Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
The fund will cover a range of assets, namely: global stocks, bonds, US dollar cash, global real-estate shares and physical commodities. Median weightings have been set out for each category, and the plan is to tweak these weightings, increasing or decreasing them by 10%, depending on prevailing market conditions.
The fund began trading in May this year, but Fidelity is unwilling to reveal how it has performed in this period prior to the public launch. Currently, the fund is overweight stocks and commodities by 6% apiece, and underweight in the other three categories. This is because the Fidelity portfolio managers like the look of anything related to global growth, such as emerging market equities, energy and metals.
Fidelity believes that correlations between asset classes have never been so low, describing the current environment as a ægolden ageÆ of low correlation. So it aims to profit by arbitraging between asset classes.
ôThe global story is growth,ö says Greetham. ôWe have had an earnings driven bull market, not one caused by price/earnings re-ratings. Consequently, I donÆt think stocks are likely to collapse, but I am not so optimistic about interest rate sensitive stocks, such as financials and consumer companies.ö
However, he says he won't manage the fund on the basis of future prognostications. He says he allocates and re-balances the assets based on whatever information lands on his desk each day. He likes to call it ônow-castingö.
The fund aims to beat its compound benchmarks by 1.5% per year, but with a subscription fee of 5.25% and annual fees of 1.25%, it may be some time before investors see a positive return over benchmark on their investment.
Regional transactions are bouncing back to pre-Covid levels, but experts caution that each geography requires a different investment strategy.
The run-up to the COP26 meeting in Glasgow provides an opportunity for governments to take stronger leadership on the climate crisis as scepticism over green financing escalates.
The asset allocation of Indonesian pension funds showed a flight to safety last year, but did fear outweigh the numbers? Some experts argue, in the light of local equities, for staying the course.
As more multi-asset portfolios integrate sustainability, such portfolios’ ability to navigate short-term swings in performance is enhanced without sacrificing longer term returns, says Schroders’ Jason Yu. In this Beyond Profit series, the firm explores both investing in sustainability-driven sectors and incorporating ESG considerations in the investment process.