Newton Real Return Fund celebrates 10 year anniversary with cautious outlook
BNY Mellon’s Real Return Fund celebrates its 10 year anniversary with a cautious outlook on the current recovery. In a press briefing held at BNY Mellon’s UK headquarters, Helena Morrissey, CEO (pictured), James Harris, investment manager, Peter Hensman, global strategist and Iain Stewart, investment leader, present their outlook for the next decade.
“The fund has not been launched for reasons of fashion and we may appear out of consensus but we are reluctant to share the current optimism, we think it is important to manage downside risks” argues Hensman.
Since its launch in 2004, the fund has aimed to respond to key long-long term challenges such as the emergence of credit-led growth, an increase in the average population age and a low return environment.
Consequently, the fund has always taken a rather cautious approach, which highlighted the impact of credit on long term purchasing power and aimed to offset volatility through a portfolio which includes a significant ratio of government bonds, precious metals ad other relatively safe assets.
This philosophy seems to have paid off during the crisis, when the fund outperformed compared to the Global MSCI Index. The cautious strategy is less rewarding in the current climate of recovering markets.
Nevertheless, Iain Stewart highlights that the key challenges identified in 2004; debt, demographics and low return, persist now in a reinforced form.
Combined with the current policy of QE, this may well lead to the creation of bubbles even more severe that during the last crisis, Stewart argues.
This is expressed in the construction of a cautious portfolio, which continues to reflect confidence in gold as a long-term security.”We are trying to stay clear of bubble’s” he argues.
Although confidence has increased, many investors continue to back a cautious outlook, rather than focussing on riskier high yield investments.
Helena Morrissey, CEO of Newton Investment Management Ltd highlights: “We consider our strategy as an alternative to alternatives.”