wag the dog.  Any tax will not be payable until January 2022 and as always, we or your platform provider will inform you of gains to include in your tax return in the future.


Tables showing the changes to the portfolio can be found on our website along with fund factsheets for the new funds that we will be using.

We wish you all a happy Christmas!