Giovanni Becchere
Head of Multi-Assets, ABN AMRO Investment Solutions. Based in: Paris, France
“We believe the recent turbulences in financial markets, triggered by the surge in coronavirus infections in Europe and South Korea, will prove to be a temporary shock. Our view of the global economy remains unchanged and we expect investor behavior in the future to be similar to what we have seen in 2019, when markets were rising driven by lower interest rates and the fact that there is no alternative to equities. This might prove to be a good buying opportunity but we acknowledge the possibility of a more negative scenario where the impact will prove to be deeper and longer, leading to an extended period of uncertainty. Therefore, for the time being, we decide to stick to the current positioning which is already showing a preference for equity versus bonds.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“Markets started the month ignoring warning signals from safe-haven assets, with global equities trading near record highs, clinging to a narrative of a quick rebound once the coronavirus episode fades. This optimism was dashed once it became clear that the chances of a global pandemic were rising, with cases in Korea and Italy soaring and significant supply chain disruption. These events pushed Chinese manufacturing PMI data to a record low while global equities experienced their worst weekly performance since the global financial crisis. From a portfolio perspective, we used the opportunity to marginally increase our exposure to European and Japanese stocks.”
Kelly Prior
Investment Manager in the Multi-manager team, BMO Global Asset Management. Based in: London, UK
“Having spent much of 2019 hitting record highs, markets sobered up somewhat in February and started setting a number of new records for largest falls in a week, and lowest levels for bond yields. The global spread of Covid-19 changed everything and the longer term implications and how to price them caused a spike in volatility that looks set to remain with us for the foreseeable future. While all equity markets fell on the month, the strongest market was Asia ironically, with the UK falling the most and this was largely due to the weakening of sterling. The Eastspring Japan Dynamic fund was the worst performer of the selection, with the M&G (LUX) Global Macro Bond making ground as its recent move into longer duration assets proved timely.”
Gayathri Devarakonda
Fund Research Analyst, Deutsche Bank Wealth Management. Based in: London, UK
“Developed markets, having shrugged off any virus outbreak concerns in the first two weeks, saw one of the biggest weekly declines since the global financial crisis in the last week of the month. Emerging markets did better as investors were concerned about increasing cases of infections outside Asia. The portfolio did reasonably well with the help of sovereign bonds and gold exposure. Our EM equities exposure suffered less than our developed markets exposure, while gold continued to be the best performing holding in the portfolio. We made no changes.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“In February. the performance of the portfolio was negative. All our equity funds were in the red. The coronavirus effect impacted risky assets, as contagion spread in Europe and in many other countries outside China. We believe the proactive attitude of central banks will bring positive developments for risky assets and the strong measures enacted by governments to contain the contagion will succeed in bringing back confidence. The virus is not changing our positive attitude towards developed markets and we add some US and European equities to the portfolio at appealing valuations.”
Richard Troue
Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“In February, investors finally cottoned on to how severe the impact of Covid-19 could be on the global economy. Supply chains are at risk of significant disruption. The more people’s everyday lives are disrupted and their movement restricted, the lower demand is likely to be. That’s a significant double-whammy, coming on top of a near 11-year bull market and, in some cases, high starting valuations. That’s quite a combination. Given all this, and the uncertainty surrounding the spread of Covid-19, it seems a little early to buy the dips. But this could change rapidly depending on how central banks react.”
Bernard Aybran
CIO Multi-management, Invesco. Based in: Paris, France
“A couple of arbitrages have been performed over February on the balanced portfolio, while keeping the overall asset allocation unchanged. Broadly speaking, the index-tracking exposure has been slightly trimmed in order to diversify the portfolio some more on Asia, where stockpicking can outperform, in particular in times of high market volatility. Hence, some Nasdaq exposure has been reduced to fund an increase of Emerging Asia. On the bond side, the arbitrage has been done between two actively managed funds, on the basis that high yield exposure did not have much more return to give, hence we allocate some more to short duration.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“February started well, but coronavirus soon turned sentiment negative. This will impact GDP, but clearly not to the extent markets priced in. The major concern for us was the speed markets dropped, 10 per cent in six days. The fastest on record, the second fastest was Q4, 2018, a trend that has been developing over recent years. We see many factors driving this, which are unlikely to diminish. We must be prepared for swings of this magnitude in markets to occur more often going forward and be ready to exploit the opportunities they offer. Not surprisingly we made no changes to the portfolio.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“We reduce equities to neutral in light of the recent corona-induced market turbulence and increased uncertainty. At the same time, we note that many clients will need to rebalance up, buying equities to reach their target allocations. Markets will remain nervous for a while, and investors will have to balance between short-term weakness in both earnings and economic data and signs of a rebound later on. As the extraordinary containment measures abate, the economy is likely to rebound, which is why we do not think one should be overly negative particularly after the recent, significant sell-off. Moreover, the pressure on the markets has left risk premia quite attractive and positions many risky assets for good performance once the horizon clears. At the same time, we lift North America to overweight and reduce Japan to underweight within equity regions.”
