Giovanni Becchere
Head of Multi-Assets, ABN AMRO Investment Solutions. Based in: Paris, France
“Market behaviour over the past few months has been characterised by higher volatility and erratic movements. This is the result of uncertainty related to the trade dispute between the US and China, fears regarding economic growth and the impact of these and other influences on future corporate earnings. As 2019 begins, we continue to favour stocks over bonds. The stance in favour of equities is based on factors that includes the expectation for lower, but continued, economic growth, a low risk of recession and attractive valuations. In order to increase the diversification in the equity component we reduce exposure to the US and Europe and increase allocation to emerging equities by adding the AA MMF Numeric Emerging Equities fund.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“Last year was challenging for investors, particularly during the first and last quarters. Stockmarkets had one of the worst Christmas Eves on record, with all major markets falling and a strong flight to quality. While economic growth in the US was more sustained, global economic growth slowed, with Europe losing steam. In addition, weak earnings and analysts’ overly optimistic expectations led us to change our relative equity preferences. We have reduced European equities in favour of emerging markets, which are supported by a meaningful valuation adjustment and the easing of trading tensions after the G20 meeting.”
Gary Potter and Rob Burdett
Co-heads of multi-manager, BMO Global Asset Management. Based in: London, UK
“The final month of 2018 bought with it erratic market movements, particularly in the final days. While the US Federal Reserve raised interest rates as expected, the adjoining statement suggested a more cautious path going forward, suggesting less certainty in the growth trajectory of the US economy. A rush to the safety of bonds, followed by year end book tidying in thin markets produced exaggerated movements. The Schroders ISF Japanese Opportunities fund was the worst performer of the selection as losses were compounded by currency moves which saw the euro weaken relative to the yen. The M&G Global Macro Bond and Merian UK Specialist Equity funds were equal first, scraping a positive return. As we look forward into 2019 we feel sentiment is cautious and expect volatility to continue.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“In December the performance of the portfolio was negative. There were no positive contributors, as pretty much all risky assets fell. The biggest detractors were Vanguard US Opportunities and Robeco US Select Opportunities. We decided to switch from Carmignac Securité and into BlackRock Fixed Income Strategies, a flexible bond fund focused on Europe. From an asset allocation perspective, we are positive on equities and still prefer to hold no meaningful duration or credit exposure, but that may change in the coming months, due to the widening of spreads and the rise in interest rates.”
Jean-Marie Piriou
Head of quantitative analysis, FundQuest Advisor, BNP Paribas Group. Based in: Paris, France
“In this higher volatility environment, we opted for a more defensive asset allocation stance and reshuffled the equity portion of the portfolio. The funds that demonstrate a more aggressive profile, notably the US growth style and high yield bonds, have been tactically trimmed in favour of the fixed income funds. In this space we preferred European and global bonds to US fixed income. Currency exposure has been changed to move further from US dollar dominance, to euro.”
Lee Gardhouse
Chief Investment Officer, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“The phrase ‘May you live in interesting times’ works for me when it comes to markets. It is a curse dressed up as a blessing but in many ways when things go wrong this is a time of opportunity for active investors. Unlike its boring 2017 sibling the 2018 market was far more interesting. As we start 2019 a number of equity markets have moved back into value territory and even the US is not so abhorrently expensive. In addition, a number of bond markets have shown signs of rewarding investors with real yields. So I say bring it on 2019. Hopefully it is going to be interesting.”
Bernard Aybran
CIO Multi-management, Invesco. Based in: Paris, France
“Two changes have been performed on the balanced portfolio during December, both on the basis of the fund managers’ styles, leaving the asset allocation unchanged. On the equity side, one long-held Pan-European portfolio has been replaced as it had become too close to the index. The proceeds have been re-invested in another, more actively managed, quality-oriented European equity fund. On the fixed income side, a discretionary global bond fund has been increased at the expense of another one, more euro-focused. The only asset allocation move has been an addition to the Emerging debt, at the expense of high yield.”
Paul Hookway
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“December was a truly horrible month for investors, with the S&P 500 only just avoiding bear market territory by a few basis points. Our US bias turned to a headwind and our performance suffered. While many of our managers suffered in the risk market we decided not to make any implementation changes based on such a short time period. However, we did increase our cash weight by 4 per cent. Half came from Algebris together with modest reductions in the European and Japanese equity positions. This will help reduce the overall level of risk in the portfolio and increase downside protection.”
Lea Vaisalo
Chief Portfolio Manager, Nordea investments. Based in: Copenhagen, Denmark
“The ‘tug of war’ continued in December and Q4 of 2018 goes down as one of the worst quarters in a long time. Markets were spooked by a decelerating economy, coupled with worries over less liquidity in the wake of tighter monetary policy and shrinking central bank balance sheets. While we lean to the view that this is still a correction, we cannot dismiss the increasing risks and therefore lower equities to neutral weight. Within equities, we recommend an overweight in broad emerging markets due to their strong earnings outlook and attractive valuation. Europe, meanwhile, remains underweight given the heightened political and economic risks. Sector-wise, we recommend keeping the IT overweight as the sector has a strong structural backdrop. Within fixed income, we keep the underweight in high-yield bonds versus government bonds weighing and within investment grade, we recommend investors to favour European bonds compared to the US, which appear less attractive due to their longer interest rate duration.”
