Returns are generated by asset allocation and not solely by active stock picking, fund selector Marie-Christine Lambin has said.
Speaking to Citywire Selector, Lambin, who works for Luxembourg-based McSquare Management, said investors need to better understand blended approaches.
‘I like passive funds and ETFs and I construct my portfolio using them. I am flexible in terms of asset allocation. I want to be active and I think it is widely accepted that using passives is a suitable way to be active in your allocations,’ she told Citywire Selector.
Lambin currently has a number of ETFs in the top ten allocations of the CONCERTO IS-MC Bolero Global Allocation fund, including the Lyxor Ucits ETF CAC 40 (4.82) and the iShares S&P 500 Value (4.81%).
She said she chooses pure passive funds in each asset class and highlighted that around 50% of the portfolio is built with ETFs.
‘I use ETFs mainly in the US as you have more liquidity and they are less expensive. A big frustration for European managers is that you have a limitation of 30% in a Ucits fund.
‘For me, ETFs are a more suitable way to be active in your allocation. By playing with passives it allows me to manage my sector allocations in a better way.’
Where to focus in fixed income
However, in fixed income, Lambin said she tends not to use passives as she believes credit analyse to be very important in the sector.
Lambin currently has funds such as the Muzinich Enhanced Yield fund (4.90%) and the T Rowe European High Yield fund (4.86%) in the top ten of the portfolio and said she likes companies with big resources in the credit analyse, high yield and emerging debt space.
Lambin also highlighted Neuberger Berman’s emerging market debt team as a strong sector player.
‘I like the former ING team which moved to Neuberger Berman, as I had followed the team for many years and started with them in 1988. They are big players in the asset class and when they moved to Neuberger I followed them.
‘The team are very strong and are able to share good information. So I chose the manager of a fund and not the performance, because you cannot outperform or beat your benchmark every year. If you are beating your benchmark every year it is suspicious.’
Forget about politics
Lambin said her fund suffered outflows last year but pledged to forget about the political noise in 2017 and stick to her style.
‘I protected the portfolio too much and I was too cautious last year, which is why I was lagging the peers. I hope this year will be a new start with better market conditions.
‘I feel more confident this year, which is why I am at maximum equities (68%). This doesn’t mean I am overly optimistic about equities – but the alternative is quite limited on the other side of the fence.’
The CONCERTO IS-MC Bolero Global Allocation fund lost 2.56% in US dollar terms, over the three years to the end of March 2017. This compares with a 10.04% rise by its Citywire-assigned benchmark the LCI MSCI World/Bloomberg BC Global Aggre (50:50), over the same time period.