Enhancing the equity mix

Enhancing the equity mix

We’re firm believers in the benefits of active management. Across our portfolios that translates to active asset allocation from both a strategic and tactical perspective, and it doesn’t stop there.

The ‘active’ approach extends to the underlying assets managed by our specialist teams and the mindset of the businesses we engage with as investors. The management teams of the companies in which we invest need to share, or at least be open to, driving positive change across a host of environmental, social and governance related matters.

Evolving our approach

Such openness to change is mirrored in our own approach. We believe it is important to refine and evolve our investment management style to keep pace with market developments and our clients’ shifting priorities.  Our equity allocation is one such area where we’ve recently sought enhancements, diversifying our style exposure to tap into a broader range of potential portfolio opportunities. 

By virtue of both exclusion criteria and a targeted opportunity set, many sustainability-focused equity strategies have an inherent bias towards more Growth and Quality factors.  In the years immediately prior to 2021, this emphasis provided a positive tailwind. However, that reversed in 2022 when higher inflation and rising interest saw markets rotate.  Growth was soon out of favour and Value saw a return to the fore.

I don’t think that we’re going to have a deep or long-lasting recession – the financial problems that normally cause a severe or protracted recession are just not there. That means that we will also see economies and markets recover in 2023.

Broader equity style dynamic

In June 2022 we added a new sustainable income equity strategy to the sustainable universal portfolios. It provides an income stream from dividends, which over the long term can be a useful component of total return.  Importantly, it also serves to provide a broader style dynamic to the equity mix, which thereby reduces our reliance on Quality and Growth factors.

CT Sustainable Universal Map Balanced Fund

Equity allocation – changes since February 2020

Source: Columbia Threadneedle Investments

Companies with long-term tailwinds

Within this global equity income strategy our specialists focus on research within several defined sustainability themes – structural trends providing long-term tailwinds to well-placed companies. Taking our ‘resource efficiency’ theme as an example, one company we particularly like is Smurfit Kappa Group, an innovative provider of credible alternatives to single-use plastic packaging, including recyclable and recycled cardboard packaging.  40% of produced plastic is used in single-use packaging and solutions from companies like Smurfit Kappa can help the world transition towards a more sustainable approach.

At launch in 2019, our CT Sustainable Universal MAP range brought something new to the marketplace – low-cost multi-asset solutions with a sustainable remit.  As the investment backdrop continues to shift, we’re committed to evolving and improving how the portfolios are managed to ensure they remain a relevant and attractive investment option for advisers to share with their clients. 

Simon Holmes
Director, Multi Strategy Investments
Eloise Robinson
Associate, Analyst, Multi Asset Solutions
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Why Columbia Threadneedle for low-cost multi-asset

Columbia Threadneedle Universal MAP redefines value through active multi-asset solutions and business support at a passive price point. Fund OCFs at 0.29%-0.39%.

Our Portfolio

The Columbia Threadneedle Universal MAP and Sustainable MAP ranges offer risk-controlled portfolio options designed to cover a host of client growth, income and sustainability needs.

Important information

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 Fund is a sub fund 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 Fund’s 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: [email protected] or electronically at www.columbiathreadneedle.com. Please read the Prospectus before taking any investment decision.

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Financial promotions are issued for marketing and information purposes; in the United Kingdom by Columbia Threadneedle Management Limited, which is authorised and regulated by the Financial Conduct Authority; in the EEA by Columbia Threadneedle Netherlands B.V., which is regulated by the Dutch Authority for the Financial Markets (AFM); and in Switzerland by Columbia Threadneedle Management (Swiss) GmbH, acting as representative office of Columbia Threadneedle Management Limited. In the Middle East: This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA).  For Distributors: This document is intended to provide distributors with information about Group products and services and is not for further distribution. For Institutional Clients: The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge and who meet the regulatory criteria to be classified as a Professional Client or Market Counterparties and no other Person should act upon it.

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