Columbia Threadneedle has won the Insurance Asset Risk multi-asset manager of the year award for a second year in a row.
In its sixth year the firm's flagship fund Threadneedle Dynamic Real Return Fund (DRR), has again delivered high performances. Given current yield levels, the asset manager believes that long-dated fixed-income assets currently provide poor diversification benefits and not overly compelling forward-looking risk-adjusted returns. It is, therefore, very light in duration, looking to protect the portfolio through the use of short-dated government bonds, corporate bonds and cash.
While these assets will not provide exponential returns to clients, they offer the ability for the fund to position itself towards higher-risk, attractive risk premia, investments such as Japanese equities.
Hence, the portfolio is currently a "barbell" strategy, with a significant proportion invested in low-volatility protection assets that enable Columbia Threadneedle to take meaningful risk where it has high conviction.
Judges noted the firm's successful management of political risk, particularly on Brexit.
Columbia Threadneedle went through significant work to prevent subjecting clients to transaction costs and performance drag by either converting portfolios to cash, or purchasing a plethora of expensive derivatives for protection against an unknown outcome. The asset manager was conscious of not exposing clients to significant potential downside risk by positioning the portfolio according to a "Leave" or "Remain" outcome.
It responded to these challenges by reducing the overall portfolio risk after analysis gauged there was a poor environment for risk to be rewarded. Columbia Threadneedle then ascertained the impact of either outcome on the portfolio of its clients and worked to remove unintended biases to neutralise the portfolios' positioning and protect clients from an unknown outcome.
