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
“We continue to believe that the US Federal Reserve can cool high inflation and very strong labour market pressures while avoiding a deep recession, but the main risk on the horizon in a few months is an earnings recession, while revenues and profit margins remain relatively resilient so far. Very active positions can be quite risky. We remain neutral on US equities and underweight Europe. We are starting to build a position in European high yield, which presents medium-term opportunities.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“Preliminary survey data stayed weak across Europe but beat pessimistic expectations of deterioration, while in the US the opposite was true. Inflationary data showed signs of moderation, with Fed minutes emphasising a slower pace of hikes. This prompted a positive reaction from equities, with European stocks leading other developed markets higher. In portfolios we maintain a slight conservative bias, aware that the downgrade cycle in earnings estimates is only in its early stages.”
Jorge Velasco
Director of Investment Strategy, CaixaBank Private Banking. Based in: Madrid, Spain
“This month we continued with the movements initiated a few weeks ago and increased the duration and sensitivity to credit risk of the portfolio. This time, we closed the short-term covered bonds position and added a short-term euro aggregate fund with a slightly longer duration. Maintaining a prudent portfolio structure, we made some minor movements on the equity side, replaced the financial sector and added a defensive investment in healthcare.”
Kelly Prior
Investment Manager in the Multi-manager team, Colombia Threadneedle Investments. Based in: London, UK
“It was a positive month across broad markets, with slowing inflation prints bolstering risk appetites, despite rising interest rates. The central banks remain at pains to point out that their job is not done yet however. Reports of protests in China rattled nerves, too. There were big moves in currency markets with the dollar rolling over as the yen surged. The TT Asia ex Japan Equity Fund was the star of the selection, with the Spyglass US Growth fund falling significantly as high-growth stocks were shunned.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“In November, the performance of the portfolio was positive, with strong contributions from Lyxor MSCI China Ucits ETF, Invesco Asian Equity and pretty much all the European equity funds. Markets were supported by the Fed signaling a more gradual hiking path. Also, some relaxation of the zero-Covid policy helped investors regain confidence in the Chinese market. We keep our allocation unchanged, but the time is coming to consider rates as an interesting asset class once again.”
Richard Troue
Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“Confidence in the UK market improved last month, after chancellor Jeremy Hunt reversed virtually all the measures announced by his predecessor. Even so, the UK stockmarket and the pound are arguably undervalued. We may see investors turn away from unprofitable companies towards those with proven models and reliable cash flows from which dividends can be paid. Hopefully some of these businesses can offer some shelter should economic conditions worsen next year.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“Global equity markets rallied strongly towards the end of the month, benefitting from the Fed’s more dovish stance on the future path of interest rates. Those markets that had lagged, such as the UK, Asia and emerging markets, performed the best. There were no changes to our asset allocation, though we did make an implementation change. In the US we sold Loomis Sayles US Growth, replacing it with the iShares S&P 500 Equal weight ETF, hedged to pound sterling. This increases the portfolio’s value bias and protects against future dollar weakness.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“In November, markets got what they had been hoping for: a lower-than-expected inflation print in the US. Investors also got more hopeful that the Fed would pivot from its hawkish policy stance. There seems to be broad agreement within the Fed that it would soon be appropriate to slow the pace of rate hikes. The high level of uncertainty still suggests a neutral weighting between equities and bonds, but heading in to next year we recommend investors to lift EM bonds to an overweight at the expense of government bonds.”
Didier Chan-Voc-Chun
Head of Multi-Management and Fund Research at Union Bancaire Privée (UBP). Based in: London, UK
“Over a particularly strong November for equities, we entered a subordinated debt stand alone position, mainly led by risk-adjusted expected returns. Yield is similar to high yield but with what we consider being a lower credit risk. We also initiated a position in opportunistic spreads. Looking ahead, the agility that was required to navigate markets in 2022 will remain an asset in 2023 as the global economy treads a fine line between developed economies entering recession and emerging ones seeking to consolidate recoveries.”
