Fund selection - July 2018

Giovanni Becchere 

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

“Even if the numbers of factors seen worldwide which are depressing market sentiment are piling up, our view remains that overall growth remains reasonable with the global economy still on course for above-trend growth. For this reason we keep our allocation unchanged while making a change in the underlying strategies. In European equities we remain positive on value-oriented strategies but we acknowledge that the combination of decelerating activity growth and monetary condition normalisation will represent a headwind for this style of investment, and especially for deep value managers. So we replace AA MMF Pzena European Equities with Amundi European Equity Value, which is managed with more focus on quality and intrinsic value.”

Thomas Wells 

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

“June proved another difficult month as risk assets continued to sell-off. This was particularly evident in emerging markets, where the Shanghai composite was down more than 10 per cent. With no end in sight to the US -China trade tensions, it is tempting, when faced with such political gyrations, to cut risk and run for the hills. However, at times like this it is worth remembering that it is the fundamentals – economic growth, companies’ earnings, and valuations – that really matter. Given that these are expected to remain positive, we believe it makes sense to look through the current political noise and make no portfolio changes.”

Gary Potter and Rob Burdett

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

“Investor sentiment continued to impact returns in the month as trade wars, Brexit and North Korea dominated headlines. The US Federal Reserve raised interest rates by 0.25 per cent as expected, with the European Central Bank skilfully managing expectation down on the outlook for a reduction in stimulus in the future following their meeting, albeit with no change at the headline level of interest rates. Most markets lost ground, with the one exception being the S&P Composite. The best performer of the selection was the Findlay Park North American fund, reflecting the fortunes of the US market, with the BGF Asian Growth Leaders the laggard of the pack reflecting the falls in the region. We remain cautious on the outlook for the coming months, with scope for volatility ever present.”

Silvia Tenconi

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

“In June, the portfolio recorded a negative performance. Equity markets rolled over, and our investment in dollars was not helpful at all. The only positive contributors were Wellington US Research, Fidelity European Dynamic Growth and Carmignac Patrimoine. There has been substatial noise on the political scene during the month, with many issues to concern investors: hints of trade wars, indecisive elections and the everlasting issue of migrants in Europe. No wonder markets are taking a step back. That said, we still favour equities and did not make any changes to the portfolio.”

Jean-Marie Piriou

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

“Over the past month, European and emerging markets equity positions in the portfolio suffered mainly from the escalation of trade tensions between the US and China and the political turmoil in Italy. Markets have focused recently on the negative news, but we maintain our positive views. In this challenging environment, we decided to cut alternative investments in order to slightly increase equities, mainly through European stocks. At the same time, we concentrate the portfolio and we introduce within a smart beta strategy focused on sector value rotation within US equity.”

Paul Hookway

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

“Equity markets remained in positive momentum despite consolidating in the second half of June, though we have seen a number of the leading indicators softening; sounding a note of caution. US GDP growth remains strong though the tightening of the labour market may offset many of the one-off short term tax cut benefits and lead to higher interest rates; impacting an increasingly leveraged corporate sector. Add to this the increasingly tense trade tariff posturing, we decided to retain our neutral position.

We made no changes to the implementation as nothing has occurred to change our conviction in the current funds.”

Bernard Aybran

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

“The overall structure was kept unchanged over the month of June. Asian equity, both Japanese and emerging, has been trimmed as a strong dollar and the so-called trade war is mainly harmful for them. The proceeds have been used to increase the high growth US companies, which, in turn, increases the US dollar weighting, a valuable diversifier for this euro-based portfolio. Most fixed income and alternative funds had a tough month as higher spreads and volatile stockmarkets jeopardised many strategies. Despite mostly benign performances for many equity markets, specific performances below the averages have been causing damage to active managers.”

Lee Gardhouse 

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

“Outperforming managers will claim they made fantastic macro calls or a combination of great stockpicking decisions. When things don’t go so well the explanation is often that their style is out of favour. While managers underappreciate the style wind at their backs during the good times I do have sympathy with more value-orientated managers at the moment. Sexy growth funds have a place in a portfolio but balance is always required. Now might be a time to celebrate having exposure to dull value funds as they too will have their moment in the sun at some point in the future.”

Peter Branner

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

“SEB Hållbarhetsfond Global is an equity fund based on a systematic approach that strives to benefit from behavioral inconsistencies in the market with a clear ESG incorporation. The fund targets better than average exposure to certain selected themes and to sustainability as an aggregate. As it has a pronounced environmental focus – the fund has no investments in oil, gas or coal companies. This year’s upturn in the oil price has hurt the fund’s relative performance but as we see the long-term benefits of ESG investing, both environmentally but clearly also financially, we keep the position.”