Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Bulls and bears: how WMs are positioned on equities

With a trade war looming and whispers of a recession swirling through the market, three wealth managers explain how they're positioned on equities.

Bruno Verstraete

Lakefield Partners 

Zurich

It's still a positive environment for equities, according to Lakefield Partners partner Bruno Verstraete. 

Between July and August the firm increased the equity exposure in its Dynamic Global Core fund by 11.5%, bringing exposure up to about 58%. In a monthly rebalance for September, equity was increased to 58.63%.

'Even though the world economy is seeing stable growth, it is deteriorating a little bit. However, the volatility and risks are not increasing and went down a bit compared to last month,' said Verstraete.

'We see more risks in the fixed income space.'

Verstraete also noted that he doesn't see market volatility becoming a major market issue just yet.

He said: 'Everyone talks about a bull market's life span. Bull markets don't die because of age, they die because of a recession on the horizon. The market has not shown signs of a late cycle, and we might have a big rally before any big decline comes.

'Volatility will come back once we get there, but we don't see that happening yet.'

Verstraete said tech is the fund's biggest sector, along with pharmaceuticals. He is overweight in the US and has avoided Europe for some time, citing higher volatility and a poorer risk return ratio than the US.

Leave a comment!

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

Bruno Verstraete

Lakefield Partners 

Zurich

It's still a positive environment for equities, according to Lakefield Partners partner Bruno Verstraete. 

Between July and August the firm increased the equity exposure in its Dynamic Global Core fund by 11.5%, bringing exposure up to about 58%. In a monthly rebalance for September, equity was increased to 58.63%.

'Even though the world economy is seeing stable growth, it is deteriorating a little bit. However, the volatility and risks are not increasing and went down a bit compared to last month,' said Verstraete.

'We see more risks in the fixed income space.'

Verstraete also noted that he doesn't see market volatility becoming a major market issue just yet.

He said: 'Everyone talks about a bull market's life span. Bull markets don't die because of age, they die because of a recession on the horizon. The market has not shown signs of a late cycle, and we might have a big rally before any big decline comes.

'Volatility will come back once we get there, but we don't see that happening yet.'

Verstraete said tech is the fund's biggest sector, along with pharmaceuticals. He is overweight in the US and has avoided Europe for some time, citing higher volatility and a poorer risk return ratio than the US.

Leave a comment!

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

David Pinkerton

Alpha Leonis Partners

Zurich

Long-term client horizons mean volatile equities are nothing to worry about, according to David Pinkerton, CEO and CIO at Alpha Leonis Partners. 

Pinkerton said the firm's client portfolios by and large mantain an equity overweight bias relative to bonds in balanced portfolios.

'There is no doubt in our mind that this equity bias is favoured in a period when rates are gently rising,' said Pinkerton.

He also noted that the firm is overweight in developed markets relative to emerging markets, as US currency is preferred.

Relating to volatility, Pinkerton is keeping a close eye on US politics - though remains conscious that the 'economic engine globally has not wavered against political noise so far'.

'The issue will be whether Trump's declining global credibility will lead to an erosion in consumer and CEO confidence that in turn triggers a risk off equity market move.

'We will watch this, but remind our clients that when there has been leadership uncertainty in the White House in the past, and it has not necessarily meant that equities entered into a bear market.'

Leave a comment!

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

Gianpiero Sturzo

Lobnek Wealth Management

Geneva

Gianpiero Sturzo, COO at Lobnek Wealth Management, said the firm has been reducing US equity exposure since March, though still remains overweight in US versus Europe. 

He also noted that the firm has been entirely absent from emerging markets since November 2017, though that current conditions have encouraged a reconsideration.

He said: 'The cut was mostly related to the fact that we preferred emerging market debt due to currency levels. But, at these levels with most emerging market funds being down 8% to 15% year-to-date, it starts to look very appealing.

'We're looking actively to slowly restart a position in emerging market equities. There's a bit less hype now, which makes it more attractive with our contrarian approach.'

Being out of emerging market equities has also helped the firm avoid volatility, with Sturzo noting that being slightly underweight in equities would present an opportunity to enter the market and return to neutral. 

Sturzo also said he believes that in Europe, general expectation of the economic market has been improving and economic activity has been stabilising, potentially presenting opportunities.

'Going forward, I would start to go back to neutral on equities by starting up some emerging market exposure. On a six-month horizon, I would be keen to start something on the financial sector in Europe.'

Leave a comment!

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