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
“The market has become much calmer and more resilient to the bad news around employment and inflation figures. The probability that growth will simply hold up, is rising. The most likely scenario remains the decline of headline inflation and growth resilience, despite a bumpy road. In this context, we are slightly increasing risky asset exposure, but still targeting a moderate active risk. We therefore decided to raise the exposure to equities strategies, increasing our relative overweight in small capitalisation and emerging markets. The fixed income allocation remains unchanged, with a contained duration, a diversification position in European high yield and Emerging debt strategies.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“During the month economic survey data surprised on the upside, with the service sector moving back into the expansion territory. We have also seen signs that core inflation pressures may not have eased in early 2023. As a result, rates markets have rapidly re-priced, impacting global sovereign bond markets. Equity markets also gave up gains during February, with only some European indices posting marginal gains, while China gave back all the gains achieved so far this year. In portfolios we maintain our mild conservative bias and have further trimmed our exposure to UK equities, while we have increased our European exposure at the expense of US equities.”
Jorge Velasco
Director of Investment Strategy, CaixaBank Private Banking. Based in: Madrid, Spain
“With no relevant changes, we maintain our defensive positioning both in terms of asset allocation and composition of each of the portfolio blocks. This month, we have changed the bias of our thematic approach, withdrawing the DWS Global Agribussines fund and entering global financials, on the back of tighter valuations and greater expectations of improved results.”
Kelly Prior
Investment Manager in the Multi-manager team, Colombia Threadneedle Investments. Based in: London, UK
“Good become bad in February as stronger economic figures spooked the market out of its game of chicken with the Federal Reserve, which has maintained all along that it is going to hold its nerve — and rates — for the foreseeable future. The subsequent repricing in risk appetite Stateside rippled through Asia and emerging markets, while long-duration assets faltered. The Magellanes Value Investors European Equity fund was the best performer of the selection, while the TT Emerging Markets Unconstrained floundered. It feels like it has been a long year already, with the predictions of December a (inflation and earnings faltering, with recession looming) distant memory. Now, we believe it is the time for active to shine!”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“In February the performance of the portfolio was slightly positive, with European Equity funds being the best contributors, followed by US Equity funds, while our exposure to China equities was the worst detractor. Equity markets were broadly flat during the month, albeit volatile, with the main central banks (European and the Fed) keeping their hawkish tone, and data on inflation disappointing investors. Yields rose both in the US and Europe. We keep our allocation unchanged, preferring equities and credit to government bonds for the moment being.”
Richard Troue
Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“Last month I started to bring a little more balance to the portfolio with some tweaks to the UK investments. This month I’ve overhauled the global funds, introducing Jupiter Global Value, managed by Ben Whitmore, and reducing Lindsell Train Global Equity and Trojan Global Income. Whitmore’s contrarian investment philosophy and disciplined value-focused approach provide a good counterbalance to the other, growth-focused, global funds in the portfolio.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“Following equity markets’ strong rise in January we had a tough decision to make; take profits or increase our equity and fixed income allocations, reducing the cash buffer. With investors still over-bearish and equities now in positive momentum, we decided not to take profits and maintain our equity and fixed income positioning. Indeed, we went further, reintroducing a Japanese exposure, adding a holding of Fidelity Japan Value in the equity allocation. In the short term this may impact performance, but looking through the current uncertainties, over the long term, we expect this to add value.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“Equity markets started 2023 strongly, but the rise came to a halt in February. Throughout the month, we received strong key figures which removed much of the fear of an imminent recession. The flip-side is that strong key figures, together with figures that show that inflation is falling more slowly, mean that the central banks have to act harder to curb inflation. Thus, policy rates now seem likely to stay higher for longer. Better growth prospects must be weighed against the risk associated with the central banks having to raise interest rates more. This argues for maintaining a neutral stance in equities versus bonds. Risk premia continue to look most attractive in certain bond segments, namely European investment grade and emerging market sovereign bonds. Hence, we continue to recommend an overweight for these asset classes and an underweight for European government bonds. ”
Didier Chan-Voc-Chun
Head of Multi-Management and Fund Research at Union Bancaire Privée (UBP). Based in: London, UK
“Despite rising recessionary risks, we don’t expect the Fed or the European Central Bank to pause their rate-hiking cycles. Just as they had to price in a new interest rate regime in early 2022, amid fading hopes of inflation being transitory, markets are similarly beginning to recognise that the prospect of a soft landing for the economy is receding, and the risk of recession is rising. We maintained our equity allocation unchanged as we still believe that non-US equities are scoring better than US ones on both earnings and valuation metrics. Credit remains our preferred asset class within fixed income, through carry strategies.”
