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
“Central bank tone revisions and rate hikes have contributed to lower equity multiples. Leading indicators suggest, for now, a mild recession in Europe and weak growth in the US. The Fed is trying to cool down the labour market and wage inflation. Earnings are at risk, with upward pressure on labour costs, but downward pressure on input costs. In this context, since the summer reduction of the exposure to risky assets, our overall asset allocation remains unchanged, with an underweight in European equities and a more neutral position in US equities.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“September saw a continuation of equity markets falling and interest rates surging. The main news has been the continuation of monetary policy tightening from central banks while macro data continues to support the expectation of slowing growth and high inflation, making European recessions more likely. The UK saw a sharp rise in local rates and a fall in the currency. In portfolios we have reduced the emerging markets underweight given recent performance and ahead of Chinese Communist Party congress.”
Jorge Velasco
Director of Investment Strategy, CaixaBank Private Banking. Based in: Madrid, Spain
“We maintain our strategic prudence positioning after a difficult September. We made small adjustments to the fixed income and equity portfolios that do not imply major changes in bias. We are also very defensive in fixed income, this month, we are adding a floating rate fund to our portfolio, thus further reducing our sensitivity to interest rates. We make a slight movement in equities, where we reduced the overweight in US equities and increased the weight in Europe due to slightly tighter valuations.”
Kelly Prior
Investment Manager in the Multi-manager team, Colombia Threadneedle Investments. Based in: London, UK
“Another month, another lurch down in risk asset prices. With inflation surprising and central banks acting tough, the repricing was to be expected. Asia and emerging markets were the most impacted as the dollar continued to strengthen, though it was again Berenberg European Smaller companies fund that performed the worst in our selection. On the flipside, the Jupiter UK Specialist Equity fund topped the table by being virtually flat. While this has been a deeply painful time to be involved in markets, it is also one of the most exciting on a forward-looking basis.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“The performance of the portfolio was deeply negative in September, following the strong sell-off on all markets, from government bonds to credit and equities, with no positive contributors. All risky assets reached new lows, on a mix of worries about aggressive hiking by central banks, uncoordinated fiscal policies in the UK and energy shortages scares, especially in Europe. Despite the dire performance of 2022, we still believe there is more value in equities and credit than in government bonds at the moment, so we keep our allocation unchanged.”
Richard Troue
Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“I’ve increased exposure to sterling investment-grade bonds again this month. They sold off in the wake of the UK’s disastrous ‘mini-budget’. The worst isn’t necessarily behind us, but at these levels I’m happy to add long-term exposure. I’ve selected Artemis Corporate Bond, managed by Stephen Snowden and Grace Le, and sold the remaining investment in BNY Real Return. It had been included to provide some shelter from high valuations, and with more value now on offer it seems an opportune time to rotate into attractive yields on sterling investment-grade bonds.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“There are continued signals that they interest rates will continue to rise as inflation remains elevated. We see no reason to reduce risk in portfolios, though we have made an alteration in our diversifying assets. Our commodities exposure had benefited from sterling’s weakness, so we sold it, taking profits. In its place we add an exposure to real assets such as infrastructure, renewable energy and selective real estate exposures, taking advantage of the recent sell off in these areas. This was through a recently launched internal fund of investment trusts.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“Yields rose sharply in September, and both bonds and equities fell. Interest rate markets are now pricing the sharp tightening in monetary policy announced by central banks. The uncertain risk picture argues for a neutral stance between equities and bonds. We take risks in the credit space than in the equity market. Yields have risen and credit spreads are high. However, it makes sense to start with a conservative approach by overweighting European Investment Grade bonds. While spreads may well rise further, a lot is already reflected in pricing.”
Didier Chan-Voc-Chun
Head of Multi-Management and Fund Research at Union Bancaire Privée (UBP). Based in: London, UK
“The summer generated a strong bounce back in many of the areas that had experienced the most determined selling earlier in the year. During July and up to mid-August, the market was quite optimistic on the hope that inflation pressures were peaking, but ultimately remarks at the Jackson Hole Economic Symposium dismissed the idea of a pivot to less-aggressive policy stance, dashing hopes that the end of the rate hike cycle was in sight. Most regions lagged behind North America as the region was faring a bit better than the rest on US dollar strength.”
