YOUR MONEY
MARKETS HAVE BEEN INFLUENCED BY HEADLINES IN THE US, THE FEDERAL RESERVE, OR BY THE WAR IN SYRIA
I don’t know what will be the next tweet from Washington or when missiles will fly. Everyone is trying to find out what the risks are. All these things are unpredictable, but [what] I know for sure is how the company in which I have invested in will perform over the next 10 years.” Francis Ellison | Client portfolio manager at Columbia Threadneedle Investments
To get value on your investments, industry experts have a simple advice: cut the noise around trade, geo-politics and Federal Reserve, and focus on fundamentals.
Markets have been prone to the headlines coming out of the US or from the Federal Reserve or by the war in Syria, which has always led to volatility in markets, but Columbia Threaneedle prefers to stick to its knittings.
“I don’t know what will be the next tweet from Washington or when missiles will fly. Everyone is trying to find out what the risks are,” Francis Ellison, client portfolio manager at Columbia Threadneedle Investments, told Gulf News while on a field visit to Dubai.
“All these things are unpredictable, but I know for sure is that how the company in which I have invested in will perform over the next 10 years. We know what their customers want. I don’t care too much about Amercian politics, trade wars or Yemen, which does not impact their business.”
Singular approach
Columbia Threadneedle Investments, which has more than $500 billion (Dh1,836.2 billion) of assets under management, has made investments in a laundry company called Elis in France and in the online Fineco Bank in Italy.
Columbia Threadneedle holds 2.2 per cent each of the Pan European smaller companies fund, the highest holding in such kind of a portfolio.
The investment manager has a 3.1 per cent of the portfolio in Elis through Threadneedle European select fund.
“We have this very singular approach. We play strengths and we look at strong business model,” Ellison said.
“It gives us businesses like the laundry business. It gives businesses like Fineco Bank. It gives us businesses which are very diverse, very successful and trying to find the way customers buy products, and services and trying to find businesses who can satisfy those needs profitably.”
The investment manager is also keeping an eye on the volatility to exploit from tactical allocations to generate alpha returns.
“We took advantage of the market volatility because within our global multi asset income fund. We sold off the money call options for US, euro and UK stocks indices,” Craig Nowrie, client portfolio manager with Columbia Threadneedle Investments said.
Taking advantage
The company took 1.5 per cent of the money during the period of rise in volatility and closed those options early and took all off those premiums and struck 4.5 per cent of the money in call options in February.
“We are taking advantage of these opportunities when they present themselves,” Nowrie said.
The CBOE Volatility Index (VIX) index, a measure of implied price volatility in the S&P 500, hit 37.2 in early February, its highest close since August 2015.
Columbia Threadneedle’s strategy has changed for fixed income, although it’s still bottom up for equities.
At the start of 2017, the investment manager started investing in US high yields, and started building up their allocations to Mexican government bonds, only to pare them later due to Nafta negotiations and their presidential elections. They have increased their allocation to short-dated emerging market hard currency.
“We have seen an uptick in spread widening this year. We are not really struggling to find income. We are adding to call options income amid the volatility,” Nowrie said.
Quality-oriented
“Our equity portfolio is driven bottoms up. We are looking at quality income oriented stocks. We are looking for stocks yield above the MSCI index, they have dividend yield of more than 5 per cent. We are mindful of geo-political issues, and in terms of trade war, but we are looking for quality oriented income,” he added.
We have this very singular approach. We play strengths and we look at strong business model. It gives us businesses like the laundry business... It gives us businesses which are very diverse, very successful...” Francis Ellison | Client portfolio manager at Columbia Threadneedle Investments
Our equity portfolio is driven bottoms up. We are looking at quality income oriented stocks. We are looking for stocks yield above the MSCI index, they have dividend yield of more than 5 per cent. ” Craig Nowrie | Client portfolio manager with Columbia Threadneedle Investments