The Top Asset Managers according to Sharing Alpha, who received the “Triple Alpha” rating in 2019 answer our questions and share their opinion about which assets have worked best for them in 2019 and the investments that they have chosen for 2020 according to the market trend they think will take place.
Frank Huttel, Head of Portfolio Management, FiNet Asset Management AG
In general risky assets like equity funds have worked best for us in 2019. Especially China (UBS China Opportunities Fund) and some thematic funds from Pictet like the Robotics fund or the AI fund from Allianz Global Investors have worked well. As we also have a focus on ESG and impact funds, we were quite happy with the performance of our selected funds, mainly thematic funds as well. This is true for bonds and equities.
Going into 2020 our allocation has not changed so far – despite “corona”. We are still optimistic on equities and remain underweight on traditional bonds. We are using green bond funds instead. Currently, we see a good chance to increase our exposure to EM and FM like Africa and buying into the weakness. We are also starting building positions in European and value stocks. Here we are buying Dimensional funds like the Dimensional Global Targeted Value fund. But we are also increasing our “Alternatives” exposure to diversify the portfolios. We like CTAs for example as insurance for “shocks”.
Bram de Haas, Portfolio Manager, Starshot
In 2019 I did well with municipal bond closed-end funds, Russian equity funds and closed-end funds and allocations to the streaming/royalty space in precious metals. Prior to 19′ municipal bonds were out-of-favor and closed-end funds trading at significant discounts. Especially given their fixed income nature. The same story is true for Russian equities that performed well even though it was somewhat of an up/down year for energy. Energy as a whole was the most important detractor for the year after select short positions. Precious metals related holdings did very well in 19′. A few idiosyncratic royalty companies propelled returns mostly based on specific mines coming online or transactions taking place that were quite favorable for these holdings.
The story of 2020 should have revolved around easy central bank policy with loose fiscal policy in the U.S., Europe, and Japan. A wave of capital is coming to the markets. But the emergence of the novel Coronavirus is a gamechanger. Some market participants are dismissing the risk as temporary. Recent data seems to be reassuring the breakout will be contained. At the same time, most investors understand the data is not without error (to put it mildly).
Until we know a lot more about second, third and fourth-order effects, I’m positioning defensively. Traditional defensive allocations are not satisfactory because valuations spiraled out of control as these categories have turned into bond alternatives as a result of a decade of easy money. Instead, I’ve tilted aggressively towards alternatives, special-situation investments, higher-quality real assets, and increased precious metals and treasuries. In my opinion, this is the time to conserve capital.
