Barclays’ Ian Aylward has been switching equities from the UK to Japan in 2017, adding to funds run by Schroders’ Andrew Rose and Baillie Gifford’s Japanese equity team.
The firm’s head of fund and manager selection said he was relatively bullish on global growth, with his portfolios overweight equities as a result, and he believes Japanese stocks provide a better route to returns than more “defensive” UK counterparts. Japan’s Topix index returned just 0.3 per cent last year in local currency terms, UK investors instead benefiting largely from the effect of a sharp rise in the yen against the pound.
“Given our overweight for equities we see growth coming through globally. But in that sense, Japan is a better play than the UK which is slightly more defensive.
“We don’t expect a huge amount of sterling weakness from these levels. That was a key benefit for the FTSE 100, and it will be less of a tailwind this year,” Mr Aylward said.
The shift came at the expense of Artemis’ £6.5bn Income fund, run by Adrian Frost and Nick Shenton, where exposure was trimmed. Similar “trimmings” took place on Ben Whitmore’s £1.7bn Jupiter UK Special Situations fund and a segregated mandate run by Old Mutual Global Investors’ (OMGI) Richard Buxton.
Barclays has instead added to the £2.4bn Schroder Tokyo fund run by Mr Rose, complementing the value strategy with growth-focused Japanese portfolios run by Baillie Gifford’s Sarah Whitley and Matthew Brent.
Mr Aylward, who previously headed up the multi-manager team at Aviva Investors, said the team always blended styles in the absence of a strong view on either growth or value. The UK exposure also reflects this stance: combining the value-focused Jupiter fund with the growth stance favoured by OMGI’s Mr Buxton.
A similar system for US equities has seen the Barclays team use a growth-focused exchange traded fund (ETF) and three value strategy mandates from US-based stockpickers. Mr Aylward described the ETF as a “pragmatic” interim solution while the team searched for growth managers.
Fixed income exposure in the risk-rated Barclays MultiManager Portfolio range was also reassessed at the start of the year following a departure.
The medium-risk portfolio, which is underweight sovereign debt, used Pioneer for some of its 3.5 per cent allocation to the asset class, in particular mandates run by the firm’s European fixed income head Tanguy Le Saout.
Pioneer suspended Mr Le Saout last December, accusing him of trying to set up a rival asset manager amid the Italian fund house’s sale to French firm Amundi. Mr Le Saout later resigned his position, but Mr Aylward said he had stuck with Pioneer’s portfolios.
He added: “We had to deal the implications [of Mr Le Saout’s exit]. We feel there’s strength and depth in the remainder of that team. Tanguy was a figurehead but there’s a lot of talent around him and his departure will give a chance for those around him to shine.”