The MoneyWeek ETF portfolio is cutting its holding in Xtrackers FTSE Developed Europe Real Estate (LSE: XDER) from 10% to 5%, citing pressure on the sector from higher energy costs, higher inflation and higher interest rates over the medium term.
The portfolio will temporarily add the 5% released from XDER, plus the remaining 5% of its uninvested cash, to iShares $ TIPS 0-5 GBP Hedged (LSE: TI5G), taking that position to 20% in total. The article notes that the underlying bonds in TI5G offer a 2.8% real yield with limited interest-rate risk at a time when higher inflation is a growing threat.
The portfolio's emerging markets exposure is 15%, split between about 10% in emerging markets and about 5% highly geared to AI capex, following the July addition of WisdomTree True Emerging Markets (LSE: WEMP) alongside iShares Core MSCI Emerging Markets (LSE: EMIM).
The article says the portfolio's bond holdings are very short-dated because of concern about longer-term yields getting untethered, and that the real-estate holding has been struggling. It adds that takeovers in the European real estate sector, especially in the UK, suggest trade buyers see opportunities where public markets do not, but that it is not clear when sentiment might change.