By Keith Balmer, Director and Portfolio Manager, Multi-Asset, Columbia Threadneedle Investments
In 2017, Britain invoked Article 50 of the Lisbon Treaty, triggering the initiation of proceedings to break away from the European Union. The Brexit vote, of the previous year, had been merely advisory, activating Article 50 meant there would be no turning back.
It was against this turbulent background that we launched a low-cost, actively managed multi-asset range; a risk-controlled portfolio option designed to cover a host of growth and income needs – the Columbia Threadneedle [CT] Universal MAP range.
The differentiated offering gave investors access to a truly active strategy, delivered at a competitive fee on par with peers’ passive multi-asset strategies.
In the five years since the funds’ launch, the world has had a torrid time. One view might be that this was a terrible time to start a multi-asset, risk-targeted, investment range. However, a more positive take, ours, is that it has also been a brilliant time, because the volatility has given us the opportunity to showcase the benefits of active investing – differentiating the Universal MAP funds from more static, benchmark-aware products.
We wanted to avoid concentration risks, building a diversified portfolio across styles, factors, and timeframes. While this would likely miss out on the highest highs, it would also avoid the lowest lows, delivering clients a smoother return profile.
Challenges and triumphs
The CT Universal MAP range has faced challenges from bull markets to bear markets, deflation to inflation and a global pandemic, accompanied by an artificially induced recession chucked in for good measure.
Our active management decisions have, on aggregate, added value at all three levels, strategic asset allocation, tactical asset allocation and stock selection.
The diversification of timeframes and investment styles has given us the tools to navigate most market environments and enabled us to deliver top quartile returns to investors. What’s more, that top quartile performance has been achieved within risk parameters and at a cost that remains very attractive relative even to passive strategies.
Cash ready for the about turn in growth
In 2022, with good news in short supply, inflation rising and interest rates climbing, all asset classes had a difficult time. In the portfolios, we cut our equity exposure and moved tactically underweight, although we retained an overweight to the FTSE100, on the view that multinational companies in the index should benefit from weaker sterling and continued higher energy prices.
While the growth outlook for 2023 is fairly gloomy, the case for holding high-quality fixed income has become more attractive. Having been underweight fixed income almost all of 2022, we ended the year overweight government bonds. At the same time, we reduced our exposure to both investment grade and high yield bonds.
So, as another trip around the sun beckons, we look forward to the challenges and triumphs that 2023 will bring, poised to deploy cash when new opportunities arise.
To find out more about the low-cost active CT Universal MAP ranges, visit columbiathreadneedle.co.uk/umap
The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.
© 2023 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. For professional investors only. This financial promotion is issued for marketing and information purposes only by Columbia Threadneedle Investments in the UK. The Funds are a sub funds of Columbia Threadneedle (UK) ICVC III, an open-ended investment company (OEIC), registered in the UK and authorised by the Financial Conduct Authority (FCA). English language copies of the Funds’ Prospectus, summarised investor rights, English language copies of the key investor information document (KIID) can be obtained from Columbia Threadneedle Investments, Exchange House, Primrose Street, London EC2A 2NY, telephone: Client Services on 0044 (0)20 7011 4444, email: firstname.lastname@example.org or electronically at www.columbiathreadneedle.com. Please read the Prospectus before taking any investment decision. The information provided in the marketing material does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell or otherwise transact in the Funds. The manager has the right to terminate the arrangements made for marketing. Financial promotions are issued in the United Kingdom by Columbia Threadneedle Management Limited, which is authorised and regulated by the Financial Conduct Authority.