Storebrand AM cuts portfolio risk after bond yield surge, trims global equities to neutral
TLT•Storebrand AM cut portfolio risk, moving global equities to neutral from overweight and raising money market exposure to overweight. It kept credit and emerging markets equities overweight as bond yields rose and credit spreads widened.
1. Portfolio changes
Storebrand AM cut portfolio risk as a global rate selloff spread into credit markets, shifting global equities to neutral from overweight. It moved duration to underweight in global, Norwegian and Swedish government bonds, and raised money market exposure to overweight from underweight.
2. Market conditions
The U.S. 30-year yield ended September just above 5.6%, while markets priced in 86 basis points of Federal Reserve hikes over 12 months. Credit remained overweight despite spreads widening in late September to their widest levels since late March market stress. Emerging markets equities also remained overweight; MSCI World fell nearly 1% in September and was up 13% year to date.
