View more on these topics

Flexibility factor

Our investment process is primarily focused on identifying fund managers through face-to-face meetings and rigorous analysis but we also recognise the importance of asset allocation in portfolio construction. This has been particularly salient over recent times.

Markets have endured an extraordinarily volatile period over the last two years and at times we have held over 20 per cent in non-directional investments, that is, cash, government bonds and gold. Our agile asset allocation decisions have helped to dampen volatility during some difficult periods, for example, the first quarter of this year.

We currently hold 10 per cent in cash, reflecting our recognition that markets have travelled a long way – arguably too far and too quickly – from the March lows.

Government rescue packages together with easing fiscal and monetary policy have stabilised economies, leading to sharp market rallies. However, at some stage it will dawn on investors that the path of future growth will be shallower than many are used to and most hope for.

The toxic assets have not been effectively dealt with, nor have the governments of the US or the UK fully thought about how they are going to get themselves back to some form of balance. For instance, debt to gross domestic product ratio in the US is over 350 per cent and this could take some years to come down to more acceptable levels.

That said, we firmly believe that there are managers out there with the experience to provide strong returns despite the likely headwinds. Our favoured managers tend to be boutique-based, fundamentally driven bottom-up stockpickers who adhere to being unconstrained by their benchmarks while adopting a more total return philosophy. It is worth pointing out that this bias does not exclude the bigger investment houses. Rather it is the flexibility of a fund’s mandate and the underlying investment process that are more pertinent.

While we have alluded to the importance of asset allocation, we still expect over two-thirds of our outperformance to come from superior fund selection, with the balance from asset allocation.

Graham Duce is co-head of multi-manager products at Aberdeen Asset Managers


CII calls for associates to become examiners

The Chartered Insurance Institute is offering associates the chance to earn money and gain continuing professional development points by becoming examiners.

Easing the exit

One of the key differences between the UK and the US’s quantitative easing programmes is that virtually all of the Bank of England’s purchases have been gilts whereas the US Federal Reserve has used a lot of its ammunition to buy residential mortgage-backed securities.

Rise of the machines

Head of Sustainable Investing at Royal London Asset Management, Mike Fox, looks at the case for including artificial intelligence within a sustainable investment strategy. Read the article in full here The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm