Hero_Intermediaries

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.
 

Fourth Quarter 2018

Fund

PERFORMANCE

All funds fell in the fourth quarter as markets continued to be challenged by increased friction between the US and China, concerns about US interest rates, the direction of the US dollar, Brexit and the Italian budget crisis.

However, despite a deceleration in global economic growth, it remains above-trend generally, particularly in the US. Economic indicators show healthy labour markets, burgeoning wage growth and robust corporate profits – all of which should support equity markets in the near future.

To reflect the slowing pace of growth, in December we lowered the overall level of risk in our funds by reducing our exposure to European equity and financial credit and holding the proceeds in cash. We are still modestly tilted towards risk assets, but recently focused our exposure in more defensive areas. This will reduce the impact of volatility on performance and give us a reserve of cash to take advantage of opportunities as they arise. 

US equities suffered in relation to other developed markets over the quarter, with the S&P 500 returning -13.5%. This has clearly been painful for investors, but continued US economic strength should support equity prices in the longer term.

The outlook for Europe has softened over 2018 following the strong economic growth seen the previous year. Because of this we reduced our allocation to European shares and added to US equities earlier this year, which benefitted performance.

We have gradually increased our investment in government bonds over the year, which should help cushion our portfolios from the worst effects of any further equity market volatility.

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

  • Diversification – Our decision to increase our investment in government bonds is a good example of the importance we place on having a diversified portfolio. They are attractive at times of greater uncertainty as they provide some good hedging characteristics. Not having all our eggs in one basket enhances the potential for performance while helping to reduce risk.
  • Value and selectively contrarian – The solid contribution of our FTSE 100 holdings shows the benefit of taking the contrarian view. While returns have been largely driven by the effect of a weaker sterling, the FTSE 100 includes a large number of global companies with currently strong earnings. We believe they will continue to deliver despite the present uncertainty surrounding the UK.
  • Macro-informed asset allocation – While the US-China trade war is a cause for concern, in our view the tariffs so far should not have a huge impact on the US economy or substantially disrupt worldwide growth. The American economy continues to expand, US exports to China represent less than 10% of its total exports – according to the Office of the US Trade Representative – and we think pragmatism will prevail in the dispute.

Fund returns, after fees

Defensive

(USD, Class B Acc*)

Balanced

(USD, Class A Inc)

Growth

(USD, Class A, Inc)

Last Quarter -3.8% -8.0% -11.4%
Rolling 12 Months:
End Dec 17 to end Dec 18 -4.2% -6.8% -8.9%
End Dec 16 to end Dec 17 9.3% 15.7% 19.7%
End Dec 15 to end Dec 16 5.6% 4.6% 3.8%
End Dec 14 to end Dec 15 -1.1% -1.4% -1.1%
End Dec 13 to end Dec 14 4.7% 4.5% 4.0%
*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

In December we increased the amount of cash we hold by reducing our exposure to European equity and financial credit. This should reduce the impact of volatility on performance and give us a reserve of cash to take advantage of opportunities as they arise. 

Also in December, we reduced our investment in alternatives, again in favour of cash. Given the current, fast-changing market conditions, we no longer see alternative strategies providing enough protection against the potentially negative impact of more volatile equity markets.

We still think government bond valuations are expensive, but they provide good diversification when there is greater uncertainty in markets. We therefore increased our holdings in US government bonds in 2018.

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

Back To Top

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.

Latest News

and Insights

  • “We see continued, above-trend growth…”

    • Markets
    • Europe
    • US
    • Coutts Invest
    • Economy
    • Investments
    • CMAF
    • Brexit
    • Equities
    • Property
    • Insight
    • Emerging Markets
    • London
    • Tailored Portfolio Service
    • Politics
    • Dollar
    • UK
    17-Dec-2018
    weekly update washington trade What our investment experts recently said to clients about the risks and opportunities currently out there in markets.
  • Soaring school fees - will your money make the grade?

    • Entertainment
    • Economy
    • Investments
    • Banking
    • Travel
    • Commercial
    • Media
    • Loyalty
    • Hotels
    • Dining
    • Property
    • Insight
    • London
    • Restaurant
    • UK
    28-Nov-2018
    Coutts Luxury Price Index The rising price of a private education comes under the spotlight in the latest Coutts Luxury Price Index.
  • Will cheaper oil grease the wheels of global growth?

    • Tax
    • Europe
    • US
    • Economy
    • Investments
    • Trends
    • Energy
    • Interest Rates
    • Trump
    • Commodities
    • Insight
    • London
    • Politics
    • Dollar
    • UK
    03-Dec-2018
    weekly update washington trade Oil prices are down by one-third since the highs of October. While it may mean cheaper petrol at the pump, what does it mean for your investments?