Each month in PWM, nine top European asset allocators reveal how they would spend €100,000 in a fund supermarket for a fairly conservative client with a balanced strategy
Benjamin Hamidi
Senior portfolio manager, ABN AMRO Investment Solutions. Based in: Paris, France
“A mild recession remains the market’s main scenario. We are therefore moving ever closer to the end of tightening in the major developed countries. We continue to closely monitor the effects of credit tightening on economic activity. In this context, we are still targeting a moderate active risk. The global asset allocation remains unchanged, with a balanced approach, a contained duration and diversification positions in small capitalisation equities strategies and emerging markets.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“Economic surveys continued their historically unusual behaviour, with manufacturing weakness diverging sharply from strong services, where readings continue to rise. The same path is evident in price pressures. During the month, developed equity markets were relatively stable, except for the Nasdaq, which moved higher thanks to a handful of names. In our portfolio, given our underwhelming outlook for China, we reduced our exposure to emerging markets in favour of European equities.”
Jorge Velasco
Director of Investment Strategy, CaixaBank Private Banking. Based in: Madrid, Spain
“While we’re not making any changes at the asset allocation level this month, we are making a few small changes to increase our exposure to cyclical companies, Japan and small caps. We are adding an index fund that replicates the MSCI World Small Caps to achieve this. To fund this, we are reducing our exposure to European value. There are no changes in the structure of the fixed income or alternatives block.”
Kelly Prior
Investment Manager in the Multi-manager team, Colombia Threadneedle Investments. Based in: London, UK
“Economic numbers were generally stronger than expected, throwing a curveball at those predicting cuts from central bankers. Currency markets were particularly volatile with the dollar surging. This, alongside a run from a certain cohort of favoured tech stocks saw the US put in a strong run, with the Spyglass US Growth fund at the top of the selected funds. Conversely, the Magallanes Value Investors UCITS European Equity fund faced the double headwinds of Europe losing ground as value stocks also faltered.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“The performance of the portfolio was flat in May, with UBS US Growth being the best contributor, along with all the other US equity funds. Lyxor MSCI China UCITS ETF and Lord Abbett High Yield detracted the most. Our US dollar exposure contributed positively during the month, while European equity funds yielded mixed results. We keep our asset allocation unchanged, waiting for the main central banks to pause and rates to stabilise before investing into government bonds. Emerging debt is still too risky for now.”
Richard Troue
Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“AB American Growth and Neuberger Berman US Large Cap Value have been added, at the expense of Findlay Park American. BlackRock Global Unconstrained Equity has been added — the managers have carved out an excellent stockpicking track record. Lindsell Train Global Equity and Rathbone Global Opportunities have been sold to make way. Exposure to Japan and the UK has been reduced, including the sale of Marlborough Micro-Cap Growth. The overall result is an equity portfolio that is more balanced by region, country, market cap, and sector.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“The Bank of England raised rates by 0.25 per cent in May, resulting in the UK market giving back its gains from April. The Fed also raised rates by 0.25 per cent, as expected, but the US market continued to rally — driven by a small number of tech companies. We made no changes to our asset allocation, but we did increase the duration of our government bond allocation. While we are not at the end of the current tightening cycle, we are nearer the end than the beginning, making this change attractive on a risk reward basis.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“The economic outlook remains uncertain due to high rates and tight credit conditions. These are, however, known to investors and therefore may not result in significant further market volatility. Earnings estimates, on the other hand, appear conservative given the prevailing economic outlook and thus further upside surprises on that front seem likely. Bond yields are higher than in a long while and especially so for riskier segments. In an uncertain environment, we prefer to take risks within credits and keep equities at neutral weight.”
Didier Chan-Voc-Chun
Head of Multi-Management and Fund Research at Union Bancaire Privée (UBP). Based in: London, UK
“Though the US debt ceiling dominated the markets’ attention, behind the scenes, the fallout from the recent US bank failures is moving through the US economy in an unanticipated manner. Loan growth has stagnated since March, with a contraction of commercial and industrial loans. This adds to the slowing economic growth narrative that continues to develop, which should result in a mild recession in the US and a more stagflationary outlook for Europe. We are maintaining our selective stance on quality equities and have no major changes to the portfolio.”
