Investment managers existed in a world where a “rising tide lifted all boats” for many years, but portfolio construction now needs a different approach, according to Mitesh Sheth, chief investment officer for multi-asset at Newton.
Sheth presides over a recently launched multi-asset range at the firm, and, acknowledging that his product range is entering a crowded market, he said: “We are coming into a new world with globalisation breaking down, and that is likely to be inflationary.
"And we are also in a world where there is a need to develop green assets, and that is also likely to be inflationary.
"So the world in which inflation and interest rates are persistently low has gone, and people need to think differently in future."
According to him, many of the strategies that have not worked for years will start to work, and vice versa.
He said: "The best strategy was to own passive funds, because in the QE era everything went up. But from now on markets will be more choppy so investors will need to be more nimble.”
What makes the best fund managers?
Sheth’s previous career experience includes a stint at Willis Towers Watson, where his role was to assess individual external fund managers and allocate capital to them. Sheth then worked in the asset allocation team at Reddington, prior to becominghhief executive of that business.
He said: “One of the things I learned at WTW was what makes the best fund managers, and about the wider teams around fund managers.
"However I also realised that some fund managers hire people like themselves, train them in the way they were trained and give them similar tools to the ones they use.
"But then they expect different outcomes, so part of what I am trying to do at Newton is create different portfolios [employing diverse thought].”
He said that central to his role at Newton is to take the existing multi-asset capability and from it create a series of risk rated funds, as this is where the demand is within the multi-asset universe right now.
As part of this he has brought together the equity chief investment officer, equity research team, and chief investment officer for credit into a team working on the new portfolios, which operate within the Dynamic Planner asset allocation categories for strategic allocation.
However, he intends the asset allocation to be more active within the prescribed bounds than he feels is the case with many providers who use the Dynamic Planner framework.
The new multi-asset range from Newton contains five multi-asset funds.
David.Thorpe@ft.com
