Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a758509

Performance review: How Coutts’ Higgins is preparing for 10% US correction

by Elsa Buchanan on Jul 01, 2014 at 14:28

Performance review: How Coutts’ Higgins is preparing for 10% US correction

Coutts’ chief investment officer Alan Higgins said tightening by the US Federal Reserve next year could result in a 10% correction in US equities, which investors should view as a buying opportunity.

‘In terms of the tipping point [for equity markets], we’ve been more cautious in our allocation on the back of the knowledge that the US will tighten their monetary policy,’ he said.

‘The big risk is not China or Ukraine, it is US monetary policy. We know it’s going to happen and our view is that it will be later rather than sooner because [Fed chair Janet] Yellen and the Fed are very dovish.’

That said, Higgins anticipates a ‘tradable correction of 10%, rather than a crash’. ‘In terms of managing portfolios, you want to be reducing risk going into it and buying on the tightening,’ he added.

In the firm’s multi-asset balanced fund, which has a 55% allocation to equities, he has reduced his US exposure to an underweight 5.2%. This exposure is gained through two S&P 500 ETFs and the William Blair US Small-Mid Cap Growth fund.

Coutts’ team has also bought master limited partnerships trackers to diversify and play the US infrastructure theme.

In a contrarian call, he has upped his exposure to emerging markets (EM), moving overweight as he is encouraged that the strong outflows from the asset class have abated.

‘Being overweight EM is partially a reflection that developed markets, especially US equities are much more expensive, and there has been a value argument for some time,’ he said. ‘We are playing global growth momentum through a number of EM exporter companies.’

Within this segment of the portfolio, he holds the db x-tracker CSI 300 and the Lyxor FTSE MIB ETFs along with the Kleinwort Benson Dividend Plus EM fund.

Meanwhile, Higgins has maintained his Japanese allocation through currency hedged exposure to the Citywire Selection pick Polar Japan fund and db x-tracker MSCI Japan ETF.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Sponsored Video: Barings on investing in Frontier Markets


From Nigeria to Pakistan and from Kenya to Kuwait, frontier markets are catching investors' attention as never before.

More about this:

Look up the funds

  • William Blair SICAV US Small-Mid Cap Growth I GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • KBI Dividend Plus Emerging Markets EUR A
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Polar Capital Japan I GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Hermes Sourcecap European Alpha Z GBP Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Pictet-Emerging Local Currency Debt-I USD
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BlackRock Gold & General A Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Royal Dutch Shell PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Unilever PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • GlaxoSmithKline PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Diageo PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BHP Billiton PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Rio Tinto PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • James Rutherford
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Ketish Pothalingam
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Evy Hambro
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet