COUTTS MULTI ASSET FUNDS UK
Coutts multi-asset funds are a range of UK-biased 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
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.
The main positive contributors over the quarter 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.
The main negative contributor was UK equity, which had its worst quartile performance since Q3 2011, although all risk assets struggled over the quarter.
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 and believe 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 (GBP Class A - distributing)||Defensive||Balanced||Growth||Equity Growth|
|Rolling 12 Months:|
|End march 17 to end march 18||1.0%||1.9%||1.9%||2.0%|
|End march 16 to end march 17||11.3%||16.3%||23.5%||20.2%|
|End march 15 to end march 16||-4.0%||-5.9%||-6.7%||-6.7%|
|End march 14 to end march 15||11.6%||10.6%||10.3%||10.0%|
|End march 13 to end march 14||1.3%||3.5%||5.1%||5.2%|
|Blank cells represent periods prior to the fund's launch|
|Source: Coutts/Thomson Datastream|
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 used the proceeds to add further to the FTSE100, maintaining our overall UK exposure.
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)
27-Feb-2023As the new tax year approaches, you might want to know about possible changes to what you’ll pay in tax. In his Autumn Statement last November, Chancellor Jeremy Hunt announced a series of tax freezes and adjustments. While there are no personal tax rises, the fact that some rates have been frozen following a year of rising prices means we’re likely see more people fall into the higher rate category and find themselves paying more tax as wages increase.