Columbia Threadneedle has a long history of delivering excess returns through asset allocation. In 2012, Toby Nangle, head of global asset allocation joined the company to develop this capability and the EMEA multi-asset team now comprises 10 people.
Last year saw the fifth anniversary of the firm's flagship fund Threadneedle Dynamic Real Return Fund (DRR), having delivered an annualised return of 5.4% (gross of fees, as at October 2018) since inception with around 45% the volatility of equities.
With the dynamic real return strategy, Columbia Threadneedle's goal is to deliver consistent performance, even in times of market volatility. Rather than constrain its opportunity set, each position needs to earn its way into the portfolio from a return and risk perspective.
The firm believes that having this ability to restructure its portfolio actively is key to navigating the current environment and ultimately delivering a smoother overall investment ride.
The strategy is actively managed, dynamic, diversified and cost effective. It is designed to deliver risk-adjusted capital growth of inflation (CPI) plus 4%, with less than two-thirds the volatility of equities.
To continually improve, Columbia Threadneedle has asked itself the question: "Did we demonstrate asset allocation skill and how can we evidence this?".
It found that at times it had identified the most beneficial risk category and, on the majority of occasions, a better-than-average mix of asset classes to produce strong returns. However, it also found that in some periods it could have taken more risk.
This it said will not change the firm's thought process or the way in which it manages the assets, but it will help it reflect on whether it is being too conservative in times of stress.
Judges praised the firm's internal reflective analysis.