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co-head of UK multi- manager funds, Aberdeen Asset Managers

Based in: London, UK

“The last two years have witnessed a strong recovery in global investment grade credit. However despite the strength of corporate balance sheets and continued earnings recovery within many sectors the outlook for credit going forward remains uncertain. The threat of inflation and global authorities increasing interest rates remains a dark cloud for this asset class. With this in mind we have further reduced our investment grade allocation by allocating more capital to L&G Dynamic Bond fund. While this fund can invest in high rated corporate credit it has the extra flexibility to invest in a selection of different instruments both long and short.”

CFA, European Fund Selection Committee, Allianz Global Investors Investments Europe

Based in: Milan, Italy

“This month we keep an overweight on the equity markets, mainly focused on the European area. We sell the BlackRock Gold fund, investing the proceeds in a fixed income multistrategy managed by Western AM, a total return fund specialized in the credit markets. This change broadens the exposure to the full global credit spectrum and terminates the long held position in the gold markets that helped the portfolio during the financial crisis. The interest rate duration of the model portfolio is still contained and principally concentrated in the Allianz Euro Bond Strategy, plus some position in absolute return bond funds..”

Eurizon Capital

Based in: Milan, Italy

“A bad start to the year for the portfolio as a whole with performance below benchmark. The biggest detractor was M&G Global Basics, suffering from the set back in materials and commodities, together with the weakness in emerging stock markets. Vontobel Global ex US Equity was also a detractor. The bond portion of our portfolio remains invested in pure Government bond funds, as we maintain our conservative approach. Equity exposure was raised by 5 per cent, while fixed income was trimmed by the same percentage. The Vontobel funds, a bit too defensive in our opinion, were dropped in favor of a more pro-cyclical positioning.”

portfolio manager, BNP Paribas Wealth Management

Based in: London UK

“When a fund manager tells you his asset class is expensive and he is struggling to find attractive investments, you should pay attention. We did. We sold our holdings in the First State Latin America Fund and invested into our existing European equity managers. While we agree with the long-term growth story of emerging markets, one must be careful of overpaying.”

executive director and chief investment officer, C-Quadrat Kapitalanlage AG

Based in: Frankfurt am Main, Germany

“Most of the major international stock markets started the new year on a positive note and managed to keep up the momentum until the end of January. European equities in particular benefited from the encouraging news flow regarding the peripheral states. Portugal, for example, succeeded in raising E1.25bn during its bond auction. Our portfolio, which is allocated according to C-Quadrat Best Fonds Strategy, reacted to this market environment by increasing its exposure to European equities and high yield bonds.”

head of funds of funds business, Dekabank

Based in: Frankfurt am Main, Germany

“The world economy is still in good shape and the earnings season surprised on the upside. Even if we used the high levels stock markets have reached to take some profits we still hold an overweight position in equities. On a regional basis we favour Germany, Euroland and Europe. The US market represents about 24 percent, with additional investments in global emerging markets. In bonds we remain cautious because the trend of increasing yields in Euroland is still intact, and focus on German bonds with a lower duration. We also invest in corporate bonds and European and global emerging market bonds.”

head of portfolio management, FundQuest, BNP Paribas Group

Based in: Paris, France

“January proved to be a pretty tough month for equity markets. Our active managers were penalised by strong sector and country rotation. Even emerging markets suffered from inflationary pressure, especially in China. Given the cheap valuations in the eurozone, we replaced part of our pan European holdings with the BlackRock Euro Markets fund which focuses on this area. We cut our corporate investment grade holdings as current yields are no longer compelling compared to euro sovereign debt. We bought a eurozone high yield vehicle, Allianz Euro High Yield, as investors are discounting higher default rates than forecast.”

manager selection specialist, IPCM, ING Private Management

Based in: Luxembourg

“January saw disappointing performance of the emerging markets and the rebound of value versus quality growth. While we have been hurt by our exposure to both emerging market equity and debt, the impact of the correction was mitigated thanks to our style diversification. Main changes that have been implemented are in the hedge fund and fixed income areas. We sold our position in the Aviva Absolute TAA, replacing it with DB Platinum IV DBX Systematic Alpha. We also opened an exposure to GAM Star Emerging Market Rates, funded via a reduction of our directional exposure to emerging debt.”

head of manager selection, Invesco

Based in: Paris, France

“Yet again this month, the high level asset allocation has remained unchanged, with half the portfolio invested in equity funds. Similar to the end of 2010, a zero direct weighting on government bonds has been kept. The only change made to the equity part is a bigger tilt towards the Eurozone, through a very active stock picker. A fourth fund has been added to the fixed income part: a pure global high yield corporate fund, managed in a very conservative way, aiming to minimise the default likelihood by focusing in smallest or non benchmark issues.”

senior portfolio manager, Investment Management Balanced, LGT Capital Management

Based in: Pfäffikon, Switzerland

“The start into 2011 was strong for risk asset classes – equities, commodities and credit scored well. Long bond yields continued to move upwards alongside macro economic indicators that surprise positively for three months. Because the level of bond yields is still low in comparison to long-term history, equities are more influenced by better growth prospects. Risk appetite of investors is steadily increasing, but so far we see no irrational exuberance calling for a contrarian move. We lighten the allocation to goldmines by 2 per cent and increase global inflation protected bonds accordingly.”

head of international portfolio management, Rensburg Sheppards IM

Based in: London, UK

“After a sharp run-up in markets towards the end of 2010, the month of January represented a quiet start to the new year with the vast majority of the funds delivering plus or minus 1 per cent in absolute (euro) terms. On a peer group basis the relative performance of Threadneedle Asian is causing us most concern at the present time. No changes were made to the portfolio.”

co-heads of multi-management, Thames River

Based in: London, UK

“Having ended 2010 strongly the tone was more muted in January as rising commodity prices and input costs were factored into inflation expectations. Europe was the one positive area, with emerging markets falling the furthest. The best performing fund of the selection was the CF Odey UK Absolute Return fund more than doubling the return of any other holding. The Veritas Asian fund was the worst, suffering the fate of Asian markets which fell as investors sold risk. We have made a number of fund changes this month to reflect our pragmatic approach to 2011 which we see as a year of continued volatility and opportunity.”