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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.
 

First Quarter 2018

Fund

PERFORMANCE

The strong start to the year in January carried through the momentum from Q4 2017, with equities and commercial bonds performing very strongly. However, the sell-off in February – and continued volatility through March – led to muted performance across all strategies for the quarter.

The main positive contributors were emerging markets, with both equities and bonds providing a bulwark against falls elsewhere, and our technology equity theme.

Technology stocks fell in February, and were subject to further pressure in March, but their strong performance earlier in the quarter meant that they made a solid positive contribution over the period. In addition, our active stock selection in the tech sector means we have avoided the worst of the falls as we have a lower exposure to the stocks most affected by the bad newsflow.

Continued dollar weakness was also beneficial to these US-dollar denominated portfolios, over the quarter, boosting returns from non-dollar assets.

Our disciplined investment process and core investment principles underpin our decision making:

  • Macro-informed allocation – We continue to look beyond short-term noise to longer-term fundamentals. In our view, the outlook for equities over the course of this year remains broadly positive, albeit subject to larger price swings than last year. Although the momentum of economic growth may have peaked it remains above-trend. 
  • 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 – When markets are a little more ‘choppy’, maintaining a well-diversified portfolio is the best way to preserve investments. By making sure we have a diversified portfolio we’ve been able to tap into the different sources of return that continue to drive markets despite the increased volatility.
Fund returns, after fees

Defensive

(USD, Class B Acc*)

Balanced

(USD, Class A Inc)

Growth

(USD, Class A, Inc)

Last Quarter -1.2% -1.5% -1.7%
Rolling 12 Months:
End March 17 to end March 18
5.3% 8.6% 10.8%
End March 16 to end March 17 7.3% 11.7% 13.7%
End March 15 to end March 16 -3.8% -6.5% -7.8%
End March 14 to end March 15 7.0% 6.9% 6.7%
End March 13 to end March 14 3.2% 6.7% 10.4%
*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

We added to our holdings in the FTSE100 opportunistically in February when prices fell. Later in the quarter, we sold our position in UK real estate investment trusts (REITs). UK REITs have been underperforming the UK equity market since the start of 2018 and we believe the sector may struggle if inflation rises or if global growth cools. It is also more exposed to headline risk around Brexit developments.

We have maintained our modest preference for equities over bonds, given continuing global economic growth. Within international equities, Europe and Japan remain our preferred regions for now, based on attractive valuations and solid earnings growth potential, which should become more visible in the upcoming Q1 earnings announcements.

We sold our allocation to global high-yield bonds in March as spreads with investment grade bonds have narrowed and we see limited potential for gains. However, we have retained our holdings in financial credit, one of our investment themes. In the current climate of rising inflation and interest rates we continue to prefer commercial debt over government bonds.

(Please note: not all fund additions will be relevant for every fund)

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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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