COUTTS MULTI ASSET FUNDS GLOBAL
Coutts Global 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 and property.
third Quarter 2019
All strategies were more or less flat over the quarter, despite strong equity market performance, reflecting impact of the relative strength of the dollar.
This quarter we’ve moved some of our equity allocation out of the UK and into the US. This has been part of a general increase in quality assets in our portfolios as we take a more defensive position in the face of slower global growth. We still have confidence in larger UK companies, where valuations are attractive, and have retained exposure to this area of the market. This should help preserve our clients’ wealth while slower economic growth continues.
Central bank policy took a decisively supportive turn in the quarter, which should be beneficial for portfolios. The US Federal Reserve (Fed) reduced interest rates twice, the European Central Bank introduced a range of rate easing polices and the Bank of England signalled ‘lower for longer’ rates, and even the potential for rate cuts in some Brexit scenarios. This should be being positive for our equity exposure, as looser monetary policy typically leads to rising markets.
Our disciplined investment process and core investment principles underpin our decision making:
- Quality – We added to US equity, bringing our allocation up to neutral weight. US equities typically display higher quality characteristics and tend to be better placed to perform over different economic conditions.
- Macro-driven – Our ‘curve steepener’ position – which favours short-term bonds over long-term bonds – is based on our analysis of underlying economic trends. As the global economic cycle enters a slower phase after a period of extended growth, we expect to see central banks reduce base interest rates. This should lead to falling prices for longer-term bonds and rising prices for shorter-term bonds.
- Value and selectively contrarian – Given sterling’s attractive valuation, we recognise the potential for gains if the political climate improves. While we’ve reduced exposure to sterling-based assets recently in recognition of short-term volatility, we retain a modest preference on the basis of our contrarian principles.
Fund returns, after fees
(USD, Class B Acc*)
(USD, Class A Inc)
(USD, Class A, Inc)
|Rolling 12 Months:|
|sep 18 to sep 19||5.7%||3.5%||1.3%|
|sep 17 to sep 18
|sep 16 to sep 17||5.6%||12.7%||16.3%|
|sep 15 to sep 16||8.4%||6.5%||6.1%|
|sep 14 to sep 15||-1.6%||-3.3%||-4.7%|
|*Inc share class no longer priced for this fund.
||Source: Coutts/Thomson Datastream|
The big change to portfolios this month was a part-rotation out of UK equities into the US. Our UK positions have been very positive over the last 12 to 18 months, and there is an element of profit-taking in the move as we think returns have reached a plateau for now. In addition, we have been tilting portfolios towards more quality assets as we have detected signs of weakness in the global economy. It’s important to note that we’re still positive on growth, and our overall positioning is neutral in terms of equities versus bonds.
(Please note: not all fund additions will be relevant for every fund)