Fund selection - June 2016

Giovanni Becchere 

Senior Portfolio Manager - Multimanagement  & Solution, AA Advisors. Based in: Paris, France

“We keep our portfolio unchanged with a modest overweight in equities, supported by a belief that the UK’s referendum on EU membership will not dramatically impact markets in the run-up to the vote. A vote to stay in, however, could trigger a relief rally. Even if the risk of a US rate hike in the summer appears to be justified on the basis of US fundamentals, the international effects may leave the Fed hesitant to move. So, no matter if there is a hike or not, we believe that it will be the slowest tightening process ever. We do not expect it to upset markets.”

Thomas Wells 

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

“Our defensive move last month of reducing equity risk proved pre-emptive as despite being volatile, markets ended flat in May. We made no portfolio changes this month, being happy to run high levels of cash as we remain very much in wait-and-see mode. The next few weeks pose significant event risk for the markets with both the Fed rate decision and Brexit referendum. Our high levels of cash and significant alternatives allocation mean we are well-positioned to take advantage of any further market volatility should it arise.”    

Gary Potter and Rob Burdett

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

“We make some mild changes this month, selling  CF Odey Odyssey with just over half the proceeds re-invested into stable mate CF Odey Absolute Return, with the balance added to lagging Japan and Kames High Yield Global Bond Fund. Although we are mildly increasing equities this is to lean into stockpickers doing better than the market in what continues to be a very benign and unexciting economic environment. There is much to concern markets about politics however so our portfolio remains balanced overall.”

Silvia Tenconi

Hedge Funds & Manager Selection, Eurizon Capital. Based in: Milan, Italy

“The portfolio posted positive results in May, the biggest contributors being Fidelity FAST Emerging Markets Equity, Nomura US High Yield Bond, Neuberger Berman High Yield Bond and MFS Global Equity. The only detractor was Julius Baer Local Emerging Bond, impacted by the recent hawkish wording of the Fed and the strengthening dollar. June is going to be a month full of events: albeit not overly optimistic, we have a positive scenario in mind, and still prefer equities and high yield to government bonds and cash. We made no changes to the portfolio.”

Fundquest Advisor Management Selection Team

FundQuest Advisor, BNP Paribas Group. Based in: Paris, France

“MSCI AC World fell by -0.2 per cent, while MSCI Emerging Markets (driven down by Brazilian markets and uncertain prospects for the Chinese economy) lost 3.9 per cent. Mediocre worldwide growth and the dimmed outlook for global company earnings keep us cautious. We maintained our defensive profile, but decided to reduce our allocation to emerging market equities in favour of resilient developed markets. We concentrated and increased our investments through income and alternative strategies instead of cash.”

Peter Haynes

Investment Director, SGPB Hambros. Based in: London, UK

“Developed equity markets rallied in May led by European (ex-UK) markets which benefitted from a weaker euro. The MSCI World Index is now in positive territory year to date although performances have been mixed with the Japanese equity market down almost 9 per cent and the Euro Stoxx 600 down more than 3 per cent. Bond markets have rallied as worries about inflation recede and Japan and Europe continue with their aggressive monetary policy. We retain a healthy exposure to the US dollar including treasuries and gold ahead of the European referendum.”

Bernard Aybran

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

“A new holding has been added to the balanced portfolio, in the alternative category. It is a Ucits fund investing in special situations and mergers and acquisitions strategies. This holding has been added to add some more diversification to the overall portfolio and was funded by trimming another, bigger, holding. With a quarter of the portfolio, alternative investments are designed to lower the beta of the portfolio over a background of high valuations for most traditional asset classes, both in the equity and debt spaces.”

Toby Vaughan 

Head of Fund Management, Global Multi Asset Solutions Santander. Based in: London, UK

“To ensure we have sufficient diversifiers in the fixed income allocation we raise our allocation to the Morgan Stanley fund (through slight reductions in Jupiter and Muzinich). While we are concerned about the potential for a back up in bond yields we want to ensure sufficient duration and diversifiers during an upcoming period of potential volatility. We raise our allocation to more defensive vehicles within  equities by increasing the minimum volatility position in the US. We continue to embrace risk, but in a diversified manner.”

Peter Branner

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

“Robeco Lux-0-Rente strives to deliver strong returns through dynamic duration management, investing in government bonds in Japan, the US and Germany. The uniqueness of the fund is that it actively uses the whole duration spectra to create return. At the beginning of this year, the duration was more than 13 years. With this long duration the fund benefited strongly from decline in yields in all three markets. Today the duration stands at about a year. A unique style diversifier and a proven ability to deliver attractive returns means we keep the fund in the portfolio.”