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Turning volatility into opportunity
Every quarter, we sit down as an Investment Committee to review portfolios, test our thinking, and ensure your investments remain aligned with long-term goals.
April’s meeting came after a sharp bout of short-term market volatility—a wobble triggered in part by geopolitical shifts and revised expectations around interest rates and inflation. This wasn’t a time for panic. It was a time for structure, clarity, and action.
Here’s what we discussed—and what we did as a result.
1. Market Context: A Sharp Wobble, Not a Crisis
The standout market event was the sudden drop in equities following what some referred to as “Liberation Day”—a significant shift in US policy rhetoric, particularly around trade and tariffs.
What we saw:
- Equities fell sharply in response, especially in the US.
- Bonds, as expected, acted as ballast and rallied during the drop.
- Inflation expectations ticked up while growth expectations fell.
- Unusually, Japan—not China—was the largest seller of US Treasuries, possibly indicating a shift in trust or valuation models.
Takeaway: Volatility came quickly and without much warning. But that’s exactly what portfolios are built for. We didn’t try to predict the dip—we prepared for it.
2. What We Did: A Disciplined Rebalance
Due to recent market moves, portfolios had naturally drifted underweight in equities and overweight in bonds. We used this as an opportunity to rebalance across all portfolios.
We:
- Trimmed bond positions that had held firm
- Topped up equities where valuations had become more attractive
This was not market timing—it was discipline. Rebalancing allows us to sell high, buy low, and realign portfolios to your long-term strategy without emotion or guesswork.
Additional benefit: For clients with General Investment Accounts (GIAs), this generated realised capital losses—these can be used to offset future gains, improving tax efficiency. There were no commissions or additional platform costs for these trades.
3. Reviewing Assumptions: Inflation, Rates, and Risks
We re-examined key economic assumptions in light of recent data:
- Inflation may remain stickier than expected in services
- Interest rate cuts are likely to be slower or shallower
- Labour market resilience remains a key signal
We also discussed broader macro risks, including the upcoming US election, energy market pressures, and the uncertain impacts of global trade policy shifts.
Outcome: Our central economic assumptions remain intact. No major changes were made to long-term models, but we continue to watch inflation and employment data closely.
4. A Word on Indices, Weightings, and Style Tilts
One theme that came up was the performance of equal-weighted indices (e.g. the S&P 500 Equal Weight), which underperformed relative to market-cap-weighted versions. This helped illustrate an important point:
- Diversification is not a free lunch—it’s a risk management tool.
- Sometimes it means underperforming popular benchmarks in the short term.
- Our portfolios intentionally tilt toward value, small-cap, and quality factors, which can lag during momentum-driven rallies but historically deliver better risk-adjusted returns over time.
Outcome: No changes were made to fund selections or factor exposures. We remain confident that our portfolio construction is aligned with long-term outcomes.
5. Fund Review and Peer Comparison
With support from Phil Wellingham at PortfolioMetrix, we reviewed each fund’s:
- Performance relative to category peers
- Cost and efficiency metrics
- Factor consistency (value, small-cap, profitability)
- Mandate adherence
While some funds slightly underperformed peers—particularly those with ESG or emerging market exposures—the portfolios remain intentionally positioned. Importantly, all funds continue to serve their role within the portfolio.
Outcome: No fund changes were made. Monitoring continues, and any underperformance is within acceptable and expected bounds.
6. Other Oversight and Observations
We also discussed:
- Behavioural trends: Clients tend to feel most anxious right before markets bounce. Staying invested through discomfort is often where the greatest returns occur.
- Platform and provider performance: No service issues or concerns to report. Implementation remains efficient.
- PROD and Consumer Duty alignment: Portfolios remain appropriate for each client segment. Advisers were reminded to revisit Oxford Risk scores during review meetings.
What This Means for You
There’s a quiet power in structure.
While headlines change daily, our role is to focus on what matters: making sure your investments are working in alignment with your plan, with no unnecessary risk or drama.
This quarter, that meant rebalancing portfolios—not because something was wrong, but because something was working. Risk had shifted, and we adjusted. That’s the value of process over prediction.
Want to understand the structure behind these meetings?
Read our explainer: What Is an Investment Committee?
And as always, if you’d like to talk anything through, we’re here.
