COUTTS MULTI ASSET FUNDS GLOBAL
QUARTERLY FOCUS
Coutts multi-asset funds are a range of global funds that aim to deliver attractive long-term returns by investing in a broad range of asset classes such as cash, bonds, equities, commodities and property.
Third Quarter 2017
Fund
PERFORMANCE
All strategies saw solid performance over the quarter, with our modest preference for equities supporting performance as global stocks rose. Our tactical positions in Europe, global technology and emerging markets boosted performance.
Dollar weakness benefitted portfolios, enhancing returns from non-dollar dominated assets. This was particularly beneficial for our European equity exposure. Our preference for Japan also contributed to performance, although this was less marked than in previous quarters.
On the bond side, our preference for corporate and financial credit continued to perform strongly in the current low volatility, low default environment of global growth. Our preference for peripheral countries in Europe within our government bond position continues to perform strongly as the eurozone strengthens. This quarter the Portuguese bond position was particularly strong following the country’s upgrade back to investment grade by one of the major rating agencies (+13% YTD).
Our disciplined investment process and core investment principles underpin our decision making:
- Macro-informed allocation – we continue to see synchronised global growth supporting risk assets and maintain a preference for equities and credit over low yielding government bonds. For example, earlier this year we added emerging market local currency debt to portfolios and funds which we saw as attractively valued for the level of yield available – and with the potential to benefit from local currencies appreciating against the US dollar.
- Quality – Our 30-stock global best ideas portfolio draws on innovative quantitative and tactical analysis to support our bottom-up fundamental research. We seek to identify companies that best reflect the tactical and strategic opportunities we have identified, in line with our core investment principles of quality and value.
- Diversification – the quarter has been characterised by solid performance across a number of sectors and regions. By making sure we have a diversified portfolio we’ve been able to tap into the different sources of return that drove markets in Q3.
| Fund returns, after fees | Defensive (USD, Class B Acc*) |
Balanced (USD, Class A Inc) |
Growth (USD, Class A, Inc) |
|---|---|---|---|
| Last Quarter | 3.0% | 1.8% | 3.9% |
| Rolling 12 Months: | |||
| End Sep 16 to end Sep 17 |
4.1% | 12.7% | 16.3% |
| End Sep 15 to end Sep 16 | 8.4% | 6.5% | 6.1% |
| End Sep 14 to end Sepl 15 | -1.5% | -3.3% | -4.7% |
| End Sep 13 to end Sep 14 | 5.6% | 7.4% | 8.7% |
| *Inc share class no longer priced for this fund. |
Source: Coutts/Thomson Datastream | ||
Past performance should not be taken as a guide to future performance.
The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.
Holdings and
Fund Update
This month we have maintained our allocations as we continue to have confidence in how our portfolios are positioned. Our modest preference for equities should continue to benefit from global growth while government bonds continue to look expensive, encouraging our low exposure to gilts in favour of corporate credit and alternative investments.
In July, we changed the way we get exposure to global equities by reducing our holding in our ‘Global 30’ basket of direct equities in favour of passive funds invested in global equity markets. This doesn’t reflect a fall in confidence in equities – our overall exposure to global equities as an asset class remains the same.
Nor have we lost any confidence in our Global 30 basket of shares – while the constituents change over time, the Global 30 exposure still represents our highest conviction beliefs.
However, we believe this change in approach provides greater flexibility when executing asset allocation decisions. Reducing the weighting to these individual stocks means we can retain our high-conviction positions and trade efficiently with minimal cost when we need to.
(Please note: not all fund additions will be relevant for all funds)
The value of investments and any income from them can go down as well as up, and you may not recover the amount of your original investment. Where an investment involves exposure to a foreign currency, changes in rates of exchange may cause the value of the investment, and the income from it, to go up or down.
In the case of some investments, they may be illiquid and there may be no recognised market for them and it may therefore be difficult for you to deal in them or obtain reliable information about their value or the extent of the risks to which they are exposed.
Investments in emerging markets are subject to certain special risks, which include, for example, a certain degree of political instability, relatively unpredictable financial market trends and economic growth patterns, a financial market that is still in the development stage and a weak economy.
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