Fund selection - March 2021

Giovanni Becchere 

Head of Multi-Assets, ABN AMRO Investment Solutions. Based in: Paris, France

“We continue to prefer stocks to bonds as we expect a continuation of the recovery. We believe emerging countries are benefiting from a combination of favourable factors: catching-up in foreign trade, a potentially weaker dollar, rising commodity prices and low financing costs. Accordingly we decide to add direct exposure to global emerging equities by adding the AAF Numeric Emerging Equities — a strategy based on a fundamentally driven quantitative and systematic process. Still in the Asian and Emerging bucket, the Fidelity Asia Focus completed its transition to become Fidelity Asia Sustainable Equity. We see this change as a positive factor as it goes in the direction of increasing the sustainability aspect of our portfolio, while having an extremely limited impact in terms of investment: the portfolio manager was already paying close attention to sustainability and there is no substantial change in the search for quality growth names with leading management teams.”

Luca Dal Mas

Senior fund analyst, Aviva Investors. Based in: London, UK

“The main news in financial markets this month was the continued increase in bond yields, the pace of which has started to unsettle parts of the market, most notably emerging equities and technology names. The economy showed further supportive signs. In the US, gross domestic product increased more than expected in Q4 and retail sales also soared in January, after three months of declines. The incoming US fiscal stimulus package should provide further support to the recovering economy. Elsewhere, surveys pointing to very strong manufacturing expansion globally, though services in Europe continue to disappoint. In portfolios, we have maintained our stance since we believe we are well positioned for the current market environment.”

Kelly Prior

Investment Manager in the Multi-manager team, BMO Global Asset Management. Based in: London, UK

“The volatility of January was repeated in February, albeit with different drivers. Strong returns early in the month reversed as bond markets repriced in response to a more positive economic outlook and central bank rhetoric suggesting markets would be allowed to “run hot”. The speed of the move spooked risk assets, more so than the outright level of government debt which remains very low. The ensuing run in more economically sensitive and value names resulted in the UK being the best performing market, with Asia and Emerging markets suffering as the dollar bounced, the Eastspring Investment Japan Dynamic was the best performer of the selection with the M&G Global Macro fund trailing.”

Javier Estrada

Chief Investment Officer, Private Banking, CaixaBank. Based in: Madrid, Spain

“We continue with a balanced portfolio between equities, fixed income and alternatives. In fixed income, due to the recent moves in the long part of the curve, we continue to favour short and flexible strategies over long durations. On the equity side, cyclicality, value and small caps remain our core, and our weights in Europe and Asia are working well so far, compared with the US. We take profit in materials after a strong performance in the beginning of the year, moving into infrastructure, seeking long predictable cash flows, with an inflation hedge. We maintain a significant presence in the ESG strategies, both equity and fixed income, we believe will continue to outperform.”

Gayathri Devarakonda

Fund Research Analyst, Deutsche Bank Wealth Management. Based in: London, UK

“Global markets started the month on a positive note as investors positioned themselves for strong economic recovery. Speedy vaccination programmes in UK and US indicated large-scale reopening of the economies in the second half of the year. Global equity markets saw solid momentum in the first part of February. However, except for financials and energy names, most segments of the market gave up gains as yields rose towards the end of the month. On the fixed-income side, sovereign bonds on both sides of the Atlantic fell sharply. February was a good month for oil with both Brent and WTI registering strong gains. Our gold and government bond exposure hurt the performance of the portfolio. We made no changes to the portfolio.”

Silvia Tenconi

Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy

“In February the performance of the portfolio was positive once again, with Robeco US Select Opportunities, Wellington US Research, Vanguard US Opportunities and Invesco Pan European Equity being the biggest contributors. There were no detractors. We are introducing two new funds, Ninety-One European Equity and Fidelity World, and selling out of JPMorgan Europe Equity Plus and M&G Global Dividend. Albeit we think interest rates will go up from now on, this won’t be enough to scare equity investors, in our opinion, so we keep our allocation to equities and high yield bonds unchanged.”

Richard Troue 

Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK

“If investors were hoping for a calmer 2021 in markets, they might be disappointed. Bonds have had their worst start to a year for a long time. Last year’s winning stocks are underperforming, and those with the potential to do better if growth and inflation pick up have been winning. Overall I think the rotation and broadening of market leadership is healthy. And it should benefit this portfolio, which aims to be diversified by assets, geography, sector, and fund manager style. This should lead to fewer sleepless nights than trying to time markets that seem to becoming increasingly volatile.”

Paul Hookway, 

Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK

“We had a lot to think about over the last month. Front and centre were the sharp rises in government bond yields across most western economies as investors took notice of rising commodity prices, increasing consumer confidence and further stimulus, all leading to a step up in inflation and at some stage interest rates. Growth stocks suffered as the potential for higher rates were factored into their DCF-based valuations, many sold off as investors switched into more cyclical parts of the market, which should benefit as economies recover over the coming months. After our changes last month, we paused to digest this change of direction in markets, to assess the need to adjust our positioning in the comings months.”

Antti Saari

Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark

“Risky assets continued their rally in February, taking heed from continued positive macro data and remarkably strong earnings delivery. Indeed, revenues beat estimates by the largest margin on record in the US, making for a third quarter in a row when actual earnings have blown past estimates by wider margins than on pre-2020 record. This stellar performance coupled with continued signs of improvement on the macro front particularly in the US keep us confident that earnings estimates for this year and next still have to be upgraded going forward. As the economic outlook improves, yields and inflation expectations also rise. This is not unusual and is in fact welcome as long as the earnings outlook improves at the same time. However, rising yields do hamper performance on the fixed income side. Hence, we continue to recommend an overweight in equities.”