The private bank has increased its allocation to sterling it confirmed on Tuesday, and is looking to increase it further during the course of the year despite its value plummeting to 30-year lows against the dollar.
Coutts’ long-term mindset and “core investment principle” of finding value in unpopular places, chief investment officer Alan Higgins said, was suited to backing sterling as it is “quite a mean-reverted currency”.
Managing director Mohammad Syed, who is also head of financial advice and investment solutions at the firm, said: “Since the UK voted to leave the European Union, dark clouds have formed over sterling. However, our investment principles of long-term thinking and a willingness to focus on quality assets at a sensible price to find good value, lead us to view sterling in a different light.”
“Concerns over the UK’s current account deficit are, in our view, overplayed and the deficit should begin falling soon. We only have to look at the market’s love of the dollar and remember that the US has run a trade deficit every year since 1975, to support our optimism for sterling.”
Its core contrarian principles are also evident in its favouring of asset-backed securities for 2017, with Higgins and Syed saying “we see them as providing good value, overcompensating investors for default risk and paying attractive incomes”, and again in Coutts’ continued commitment to hold its exposure to “cheap” Russian equities and bonds.
