Rapid fire on: Real Return

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As world markets seem to be veering towards a more sustained bear market environment than we have seen in years, attention is once more on capital preservation. Here Newton’s Real Return1 team leader, Suzanne Hutchins, discusses how the team walks the line between return opportunities and downside protection in the current climate.2

How would you characterise the market today (summer 2022)?
What makes it more difficult than amid the 2008 financial crisis?
The market falls in March 2020 were also a jolt. How did Real Return fare then?
How has the Real Return portfolio adapted to this environment?
If bonds aren’t acting as good hedge in this environment, what are you using?
What about your holding in alternatives?
Are you using currency positions as a proxy hedge?
Last year the strategy moved out of gold before rapidly moving back in this year. Why?
Will you be adding new types of alternatives in the second half of 2022?
In this market, how do you balance between capital growth and capital preservation?
Is this a realistic tightrope to walk in today’s investing world?
How do you manage the longer-term picture?
Have you needed to turn the portfolio over more today?
The strategy appears to be employing a greater number of instruments than it once did. Does it need to go ‘back to basics’?
Has the portfolio become over complicated?
Your derivatives positions in effect reduce your equity exposure. Doesn’t being invested in more defensive companies achieve the same thing – only more cheaply?
Considering one of the strategy’s main features is capital preservation, have you been too exposed to risk assets during this market downturn?
What do you feel is a reasonable drawdown?
How do you feel about the performance of the strategy this year?
Market timing is always tough. How have you managed that this year?
How does the team feel the strategy is working?
What would you say has changed about the fund since its inception?
Given the strategy’s large AUM can you still be nimble? Has it become too slow?
What is your outlook for H2?
How are you positioned for this outlook?
Why do you think clients buy this strategy?
Newton Real Return (GBP) Composite
2005
16.93
2006
9.24
2007
16.41
2008
6.58
2009
10.73
2010
10.17
2011
1.11
2012
4.66
2013
6.56
2014
4.2
2015
2.05
2016
4.62
2017
3.35
2018
0.86
2019
13.10
2020
7.95
2021
7.77

Source: Newton. Total return, gross of fees in GBP. Data as at 31 December 2021.

Newton Global Real Return (Euro) Composite
2005
2006
2007
2008
2009
2010
2011
2.45
2012
5.30
2013
4.45
2014
6.65
2015
2.88
2016
1.90
2017
2.55
2018
-0.04
2019
12.28
2020
8.50
2021
8.34

Source: Newton. Total return, gross of fees in EUR. Data as at 31 December 2021.

1 The value of investments can fall. Investors may not get back the amount invested.

2 Please note – all references to current positioning are as of start of July 2022.

Past performance is not a guide to future performance.

1050551 Exp: 21 October 2022

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