Fund selection - January 2018

Giovanni Becchere 

Head of Multi-Assets, ABN AMRO Investment Solutions. Based in: Paris, France

“After a good 2017 we believe the pace of the recovery has likely peaked, but growth trend should persist as more countries participate. Global central banks will remain accommodative but in transition toward normalisation requiring precise communication and an aggressive financial tightening should be avoided. In this context equities remain our preferred asset class, even if the 2017 run-up has further tempered our global return expectations globally. The combination of steady economic growth, gradually tighter monetary policy and attractive relative valuations suggests that value is well-positioned for outperforming. Accordingly within our selection in both European and US equities we continue to prefer value-oriented over growth-oriented strategies.”

Thomas Wells 

Fund Manager, Multi-assets Aviva Investors. Based in: London, UK

“2017 was a good year for the portfolio; risk-assets did well and we were overweight equities. We also saw strong performance from our active managers with the likes of Blackrock European Dynamic and Baillie Gifford Japan delivering nearly double digit outperformance. It was, however, Indus Asia Select that stole the show returning more than 31 per cent in euro terms, 15 per cent ahead of the Asia Pacific market.  After such a strong year it is naturally tempting to book profits and de-risk. However as difficult as it may seem, now is the time to sit on one’s hands and not trade. Hence in December we made no portfolio changes.”

Gary Potter and Rob Burdett

Co-heads of multi-manager, BMO Global Asset Management. Based in: London, UK

“The final month of the year saw a continuation of recent trends with positive returns and low volatility from most markets. The third rate hike of 2017 from the Fed was well flagged, as was the detail of the tax bill which was signed into law by President Trump. The conclusion of the first phase of Brexit talks brought relief to both sides of the talks, with the UK market more focused on central bank policy which impacted fixed income assets as the year closed. The BGF Asian Growth Leaders fund led the selection with the M&G Global Macro Bond fund falling to the pack. We remain cautiously positioned going into the new year.”

Silvia Tenconi

Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy

“December was a positive month for the portfolio. Top contributors were M&G Global Dividend and Comgest Emerging Markets Equity. Worst detractors were Wellington US Research and Vanguard US Opportunities. Equities had a good rally into year end, while our high yield position was flat. Our US equity funds, while positive in local currency, detracted from performance because of their dollar exposure. Being long equities was a positive in 2017, while our currency exposure detracted the most. We didn’t make any changes to the portfolio, as we are still confident the environment is favourable to risky assets.”

Jean-Marie Piriou

Head of quantitative analysis, FundQuest Advisor, BNP Paribas Group. Based in: Paris, France

“In 2017, global equities achieved their best performance since 2009. In reaction to the solid prospects for the global economy and proactive economic policies, analysts have revised their earnings forecasts upwards, while government bond yields are likely to remain low. This combination should push equities up further despite valuations that are stretched in absolute terms, particularly in the US. In this context, we trim alternative investments and reduce US equities in favour of emerging market equities. This asset class is deemed to greatly benefit from the current economic conditions.”

Paul Hookway

Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK

“Equity markets were strong in the final month of 2017. The best performance came from the UK market with the FTSE All Share returning 4.8 per cent. The materials sector was the key driver of this, up 12.1 per cent, driven by the strong rally in the metals index. Most other equity markets also delivered reasonable returns, with the exception of continental Europe, which was broadly flat. Against this background we decided to make a number of changes to the portfolio. The first was the removal of Artemis Global Income as the income theme has lagged the wider market and we wanted to allocate the capital to a more appropriate investment. We also took profits from our European exposure, modestly trimming the holding of BlackRock Continental European Flexible. The proceeds were re invested into a new holding of Loomis Sayles US Growth equity, to increase our US exposure, which looks set to benefit from improving macro-economic fundamentals and the recent tax reforms. Overall our equity allocation remains unchanged.”

Bernard Aybran

CIO Multi-management, Invesco. Based in: Paris, France

“The balanced portfolio remained mostly unchanged over the month of December. The high yield investment has just been trimmed in order to add to a go-anywhere actively managed debt portfolio. The rest of the portfolio remains split between passive and active funds. Passive is primarily used where markets are the most efficient or where the momentum factor is the primary driving factor. Actively managed funds are favoured whenever the momentum is less of a dominant part in the investment case or when the target markets are less liquid. As far as the latter, the implementation of Mifid 2 helped lower the costs.”

Lee Gardhouse 

Chief Investment Officer, Hargreaves Lansdown Fund Managers, Based in: Bristol, UK

“When is a diversified portfolio not a diversified portfolio? Chasing fund performance can lead the unwary to have a fund of similar funds. I experienced this in 1999 to 2003. Apparently different funds all has a tech bet that saw then top the charts and then hit the floor all at the same time.  My portfolio has managers with differing styles because I don’t want to bet the ranch on one style winning. Markets globally are painting themselves into a corner with stocks of a certain type get more and more expensive while other fall massively out of favour. In this environment it’s important to make sure you have real not perceived diversification.”

Peter Branner

Global CIO, SEB Asset management. Based in: Stockholm, Sweden

“JP Morgan Emerging Markets Small Cap Equity fund is a fundamentally-driven product relying on an armada of analyst’s comprehensive research on individual stocks. Given the nature of this asset class focus on potential risks and frauds is essential resulting in a portfolio of premium quality stocks that additionally operates in a sustainably part of the value chain. Portfolio manager Amit Mehta runs the portfolio with low turnover strives to find the large caps of tomorrow. Characteristics of smaller-sized companies in emerging markets also serve as an indirect hedge to expected rate hikes in US, in combination with solid global growth stability in both the dollar and China creates a compelling foundation for this asset class. We increase the holding slightly and fund this by SEB Global Fund.”