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Weekly Investment Update



How Coutts portfolios have performed so far this year and our views on the UK economy and Catalonia independence dispute.

2 min read

Coutts portfolios continue to perform

Coutts portfolios have turned in a strong performance so far this year. A typical balanced portfolio is up 6.1% year-to-date and top quartile compared to peers over one and three years.

Our portfolios are tilted modestly towards equities and we benefitted from the year’s equity market rally.

Meanwhile, gilts sold off in September after the Bank of England hinted at an upcoming interest rate hike, and our underweight position in gilts cushioned us from the fall.

UK economy slowing but still growing

UK economic growth remains sluggish. New car sales fell for the sixth month in a row in September, the construction industry contracted for the first time since the EU referendum and GDP growth looks likely to be 0.3% in Q3 – the same pace as a year earlier. This leaves the UK with the lowest growth in the G7 economies. 

Also, sterling slid to a four-week low against the dollar this week following Conservative party conference concerns.  

“In a typical balanced portfolio, our UK funds have outperformed the relevant benchmark – the MSCI UK index – by about 5.5%.”

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At Coutts, we have anticipated the current economic environment in the UK for some time and our portfolios are well positioned for it. Our preference for alternatives such as commercial property over low-performing gilts has been beneficial, for example.

The UK equity market has not been the best performing so far this year, but within our portfolios we have managed to add meaningful returns from it. In a typical balanced portfolio, our UK funds have outperformed the relevant benchmark – the MSCI UK index – by about 5.5%.

Tensions in Spain should not sour markets

Tensions elevated in the independence dispute between Spain and Catalonia at the end of last week, with Spain’s constitutional court suspending a Catalan parliament session planned for Monday to block an expected declaration of independence by Catalan president Carles Puigdemont.

We expect any wider economic impact to be minimal as any volatility should be isolated to local markets.

Coutts exposure to Spain is pretty small – the country counts for under 6% of our European equity exposure within a typical balanced portfolio. We therefore don’t see this as having a substantial impact on the performance of Coutts portfolios.

Coutts Investments

With unstinting focus on client objectives and capital preservation, Coutts Investments provide high-touch investment expertise that centres on diversified solutions and a service-led approach to portfolio management. Our investment process is as disciplined as it is creative – ensuring tailored solutions with robust results.