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 mild recession scenario in 2023 seems to have already been priced in. The closer we get to the central bank pivots, the less uncertainty there is about the evolution of the short part of the yield curve. An important source of risk is the extent to which bank and non-bank lenders are tightening credit and raising borrowing costs, and how that will weigh on economic performance. The risk of a credit tightening now appears to be greater than the risk of inflation. In this context, we are still targeting a moderate active risk with a contained duration. The global asset allocation remains unchanged, with a slight overweight in Emerging markets.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“Chinese gross domestic product data exceeded expectations, with strong retail sales and a drop in unemployment as the Covid reopening and confidence gain momentum. In the US, output rose at the sharpest pace for almost a year, with solid growth in activity across both the manufacturing and service sectors. Manufacturing has slowed considerably since the end of the reopening mini-boom, but the resiliency in services has so far postponed any recession in developed economies. Equity markets have recovered after the March weakness driven by issues in the banking sector. Following this stabilisation, we have decided to add back exposure to US and European 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. We have made a single change in the portfolio at the fund level —we maintain exposure to the climate change theme, but with a new fund, Templeton Global Climate Change. This offers more attractive valuations and greater weight in Europe behind the change. For the time being, we are maintaining our exposure to subordinated financial debt with the Lazard fund.”
Kelly Prior
Investment Manager in the Multi-manager team, Colombia Threadneedle Investments. Based in: London, UK
“It was a comparably quiet month for headlines as earnings season took centre stage in the latter weeks of April. It was too early to see the impact of March’s banking woes in announcements, but there was a positive tone overall in broad summary. Higher-than-expected inflation in the UK surprised all, which consequently caused sterling to rally. While growth out of China surprised on the upside, Asia overall faltered as the prospects for slowing global fortunes proved too much of a headwind as a counter. All in all, it was a very mixed month for returns. The UK made good ground with the Mirabaud UK Equity Alpha profiting suitably at the top of the table. Conversely, the Spyglass US growth fund faltered, though it was Asia as a region that disappointed the most in the month.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“In April, the performance of the portfolio was flat, with Wellington Strategic European Equity, Eleva European Selection and Vontobel US Equity being the best contributors, while Lyxor MSCI China UCITS ETF and Invesco Asian Equity detracted the most. Our view on China is still positive, but it’s fair to say that this position is not working well since we initiated it. The Fed is coming close to a pause in rate hikes, while the economy seems to be slowing. We’re monitoring the situation closely, as implications for markets will be relevant.”
Richard Troue
Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“The portfolio’s total return funds have provided stability when markets have been turbulent in recent years, and I saw them as a useful addition to the portfolio when bond yields were low. As bond yields have risen, I’ve rotated more into fixed interest, particularly investment grade bonds. That continues this month with the addition of BlueBay Global Investment Grade Corporate Bond, which offers sterling-hedged exposure to global corporates from an experienced team aiming to add value through credit selection. This increases the portfolio’s fixed interest exposure, but it remains well diversified across investment grade, high yield, and government debt.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“Equity markets continue to rally from the end of March, recovering declines driven by the failure of three small-to-mid sized banks in the US. Expectations that rates were at or near their peak was a welcome tailwind for investors. We made no changes to the portfolio, seeing no justification for changing our broad allocation or implementation from the macro inputs we monitor. Looking at the inversion of yield curves and the ongoing concerns over the US banking sector, central banks are going will struggle to justify further rate increases. The failure of PacWest at the start of May confirms that the issues have not ended; perhaps the Fed’s May 0.25% rate hike will be its last.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“After the rebound in late March, stock markets were calmer in April as concerns on the health of the banking sector continued to abate.Economic activity is proving better than expected in Europe and China, but there are some signs that the US is about to slow down. Our base case is still a relatively mild slowdown in the US, but uncertainty remains. We therefore keep a neutral weighting between equities and bonds, but in equities we recommend investors to lift emerging market stocks to an overweight and underweight the US. Moreover, we continue to find good opportunities within the bond markets where we are overweight emerging markets bonds and European investment grade bonds, and underweight in government bonds.”
Didier Chan-Voc-Chun
Head of Multi-Management and Fund Research at Union Bancaire Privée (UBP). Based in: London, UK
“Global equities and bonds were flat in April as markets digested the global liquidity injections following the crisis in the US banking sector and Switzerland’s orchestrated acquisition of Credit Suisse by UBS. Signs of credit tightening are emerging in the US banking system, driven by annualised contractions in both commercial and industrial lending, and commercial real estate lending on par with the pace seen during the global financial crisis. Admittedly, it remains to be seen whether this hesitancy will persist and spread to consumer lending. We are maintaining our selective stance on quality equities and have not made any major changes to our portfolios.”
