“This month again we have not changed the allocation of our portfolio. We maintain an overweight on the equity markets, biased toward the value, gold and dividend investment themes.

The fixed income allocation is concentrated in absolute return funds and has a limited duration exposure. We continue to be invested in dedicated corporate funds with the AXA Euro Credit Plus fund. The portfolio will benefit from the recovery trade with a protection against inflation surprises and fears about government indebtedness weighting on the long end of the yield curves.”

“September was a good month for stock markets. OECD indicators show a positive development, while incoming orders and corporate investments increased. M&A; activity also started to pick up. The European economy seems to be getting out of recession sooner than expected. According to OECD forecasts, Europe will already have relatively stable growth rates in the second half of the year. Nevertheless, private consumer spending continues to be hesitant and budget deficits in many countries do not stop rising. Our portfolio, which is allocated according to C-Quadrat Best Fonds Strategy, increased its cash and fixed income exposure.”

“The international central banks of the main economic areas will not rise their prime-rates in the next few months and we have not seen deflation or a rising inflation. The upcoming company report-season should support the equity market. On the other hand, there are risks of seasonal uncertainties and short-term profit taking. We overweight the equity-position. As the fixed income has reached a level of 3,1 per cent for the 10-year German government bonds, the risk of a countermovement rises. Therefore, we redeemed E5000 of the UniEuroRenta and drop duration clearly below the neutral level.”

“This month we made no change in the sector and geographic allocation of our portfolio. The portfolio is well diversified, so we have not planned any change to the portfolio in the short-term. As in the past month, main contributions to the performance have come from European funds, especially Nordea European Value Equities, MFS European Equities and Templeton Mutual European. Another good contributor has been Vontobel Global Value ex US, thanks to his emerging market exposure. The bond portion of our portfolio remains invested in pure Government bond funds, as we maintain our conservative approach.”

“September began by confirming its poor reputation on the equity markets, however salvation arrived in the form of pleasant surprises on macro-economic data in the United States. Ben Bernanke declared that the recession in the United States had come to an end but that the economy was likely to remain weak. Thus, our aggressive and cyclical bets in equities, credit and convertibles still provided positive returns over the month. Given that economic figures are, on average, still supportive and that significant liquidity remains in the market, we have decided to increase our global equity exposure through European equities.”

“During October, we made no change neither in our selected funds nor in our asset allocation. We continue to monitor the evolution of the market rally that started a few months ago. We do not expect the rebound to continue at such a strong pace in the near term but a more volatile environment could take place.

Our actual positioning as well as the type of manager that we are today investing in should benefit from such type of environment. Our position in the BGF Global Allocation Fund should play the balance between less risky and more risky assets especially if the market starts to correct.”

“As more and more investors wait for a correction before investing, the market ignores them and continues to rise. Many of our managers have reduced exposure to cyclical stocks and are now overweight defensives as they are adjusting to valuations. We remain invested. We introduced UK unlisted property into the portfolio in September. For Europe-based investors, this asset class has fallen some 70 per cent, is yielding over 6 per cent and offers potentially attractive returns. Unlisted property tends to lag the quoted market, which is implying an upturn. For those willing to sacrifice some liquidity, it looks like an attractive investment. ”

“You don’t change a winning team. As months go by, our balanced portfolio is faring rather well. The only move has been redeeming the remaining bit of US equity in the portfolio and using the proceeds to increase the emerging exposure. Going forward, and while the markets keep escalating the wall of worry, de-correlation is getting harder and harder to find: commodities have tended to move hand in hand with stocks, as of late, and more surprisingly, with government bonds. What could then act as a safe haven even when the tide goes down? This question matters quite a lot.”

“The trend is your friend. Risks asset continue to be bid up. The first phase of the bull market was mainly a sentiment driven mean reversion market. In the meantime, fundamentals have improved as well, macroeconomic indicators and realised and expected company results. Fund flows and positioning analysis suggest that investors as a group have not heavily participated in this risk rally. Given that money market instruments provide basically no return, the pressure for yield drives investors into risk asset classes. We increase the weighting of our equity allocation at the expense of government bonds.”

“No changes were made to the portfolio for the month of September, which represented yet another strong market for virtually every fund and similarly for most asset classes.”

“During another volatile month, returns market to market were mixed for Euro investors. We chose to stick with our over-weights towards Japan, home of the worst returns of the month for our portfolio, and also stick with top performing emerging markets. In bonds we re-adjusted saying goodbye to the sterling- focussed Invesco Sterling Bond Fund and added the proceeds to Thames River High Income which has more flexibility, a higher yield and a Euro-hedge. Other funds of note were IVI European which rose 3.9 per cent. Cazenove UK Absolute also did well rising 2.22 per cent for the month capitalising on volatility.”

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