Fund selection - September 2013

Graham Duce

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

“Risk assets continued to gain strength as economic data and policy statements encouraged renewed global risk appetite. Published Fed minutes helped calm investors that the end of the QE programme will be measured. Elections in Japan strengthened prime minster Abe’s stimulus polices and further encouraged investors that global monetary conditions will remain supportive. While we remain overweight equities, we are aware of both their recent strength and the possible challenges that could derail sentiment over the volatile summer period. We have marginally de risked the fund by reducing some allocations in higher beta names.”

Peter Fitzgerald

Head of Multi-Asset Retail Funds, Aviva investors, Based in: London, UK

“We made a number of changes last month.  Firstly we added slightly to our equity allocation and at the same time reduced our allocation to emerging markets in favour of the US and Europe.  We believe the outlook for emerging markets remains challenging.  Secondly, we reduced our fixed income allocation and increased cash and allocated to European loans.  We do not believe fixed income offers an attractive risk return profile and prefer to hold cash to reduce the volatility of our equity holdings. Finally we replaced Eclectica with MW Tops within our alternative allocation.”

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 4.25 per cent. We increased our non risky asset allocation with investments in the German government bond sector. On the risky asset sector we enhanced the US large caps exposure and decreased non euro property. Within our European equity allocation we replaced large caps with small caps.”

Management selection team

Eurizon Capital, Based in: Milan, Italy

“We reduced our equity exposure, closing our long position on emerging markets and putting the proceeds in a cash fund. We remain overweight equities, overweight European investment grade credit and underweight euro government bonds. The portfolio outperformed its benchmark in both June and July. The overweight in equities versus government bonds gave a positive contribution and off-benchmark exposure to European investment grade credit was also beneficial. US equities yielded very interesting results, with Vanguard US Opportunities, Edram US Value & Yield and Ubam NB US Value nicely outperforming the S&P 500.”

Gary Potter and Rob Burdett

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

“Markets began the month in a buoyant mood as the fears of an end of central bank stimulation eased with weaker than expected macro-economic numbers. Japan suffered a turn of sentiment in the latter stages of July, falling from best to worst performing market, as little news came from the Abe government post their upper house election. Positive economic numbers from Europe drove it to the best performing spot, but despite this the Brown North American fund was the best performing, closely followed by Johcm Continental European. In our opinion, the usual light summer volumes combined with volatile sentiment will keep markets unsettled in the short term.”

Thierry CRENO

Local Head France, Global Balanced Solutions FundQuest, BNP Paribas Group, Based in: Paris, France

“Despite uncertainties around the Fed’s policy, markets have recovered their spring correction on the back of improving cyclical economic background. This environment has benefited our portfolio. We view the last few months emerging equities weakness relative to developed markets as exaggerated and still expect higher returns over the medium term from developing markets. Therefore, we proceed with only one change in our allocation and increase Acadian Emerging Markets Equity Fund at the expense of US and Europe exposures, however the latter remains our largest allocation.”

Lionel De Broux

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

“June was a difficult month for the portfolio, as markets penalised risk takers in most asset classes. If the allocation to absolute return strategy has mitigated the impact of the correction, our exposure to emerging markets weighed on the performance. Performance rebounded in July supported by our allocation to convertible bonds and US small and mid-cap. A few changes were implemented: we cut our exposure to GAM Emerging Market Rate, BL Global Flexible as well as Schroder ISF Global Bond and open new position in BSF European Divers Eq Abs Ret, Universal Invest Global Flexible D and GS Glbl Strategic Income Bd €H.”

Bernard Aybran

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

“There was good news for active fund managers over the past few months: throughout the ups and downs surrounding the speeches about the Fed’s tapering, indices suffered quite a lot, both in the debt and the stockmarkets. Thus, the balanced portfolio has been quite heavily focused on high tracking error fund managers, at the expense of index-tracking instruments. This gives a more mid-cap flavor to the equity portfolio, and increases the credit risk on the fixed income side. From an asset allocation point of view, a major choice is staying out of the emerging markets and sticking with Europe and the US.”

Peter Branner

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

“With only marginal changes to asset allocation we maintain our combination of M&G Global Dividend and JO Hambro Global Select in our equity portfolio. Both management teams have proved their capacity to add value over time but with different approaches. While M&G is bottom-up focused on quality in cash flow generation, JO Hambro is almost the opposite with an opportunistic, thematic and market savvy investment approach. This has turned out to be good from a performance perspective as M&G focuses on research while the approach of JO Hambro kicks in with the market’s constant shifts of focus between more short-term factors.”