Recently published figures from S&P Down Jones Indices point to nine-in-10 UK equity funds sold in Europe underperforming their benchmark through a turbulent 2016. Gary Robinson met up with Fidelity International’s Nick Peters to talk about the rise of multi-asset funds, and find out how investors can improve their risk-adjusted returns through this kind of strategy approach.
The Fidelity multi-asset management team runs several products including ones that follow traditional benchmarks. But the real growth is occurring in the area of funds focused on outcomes – so-called outcomes-based solutions – that include income, volatility targeting, target date and total return funds.
The attraction of such funds, says Nick Peters, (pictured above and below left), the person responsible for the company’s total return funds, is that they look to achieve a certain return on an annual basis over a market cycle while at the same time ensuring that the volatility is “managed carefully”.
Peters’ team is certainly packed with experienced bodies – 10 portfolio managers and a further five analysts – looking at economic and information data.
“[We have] another 10 or so analysts who are also looking to find the best way to invest in an asset class, whether it be an active fund manager, a passive instrument or maybe smart beta,” he says. “Not only is there an enlarged team but [there is] plenty of experience. People like me who have managed money previously or perhaps have a consultancy background or just know the funds markets very well.
“And then, lastly, we invest with fund managers and so investors will get the knowledge from a very strong research function
Name: Nick Peters
Company: Fidelity International
Job: Multi asset team portfolio manager
Career History: Over 20 years’ investment experience. He joined Fidelity in 2012 from Barclays Wealth. He also previously worked at Henderson Global Investors.
Educated: A qualified chartered accountant and holds a BA in Economics and Statistics from Exeter University.
Family/Hobbies: Married with three children. Enjoys rugby union and running.
within Fidelity from the equity side and the fixed income side,” he says
Peters joined Fidelity just over four years ago. But it was at Barclays Wealth where he “really learned” about fund manager selection.
Despite being happy with success at Barclays, when he was offered a role be a portfolio manager at Fidelity across a number of different funds. “It was a role that I jumped at,” he says.
The 2017 investment backdrop is, according to Peters, “pretty good”, with macroeconomic data looking strong for the US and for Europe in particular.
Add to the mix central banks, which continue to pursue “pretty flexible monetary policy” and, he says, there is a lot of liquidity “sloshing around”.
“And you’ve got a strong economic backdrop so really that should be good for risk assets such as equities and commodities,” he says.
But there are still hurdles to deal with, including a “potential slowdown” of the Chinese market and the political situation in Europe, particularly with several key elections coming up, including the French and German elections that could be critical for the eurozone.
“And then we’ve got the unknown, if you like, with Donald Trump and the policies that he is going to look to introduce over time,” adds Peters.
“There’s plenty for us to worry about. Fortunately, the backdrop, at the moment, still looks positive.”
Despite the promising stability of the post-Brexit markets, Peters, pictured left (and above), admits that with the UK prime minister Theresa May having triggered Article 50 and the two-year countdown under way, Brexit is never far from his team’s thoughts.
“We felt that we should take some of the risk positions that we had off. So, that’s what we did. With the benefit of hindsight that was the wrong thing to do, because what we saw with the markets was that there was a correction and that it lasted in matter of days and weeks. Actually, we saw markets rallying strongly thereafter.
“There was a bit of a lesson that we learned, that we applied very quickly. When Donald Trump won the [US] election. That again was a surprise but that time we were adding to risk rather than taking risk off because we had learned the lesson.
“In terms of investing that’s what you try to do. Learn lessons from what you’ve experienced in the past which is why I think having a long track record does help when you are investing client’s money,” he says.