Giovanni Becchere
Head of Multi-Assets, ABN AMRO Investment Solutions. Based in: Paris, France
“Over the summer, the risks of a global recession have indeed risen. Additional headwinds are coming from the uncertainty on the trade war, the outcome of Brexit, the political risk in Italy and the discussion about the inverted US yield curve – a frequent signal of recession. Nonetheless we do not believe that a global recession is coming this year or next. In the US as well as in the eurozone consumer spending is holding up. The US Federal Reserve, the European Central Bank and other central banks worldwide are also ready to take preventative measures to support the global economy. In this environment we continue to stick to the current allocation between equities and bonds, leaving the portfolio unchanged.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“In August, we continued to experience a deterioration in the US-China trade relationship, with both parties announcing additional duties on each other’s goods. Political and economic instability in Argentina, intense protests in Hong Kong and continuous Brexit-related challenges in the UK complete a deteriorating political picture in a world where global macro data does not offer much support. In this environment, gold hit a six-year high, the US yield curve continue to invert, and a record amount of bonds are now trading on a negative yield. These warning signals have so far limited impact on equity markets, especially in the US, where the headline index is still trading close to all-time highs.”
Kelly Prior
Investment Manager in the Multi-manager team, BMO Global Asset Management. Based in: London, UK
“August did not disappoint on the volatility front, bringing with it a much anticipated inversion of the US and UK yield curves, alongside a fall in the yield of the 30 year US long bond to never seen before low levels – all historically gloomy indicators for the future fortunes of the global economy. As investors grappled with mixed economic data from around the world, trade war narratives remained in the headlines. Equities fell back in the month overall, though clawed back some of the more significant mid-month losses. The M&G Global Macro Bond fund was the best performer, benefiting from strong moves in the dollar and yen in particular, making gains in the period. The CC Asia Focus fund was the worst performer, reflecting the fortunes of the underlying markets.”
Ian Crispo
Head of fund selection, Deutsche Bank Wealth Management. Based in: London, UK
“During a volatile month marked by recession fears, trade war talks and instability in Argentina, our EM-related exposures sold off, as did the equity book more generally. Our alternatives exposure provided diversification, with gold and systematic macro leading the way. Our fixed income book gave good protection, being generally in positive territory across the board. Given our already cautious positioning, we did not make any further changes to our target portfolio allocation. The sharp sell-off in EM should provide us with attractive upside in the months to come, particularly on the debt side, given expectations priced in of Argentina defaults.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“In August, the performance of the portfolio was negative. The only positive contributors were Vontobel US Equity, MFS European Value, MFS Global Equity and Eurizon Fund Absolute High Yield. Major detractors were Vanguard US Opportunities and M&G Global Dividend. Setbacks in Sino-US trade talks sent markets down, yet lower interest rates could underpin risky assets’ valuations if macro data were to show some stabilisation later in the year. We keep our allocation unchanged: we still like developed markets equities and credit and keep a sizeable exposure to the US dollar.”
Lee Gardhouse
Chief Investment Officer, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“Most fund managers have a dirty secret which costs them and their clients performance yet even when you uncover it few want to admit to it causing damage. I am talking about holding too much cash. My finger in the air guess is that the average manager has the best part of 5 per cent in cash. I have heard every excuse in the book as to why this is a good idea but most managers get into a rut in terms of a cash weight they get comfortable with and the bigger this number its my view that the bigger the negative impact their clients will suffer.”
Bernard Aybran
CIO Multi-management, Invesco. Based in: Paris, France
“A couple of changes were made during August. On the European equity side, there has been some profit taking on a healthcare ETF and the proceeds have been reinvested on an actively managed fund, giving us access to a long-proven approach mixing a strong fundamental analysis and a very low turnover, clearly biased toward a visible growth approach. Fixed income investments performed strongly with the exception of the two emerging bond funds, that lost ground because of their asset class. All actively managed funds behaved well during the summer.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“Events in August reminded us we need to spend as much time on the diversifying part of the portfolio as its equity investments, if we are to deliver attractive long-term performance. Investment grade spreads over governments are at historic lows, with questions over credit quality going forward. To this end we decided to reduce our allocation by 4 per cent, by selling the Pimco Global Investment Grade Credit holding and modestly reducing H20 Multi Aggregate. The hardest question was where to invest the proceeds? In the end we opted to increase the portfolio’s gold exposure to 8 per cent; the obvious choice in times of uncertainty.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“Tweets and trade defined August and while this is a central part of the market narrative, ‘the rest’ has not disappeared. Hopes of monetary and fiscal stimulus are rising as worries around the economic outlook grow and a Trump tweet can sway the boat both ways. We keep our neutral recommendation between equities and fixed income. In our regional strategy, we overweight Europe since almost everybody is negative towards the region. Within sectors, we stick to our defensive stance and within fixed income shift our overweight from high yield to emerging market bonds.”
