Fund selection - April 2013

Graham Duce

Co-head of UK multi- manager funds, Aberdeen Asset Managers.

Based in London, UK

“After an exceptionally strong 2012 for investment grade credit, spreads have continued to tighten to a point where we see little to go for. We have therefore disposed of the Bluebay Investment Grade Bond fund. It has proven to be a relatively conservative investment grade fund, which is why it has been a feature within the portfolio for some time. The proceeds are to be invested in the newly launched Liontrust Global Strategic Bond fund managed by Mike Mabbutt. This total return-orientated long only fund has the flexibility to invest across the fixed income universe, although we would expect a strong bias toward emerging market debt.”

Peter Fitzgerald

Senior portfolio manager, multi-asset Multi-Manager, Aviva Investors.

Based in: London, UK

“We have sold our holdings in the Jupiter Convertibles Fund. This was an asset allocation rather than a manager selection decision. We classify convertibles as equities and given that we are already at our maximum equity allocation of 60 per cent for this portfolio, we added an investment in Latin America and increased our allocation to our European equity managers. As discussed last month, we no longer invest in global emerging markets as an asset class but have decided to invest regionally. We completed this task during the month by allocating to a core Latin American manager.”

Christian Jost

Executive director and chief investment officer, C-Quadrat Kapitalanlage AG

Based in: Vienna, Austria

“C-Quadrat Flexible Assets AMI tries to benefit from the diversification effects of a sizeable multi-asset investment universe. The fund’s allocation has been geared to a predefined investment risk (with a risk corridor from 2 to 6.5 per cent volatility), with a current risk profile of almost 4 per cent. The risky assets exposure is mainly allocated in European equities, with a focus on small and mid caps. Total risky asset quote, including equities and commodities, is almost 70 per cent. The remaining 30 per cent is allocated to government and sovereign bonds.”

Management selection team

Eurizon Capital

Based in: Milan, Italy

“By the end of February we decided to replace the M&G Global Basics Fund with the M&G Global Dividend Fund, which we deem to be more rewarding in low growth environments because of its more balanced approach to the markets.The portfolio is currently overweight equities, overweight European investment grade credit and underweight euro government bonds. Although the outlook for government rates is not positive, we deem it appropriate to keep a little exposure to duration for diversification purposes via the Invesco Euro Corporate fund. Our portfolio outperformed its benchmark in February.”

Gary Potter and Rob Burdett

Co-heads of multi-management, F&C investments Based in: London, UK

“It was a positive month for most equity markets led by Japan. Gains were compounded by a weakening of the euro against most major currencies with the Morant Wright Japan fund the best performer of our selection. European equities failed to capture the positive mood thanks to a negative outcome from the Italian elections, bringing political uncertainty to the forefront of investors’ minds yet again. The Thames River Global Bond fund was the poorest performer losing money, with the Neptune European Opportunities fund close behind. We continue to be positive on market direction in the long term, but mindful of the potential for short-term volatility.”

Thierry Creno

Local Head France, Global Balanced Solutions FundQuest, BNP Paribas Group

Based in: Paris, France

“The equity markets stabilised in February with the MSCI AC World and the MSCI Emerging falling by 0.2 per cent and 1.4 per cent. Uncertainties, mainly of a political nature, returned to the forefront in Europe. Our fairly conservative allocation did pretty well last month thanks to bond funds that benefited from lower yields and Alken European Opportunities that returned 5 per cent and outperformed the broad European market by 4 per cent. This month, we add to the alternatives investments with absolute return strategies (GS ART, BNY Mellon Global Real Return and DBX Platinum IV Systematic Alpha) at the expense of cash. ”

Lionel De Broux

Manager selection specialist, IPCM, ING Private Management Based in: Luxembourg

“The performance of the selected funds has been strong, particularly on the equity side. The recent increase in emerging market has been positive and we continue to benefit from strong support from some of the global equity funds. Mixed funds as well as the allocation to Schroder ISF Global Bond have outperformed bonds markets. The main drag on performance came from the alternatives that have underperformed markets. We have not implemented any change over the month.”

Bernard Aybran

Head of manager selection, Invesco Based in: Paris, France

“The equity holdings have been re-balanced some more over the course of February as European stocks have been slightly trimmed while the US and Chinese stocks were increased. However, a key part of the portfolio, around 55 per cent, are not stocks. Multi-assets fund managers too often focus on the equity holdings and pay less attention to the rest. These days, with many stockmarkets and interest rates likely to remain range bound over the medium term, finding low-correlation portfolios is key to keep decent returns after fees for the end investors.”

Peter Branner

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

“The equity spring is here to stay while fixed income returns are fading away. To limit directional risk in the fixed income space we partly allocate to Ignis to capture the absolute pace. We do a minor investment in alternatives to give further diversification – and downside protection. The selected equity managers are both global to secure the broadest possible opportunity set  and with respect to the different ways their targets are supposed to be met. The SEB PWM Portfolio is a concentrate of our external specialist asset managers used in the range of multi manager products – SEB Strategy funds.”