Benjamin Hamidi
Senior portfolio manager, ABN AMRO Investment Solutions. Based in: Paris, France
“The growth outlook remains sufficiently robust for now and growth is slowing toward its potential level. Earnings publications are generally above expectations, while some economic data have shown a greater slowdown than expected. Production delays and bad news (energy prices, Chinese deleveraging) have so far had an overall moderate impact on the market with temporary spikes in volatility and limited pullbacks. The high level of liquidity in household balance sheets, the still very accommodative monetary conditions and investment may also support the equity market. In this context, the portfolio is unchanged, with a preference for equities over fixed income and a neutral position for style allocation.”
Luca Dal Mas
Senior fund analyst, Aviva Investors. Based in: London, UK
“In Europe, the latest round of flash PMI showed a dip in momentum, although the overall message was one of continuing growth in both manufacturing and services. The inflation impulse has intensified in the past few weeks. We continue to believe that much of the increases will reverse over the course of the next year as energy prices stabilise or fall back. Equity markets globally were not impacted by these minor negative economic data points and performed strongly, with US equities leading the way. In portfolios we have taken the opportunity to marginally adjust upward our exposure to US and Japanese stocks to benefit from a potential year-end rally.”
Kelly Prior
Investment Manager in the Multi-manager team, BMO Global Asset Management. Based in: London, UK
“Positive surprises from companies in their earnings announcement this month overshadowed any mixed messages from global economic data driving equities, with the exception of Japan. The US market led with Findlay Park American being the best performer of the selection, while the Eastspring Investment Dynamic Japan fund was anything but, echoing the returns of its base market. Bond markets continued to worry about the threat of inflation, with the messaging from central banks very much signalling an end to the ultra-easy policies in response. We remain cautious of market levels with the punch bowl being removed from the party, though remain hopeful there will be no tantrum!”
Javier Estrada
Chief Investment Officer, Private Banking, CaixaBank. Based in: Madrid, Spain
“We maintained weights between asset types through the month. Half of our portfolio is currently in equities, with the rest divided between fixed-income and alternatives. Our fixed-income strategy remains focused on low-duration and flexible options, aiming to minimise last month’s movement in interest rates. Credit wise, financials and covered bonds are our main positions. Alternatives continues to be quite significant in our portfolio as they helped keep volatility low. On the equity side, we are biased in favor of Europe versus Asia and North America. Sector-wise, healthcare, climate change and consumer discretionary are our main sectors exposure.”
Silvia Tenconi
Multimanager Investments & Unit Linked, Eurizon Capital SGR. Based in: Milan, Italy
“In October equity markets resumed their rally, after the correction experienced in September. Accordingly, the performance of the portfolio was extremely positive. Main contributors were Wellington US Research and Vanguard US Opportunities. Following its own dynamics, the Japanese market ended the month lower, and Baillie Gifford Japanese Equity was the only detractor in October. We are starting to look at emerging markets with some interest, given their lacklustre performance and the fact that some stimulus is needed in China, yet we prefer to wait for things to happen before investing in this theme.”
Richard Troue
Fund Manager, Hargreaves Lansdown Fund Managers. Based in: Bristol, UK
“The inflation narrative took centre stage again in October, with break-evens spiking up and short-dated bond yields rising. Stock markets seemed unfazed, which raised the question of whether stock markets are being over-optimistic. History tells us that bond markets are usually more realistic. Equity investors usually get an opportunity to pay attention to what the bond market is telling them, though they don’t often take it. Yields and breakevens have since come down. Even so, it’s getting to the point where I’d be tempted to use future stock market strength to rotate into total returns funds, where there’s potential for shelter during a setback and some protection from inflation.”
Paul Hookway,
Senior Fund Analyst, Kleinwort Hambros. Based in: London, UK
“Equity markets rebounded from the September sell off, led by the S&P 500, though Asian, emerging and Japanese markets all declined. Given the continued strength of the US market, we are considering reducing our underweight exposure to it — the tough question is where we finance it from. There are a few candidates, but as yet we are undecided, so this will be resolved in November. We have reduced the duration in our government bond allocation, as we see rates rising over the coming months. In the UK, rates were held, but we expect them to rise shortly.”
Antti Saari
Chief Investment Strategist, Nordea investments. Based in: Copenhagen, Denmark
“Even though we have not reached the end of the reporting season, third-quarter earnings have once again exceeded analyst estimates by a wide margin. Private consumption will remain elevated during the coming year, keeping growth above the average of the past decade. As a result, investors are betting that monetary policy will be tightened sooner than previously expected and will therefore become less accommodative going forward. At this stage of the business cycle, however, we find it likely that a less accommodative monetary policy is mainly a concern for bond returns in the near term. Moreover, with the solid macro backdrop, we think the earnings outlook will continue to improve, and keep an overweight of equities. In the bond space, we continue to reach for extra return in European investment grade while underweighting government bonds, as rising yields are likely to hurt the latter more than the former. Overall, however, the return outlook from bonds is very modest going forward.”
Marco Pabst
Chief Investment Officer London at Union Bancaire Privée (UBP). Based in: London, UK
“October was a strong month for world equity markets, which gained more than 5%. Rising inflation, continued labour shortages and the ongoing tapering debate put pressure on fixed income, which lost 0.3% last month. Growth equities in developed markets outperformed strongly amid signs of an economic slowdown, which weighed further on cyclical names. Value-oriented funds, as well as emerging market exposure in the portfolio, underperformed the MSCI World last month, but they are expected to recover in due course as China is likely to ease financial conditions substantially soon.”
