Modern Investor asked Edward Bonham-Carter, vice chairman of Jupiter Fund Management since 2014 and its CEO for 14 years, how he would invest his assets if he was an investment manager of a middle-sized pension fund.
Bonham-Carter said that his imaginary pension fund portfolio would consist of two larger allocations to fixed income and equities and two smaller exposures to absolute return and private equity.
However, within the asset classes he would make adjustments, firstly adjusting fixed income positioning.
‘If you have normal [default] weightings in ranges in assets, I would have below-average in fixed income, given the current market environment in which the possibility of inflation and interest rates is rising'.
In addition to fixed income, he would put a ‘good slug’ in equities and skew it towards value equities because value has underperformed growth.
‘I’d be slightly overweight equities relatively to my normal weightings. Additionally, within that, I would have a bit more emerging markets and Japan because I think they are undervalued, and a bit less in the US because it’s at a very high level of valuation.’
In terms of smaller buckets of the portfolio, Bonham-Carter would opt for private equity and start ups. ‘I sit on the board of a foundation which invests in US venture capital and I think that if you can get the access to the right funds you can really access very interesting, unquoted small-cap opportunities. The problem is finding the deals and investing in them so you would have to go through funds, if you can do that.’
Lastly, the Jupiter vice-chairman would invest in absolute managers, who he said would be able to deal with the upcoming market volatility.
When it comes to real estate, Bonham-Carter would opt for emerging markets if he was able to access them.
‘I think that if you have expertise and a long-term view, real estate in emerging markets is very interesting because of the expected rise in population as well as wealth growth, hence real estate will do well. The problem there might be governance and access.’
‘In London, commercial offices are currently highly-valued so I would wait before investing there.’