Coutts has ruled out involvement in cryptocurrencies with the private bank’s managing director, Mohammad Syed, saying: “A cryptocurrency is not something we can stand behind or recommend.”
Syed made the comments at an investment outlook 2018 media briefing. Elaborating on Coutts rejection of cryptocurrencies, Syed said a cryptocurrency is a “faith-based investment”.
Syed’s comments come as the prices of some cryptocurrencies have soared recently with wealth managers and private banks divided on the issue.
Lilian Chovin, an investment strategist at Coutts, recently said: “In the struggle between believers and sceptics, we remain firmly on the side of the sceptics. Bitcoin’s value does not seem justified by its role as money, payment system or commodity and we struggle to assign a fair value to it. While some form of cryptocurrency might, in the future, co-exist with traditional currencies, it is our view that Bitcoin, in its current form is unlikely to be one of them.”
Reviewing 2017, Coutts said the average return from all the opportunities it identified through its in-house research is 11.6% to 7 November 2017, compared to a general market return of 8.7% based on 50% UK equities, 50% gilts over the same period.
Coutts oversaw an increase in the assets under management (AUM) in 2017, up to £17.86bn, in addition to strong investment performance, achieving first quartile compared to peers over 1, 3 and 5 years across most of our strategies, according to ARC.
Of the opportunities, where it has the most conviction, Coutts highlighted sterling, global healthcare and alternative investment strategies.
For example, in the case of sterling, Coutts believes the pound still looks attractive by long-term standards and remains at the low-end of its 40-year valuation range.
The private bank expects it to recover further against major currencies especially if the UK trade deficit begins to fall, which Coutts believes should begin soon, provided the Brexit negotiations are not too prolonged.
Commenting on Brexit, Alan Higgins, head of multi asset investments at Coutts, said: “We believe there will be a transitional deal on Brexit.”
From a macro perspective, Monique Wong, multi asset investment manager at Coutts, noted that inflationary pressures are rising in the US. She said: “We are not expecting inflation in the US to spike. But it is on the upside and the market is not pricing it in.”
Camilla Stowell, managing director, wealth and investment management at Coutts, commented that clients are taking a longer-term approach to investing and are more open to spreading their risk across asset classes.