Fund selection - March 2017

Giovanni Becchere 

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

“Stockmarket performance has been positive since the US election of Donald Trump, driven by an expected increase in US fiscal spending, solid macroeconomic momentum and a slightly better-than-expected earnings season. Valuations are also reasonable. In this environment, equity market fundamentals and important indicators, such as earnings and valuations, continue to be solid and supportive of stock investments. Nonetheless, politics can be a source of risk. Therefore we decide to take some profit from the equity exposure trimming the biggest lines in the two main regions. At the same time we shift our position in European high yield bonds to US high yield, based on better return prospects and the opportunity to diversify the bond component.”

Thomas Wells 

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

“Our large US equity allocation was rewarded in February with the S&P 500 returning nearly 4 per cent in local currency terms and the US dollar appreciating 2 per cent to the euro. Pleasingly, after a difficult year for active management in the US, Wellington is beginning to outperform again and is already nearly 1.5 per cent ahead of benchmark. Although we have made no portfolio changes this month, we continue to be surprised by the strong performance of high yield credit as spreads tighten towards five year lows. This is potentially an area where we would be looking to lighten up on risk going forward..”

Gary Potter and Rob Burdett

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

“Equity markets shrugged off political concerns and resumed strong upwards moves in the month. Despite the Dutch and French elections edging closer and a lack of clarity from President Trump’s policy maker regarding tax and infrastructure spending. The most interesting moves came from the bond market, as fears over victories of the populist vote caused a rush to German bunds with French government debt moving wider.  Rhetoric from the Fed caused an increase in expectation of a rise in interest rates in the US. The euro weakened given the political noise against most major currencies. Of the selection, the Findlay Park American fund was the best performer reflecting the fortunes of the underlying market, with the Odey Odyssey the laggard losing ground in the month. The continued strength of markets, despite building political uncertainty, increases our conviction that we should expect volatility at some point.”

Silvia Tenconi

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

“The portfolio ended February with a positive performance. The main contributors were Comgest Emerging Markets, JP Morgan Highbridge US STEEP and MFS Global Equity. The only detractor was Schroder European Opportunities, still undergoing a phase of  underperformance that began last year. Exane Archimedes also disappointed, a weak performer since June 2016. Our asset allocation remains unchanged, with a positive view on risky assets, tempered with some caution due to valuations (not cheap anymore) and political turmoil ahead. We made no changes to the portfolio and prefer equities, flexible strategies and credit to government bonds.”

Jean-Marie Piriou

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

“During February, positive economic data and improved corporate earnings continued to contribute to equity performance. After significant gains on US markets, we reshuffled this bucket by closing US small caps and the value bias. We slightly reinforced emerging markets and introduced a eurozone Reit bet: relative to the underlying assets, this investment is not cheap but has higher dividend yields versus credit yields. We are positive on the eurozone economy: commercial real estate demand should improve in our views, with still limited supply. We reduced US high yield and replaced it with European high yield.”

Peter Haynes

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

“The MSCI World Index sailed to yet another record high during the month, despite geopolitical uncertainty and the threat of tighter monetary policy in the US. At the beginning of the month, expectations of the Federal Reserve raising rates to 1 per cent in March stood at around 28 per cent but a raft of positive economic data and Janet Yellen’s testimony pushed this expectation to 80 per cent by month end. US market led the way with a rise of 4 per cent and this was reflected in the portfolio with strong performances from Henderson Global Technology and Robeco US Premium. It was also encouraging to note the performance of Lyxor Epsilon within the alternatives allocation which rose almost 5 per cent during the period.”

Bernard Aybran

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

“In February one new holding was added to the portfolio, with another being fully redeemed, both in the European equity space, leaving the overall asset allocation unchanged. The holding that has been redeemed has been experiencing a style drift that makes it less appropriate for the portfolio in the current context of style rotation. The extra holding added displays a lowest tracking error and an investment style that is more blend. On the fixed income side, the investment in non-euro markets has been increased somewhat, consistently with the move previously initiated.”

Lee Gardhouse 

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

“When a manager has underperformed I often hear that ‘the market has been irrational’. Rarely do I hear that during periods of outperformance. All managers get it wrong sometimes, the key is not to be too wrong when the market does not go your way. The US has been excellent again more recently and a lack of great US managers has led us to be underweight the US (for the last 21 years!). While we have been wrong for the last decade we have at least maintained an exposure and have worked hard to pick great managers elsewhere. Markets are cyclical so surely the S&P cannot keep outperforming, that would be irrational.”

Peter Branner

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

“The CTA fund, SEB Asset Selection, is a pure trend-following strategy, assessing the world’s most liquid futures markets. It is a challenge to foresee when markets will generate strong and consistent trends – i.e. when to own CTA funds in general. However, what we do know is that SEB Asset Selection will serve as an uncorrelated component and through its rigorous risk management it will reduce the drawdowns in a portfolio context. We trust the five-strong team to continue its solid track record and boosting the sharp-ratio of our overall portfolio. Our position in the fund remains.”