Fund manager update

  • Fund manager update
  • 5 minute read

By Matthew Stanesby

Macro backdrop

Global Equity: +1.9%

UK Equity: +2.2%

UK Gilts: -0.9%

UK Corps: +0.1%

Managed Funds

  • All strategies were ahead of both their IA sectors and Strategic Asset Allocations (SAAs).
  • Equity – Our UK managers lagged the wider peer group, but were more than offset by our US and Emerging Market managers where we saw excellent returns on both an absolute and relative basis (US - Baillie Gifford +8.2% and Emerging Markets - RWC +3.3%).
  • Fixed income – Strategic bond funds delivered +0.9% on average. Our Nomura fund delivered a very strong +1.4% over the month.
  • Alternatives – Infrastructure returned +2.2% on average. BMO Global Equity Market Neutral had a difficult month delivering -10.1%.

Managed review

There were good returns from all four Managed Funds in both absolute and relative terms during February.

Significant drivers of return were from the US, Emerging Markets, and Asia within equities; and credit exposure in fixed income. Infrastructure also contributed positively across all portfolios within our alternatives allocation. We had strong fund-specific performance from the Baillie Gifford American (+8.2%), Legg Mason Royce US Small Cap Opportunities (+3.9%), and RWC Global Emerging Markets (+3.3%). Each of these funds typically does well in rising markets, but it was heartening to see nonetheless.

Areas that detracted from performance were government bonds and gold. In addition, the BMO Global Market Neutral fund which we hold in CDF Managed Balanced and CDF Managed Growth.

Main activity

We maintain our small overweight to equity, and continue to favour the US, Europe, and Emerging Markets. Our least favoured equity region from a relative viewpoint is the UK, where we see continued uncertainty around Brexit, creating an investment headwind. That said, we still have a reasonable absolute allocation as it represents our investors domestic market.

Manager of the month: RWC Global Emerging Markets

The RWC Global Emerging Markets captures exposure to growth companies in Emerging Markets, and does this through a combination of fundamental company analysis and macro political and economic viewpoints. The team at RWC, who are based across three locations (London, Singapore, and Miami), believe that it is important to properly consider the political and economic risks in emerging economies, as well as the opportunities that factors like reform or democratic change can present. In addition to the strength of the team and its track record, we also like the fact that the fund will typically have up to around 20% exposure to so-called ‘frontier’ markets; these are the Emerging Markets of the future and currently include countries like Vietnam, Bangladesh, and Nigeria. Being growth-orientated, the fund will often capture significant upside when Emerging Markets do well; the flipside being that underperformance can occur when Emerging Markets sell-off.

Close Managed Funds discrete performance as at 28 February 2019

 

YTD

2018

2017

2016

2015

2014

Close Managed Income

3.1%

-4.0%

6.4%

9.1%

4.5%

6.4%

IA £ 20-60% Equity

3.7%

-5.1%

7.2%

10.3%

1.2%

4.9%

Close Managed Conservative

3.4%

-4.3%

7.0%

8.6%

4.2%

5.7%

IA £ 20-60% Equity

3.7%

-5.1%

7.2%

10.3%

1.2%

4.8%

Close Managed Balanced

5.0%

-5.1%

10.8%

10.4%

4.7%

5.5%

IA £ 40-85% Equity

4.8%

-6.1%

10.0%

12.9%

2.7%

4.9%

Close Managed Growth

5.6%

-6.0%

14.3%

10.3%

6.3%

5.6%

IA £ Flexible Investment

5.0%

-6.7%

11.2%

13.8%

2.0%

4.9%

Source: FE Analytics as at 14.03.2019; all are X Acc share classes; performance is total returns, net of fees with dividends reinvested. 

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Important information
This article is only intended for use by UK investment professionals and should not be distributed to or relied upon by retail clients.  The value of investments will go up and down and clients may get back less money than they invested. Past performance is not a reliable indicator of future returns. The information contained in this document is believed to be correct but cannot be guaranteed. Opinions constitute our judgment as at the date shown and are subject to change without notice. This document is not intended as an offer or solicitation to buy or sell securities, nor does it constitute a personal recommendation.

Please be aware, the value of investments can fall as well as rise and that past performance is not a reliable indicator of future returns and you could get back less than invested. Click here to understand the risks associated with investing. Calls to any number may be recorded for training and monitoring purposes. This site uses Cookies.