Menu
You are currently using Internet Explorer. This website is optimised for Google Chrome, Mozilla Firefox and Microsoft Edge. You can download Chrome here, Firefox here or Microsoft Edge here.
For a succinct economic and market review, read our Monthly Viewpoints. Our Articles and Guidance notes offer our thoughts and opinions on markets, sectors or specific topics/events.
It was a testing start to the month, with investors unnerved by fears that the US was heading for recession. The rapid unwinding of yen carry trades following the recent interest rate hike by the Bank of Japan added to the turbulent conditions. However, the mood lightened on the back of more positive economic data from the US, together with dovish comments from central bankers. By the end of the month, both global equities and global bonds had gained ground. Backdrop UK eco...
Read more >It was a wild ride in equities as cracks appeared in the mega-cap technology narrative. Weaker earnings, fears of semiconductor trade restrictions, questions about the AI theme, as well as general concerns about valuation levels meant that July was a rough month for the technology bulls. Signs that the US economy was weakening sparked a major rotation into stocks that had been languishing under the technology shadow, notably mid and smaller-caps, defensive and interest rate sensitive stocks....
Read more >It was a defining month in politics, with general elections occurring or upcoming in several countries. UK markets remained relatively calm ahead of the expected (and actual) win by the Labour Party, while other markets were buffeted, notably bond and equity markets in France. More broadly, global equities gained ground, with technology sectors making the strongest contributions. The timing of interest rate cuts continued to be the key question for bond markets. UK gilt prices gained on ...
Read more >Economic data releases and the consequences for monetary policies continued to be the focus for investors. Optimism about forthcoming rate cuts together with a positive outlook for corporate profits helped equities to push ahead, although nervousness returned at the end of the month as hawkish comments from central bankers caused bond yields to rise. All in all, global equities chalked up good returns, while government bonds struggled for direction amid the push-and-pull of interest rate exp...
Read more >The debate about the path of US interest rates was firmly in the spotlight as incoming data painted a mixed economic picture. With inflation rates running hotter than anticipated, there was a growing realisation that interest rates would remain “higher-for-longer”, and this weighed upon both bond and equity markets. Earnings results came in thick and fast, leading to significant share price swings, particularly amongst the mega-cap technology cohort. Backdrop UK economic...
Read more >For the third consecutive month, global equities gained ground. As a result, for the full quarter, global equity indices posted near double digit returns. Blockbuster earnings from chipmaker, Nvidia, sparked renewed excitement about the broader possibilities of AI, helping several markets to reach new highs. The mood was mixed in bond markets, but UK gilt prices rose on expectations that the Bank of England would cut interest rates earlier than other central banks. Geopolitical concerns ...
Read more >Amid signs of improving economic growth and robust corporate earnings, global equities made firm progress in February. Nvidia’s highly anticipated earnings announcement re-ignited the excitement around artificial intelligence, and this gave equity markets an extra boost. In contrast, fixed income markets were weak against the backdrop of persistent inflation and the likelihood that interest rates will need to stay higher for longer. Backdrop UK economics: The economic backdrop re...
Read more >After a blockbuster fourth quarter, risk assets began the new year in a nervous frame of mind. However, by mid-January, the mood had improved on the back of upbeat economic growth in the US and cooling inflation. Developed equity markets gained ground, although the UK was a laggard. Once again, the mega-cap US technology stocks were at the heart of the action. Weakness from Chinese and Hong Kong stocks persisted amid ongoing economic concerns. With investors recalibrating their expecta...
Read more >The Federal Reserve’s “less hawkish, yet not more dovish” language underpinned another positive month for risk assets as an economic soft landing appeared to be within grasp. Taken together with a “November to remember”, it turned into a stellar fourth quarter for investors, materially improving the calendar year picture for investment portfolios after a grinding few months amid rising bond yields. Market breadth within equities also improved, benefiting mid and small-cap indices. ...
Read more >For investors, it was a November to remember. A softening inflation picture bolstered hopes that central bankers would ease interest rates in the coming months, leading to a “melt-up” in bond and equity markets. By the end of the month, market expectations had shifted to the idea that the Federal Reserve’s rate hiking cycle was at an end and that rate cuts were in the offing in the coming year. Backdrop UK economics: The UK economy stalled in the third quarter ...
Read more >Geopolitics was thrust back into the headlines when Hamas sprung a brutal, coordinated attack on Israeli citizens, leading to renewed conflict. Investor sentiment, already fragile, took another knock. Rising long-term US treasury yields also contributed to receding risk appetite, which saw a negative outcome for most asset classes. Mixed corporate earnings also weighed upon sentiment. Backdrop UK economics: The inflation rate held steady at 6.7%. Monthly retail sales data ...
Read more >It was another nervy month as investors faced up to the prospect of interest rates staying higher for longer than anticipated. Tighter financial conditions and softer economic data unsettled equity markets and global indices registered declines. However, the UK market bucked the trend and delivered a positive return. Global bond yields continued their upward march, although the UK gilt market fared better than its sovereign peers, thanks to a less troubling inflation backdrop and a welcome...
Read more >August is often a tricky month for markets amid less liquid summer trading, and this year was no exception. The prospect of interest rates staying higher for longer, causing a further rise in US treasury yields, unsettled investors. A downgrade of US government debt added to the nervous mood. Worsening data from China was also a source of concern. Broadly, equities were weaker over the month. UK gilts declined, although the short end gained traction as investors sensed that the peak in...
Read more >July was a good month for risk assets, with equity and credit markets chalking up positive returns. Fears of recession receded as economies appeared to be resilient in the face of higher interest rates. Signs that inflationary pressures were easing also gave cause for optimism. After a difficult year so far, UK gilts outperformed other government bond markets as forecasters pared back their expectations for base rates. Backdrop UK economics: GDP data showed that the UK econom...
Read more >June was a positive month for equity investors, with the US market leading the way once again. This strong finish meant that it was a fruitful quarter for global equities, although in practice a narrow group of US technology stocks were responsible for much of the headline gain. The UK stockmarket was relatively disappointing, making some progress in June but ending the quarter in negative territory. Meanwhile, the pain continued for bond investors as stubborn inflation and rising interest...
Read more >Broadly, it was a disappointing month for equity investors, with worries about inflation, the path of interest rates and fading economic growth continuing to weigh upon sentiment. Within that, technology stocks, specifically those seen as benefiting from the world of artificial intelligence, were flavour of the month, and some companies saw a surge in their share prices. UK gilt yields rose as persistent inflation continued to dog the market. Backdrop UK politics and economics: ...
Read more >Broadly, it was a positive month for equity markets, although sentiment grew more cautious on further troubling news from the US banking sector. The US market lagged the UK and Europe, while geopolitical worries weighed upon Asian and emerging market indices. It was a difficult month for gilts, which underperformed other government bonds against a tricky economic backdrop. Corporate bonds fared better, with credit spreads stabilising after last month’s volatility. Backdrop ...
Read more >An extraordinary month brought a choppy first quarter to a close. There was a surge in volatility for both equity and bond markets after the collapse of Silicon Valley Bank stoked fears of wider issues for the banking sector. The rapidly orchestrated take-over of Credit Suisse by UBS sent another shockwave through financial markets and led investors to speculate where the next domino might topple. However, with the authorities taking swift action to shore up confidence, enthusiasm for risk a...
Read more >After a strong start to the year, equity markets lost momentum in February. With high inflation proving to be persistent, investors reassessed the prospects for interest rates in response to hawkish comments from central bankers. Geo-political tensions also weighed upon investor sentiment. Despite the nervy mood, UK and European equity markets managed to close the month in positive territory, whereas the US and Asian markets were weak. After a positive start to the year, government bond ...
Read more >Equity, government bond and credit markets made strong gains, with China’s re-opening, a mild European winter and a fall in US inflation numbers helping to dissipate some of last year’s pessimism. Nonetheless, the risk of recession and the issue of persistent inflation were never too far from investors’ minds. Backdrop UK politics: Yet another scandal dominated the headlines as Conservative Party Chair, Nadhim Zahawi, was sacked after “carelessness” in his tax affairs. Prim...
Read more >Any hopes of a Santa rally in equities were dashed and investors closed out the year in a cautious mood. Similarly, enthusiasm amongst fixed income investors waned as it became clear that monetary tightening had further to go, despite a slowing pace of inflation. 2022 goes down as one of the worst in history for global investors, with almost nowhere - except cash - to hide. Backdrop UK politics: As the weather turned colder, memories of the 1970s loomed large as strike action was ann...
Read more >Santa arrived early this year, with bond and equity markets delivering strong returns. Sentiment towards risk assets was buoyed by signs that inflation rates around the world may be topping and the pace of interest rate rises slowing. Indications that Beijing was moving away from its zero-tolerance approach towards COVID-19 also cheered investors. Backdrop UK politics: Chancellor Hunt delivered his Autumn Statement, presenting a picture of an economy weighed down by weak growth, risi...
Read more >Investor sentiment was buoyed by hopes that the up cycle in US interest rates may be nearing an end. Equities around the world staged a rebound, notwithstanding some high-profile stock price declines amongst some of the US technology and e-commerce former growth heroes after disappointing earnings. It was also a positive month for bonds, with UK gilts regaining their poise as the country looked forward to sounder economic policies under Prime Minister Sunak. Backdrop UK politics: T...
Read more >It was a brutal month for investors, rounding off what has been a very challenging quarter. Equities and bonds fell in tandem, as high inflation and interest rate rises continued to test investors’ mettle. September 2022 will also be remembered for the calamitous “mini-budget” from the new UK government, which sent the pound tumbling and gilt yields soaring, causing major disruption to the pension and mortgage markets. Despite intervention from the Bank of England, sentiment towards ...
Read more >Last month’s enthusiasm for risk assets dissipated as Jerome Powell, US Federal Reserve Governor, poured water on any hope of a “dovish pivot” on interest rates. Developed market equities gave up their early gains to end the month firmly in the red. Core sovereign bond yields rose sharply as it became clear that central bankers would continue to tighten the monetary screws. The weak pound and concerns about rising debt added to the pressure on UK gilts. With the exception of natura...
Read more >After a first half that most would like to forget, the second half of the year started with a bang, with most assets delivering a positive return. US stocks led the charge, but most markets chalked up robust gains. With bond yields in decline, it was also a much brighter month for fixed income investors. In contrast, commodities began the quarter on a weaker note as mounting worries about recession weighed upon sentiment. Backdrop Economics: The Bank of England warned that the ec...
Read more >There were no hiding places in June as risk assets ended the first half of 2022 on a low note. Even commodities succumbed to weakness as fears of recession permeated all markets. As investors looked towards the second half of the year, they were left licking their wounds after heavy falls from both bonds and equities. On a brighter note, the main UK index held up relatively well and the weakness in UK sterling bolstered returns for investors with unhedged foreign currency holdings, particu...
Read more >The macro-economic backdrop was front and centre of investors’ minds in May, with policy-makers walking a fine line between fighting inflation and trying not to jeopardise the fragile growth outlook. Equities were choppy and struggled to make headway. Government bond yields rose, and credit spreads widened, making it a negative month for fixed income assets in the round. Backdrop Russia and Ukraine: The conflict drew on, with Russia making incremental gains in the eastern Donbas...
Read more >It was a difficult month for markets, with very few places for investors to hide. Government bond, credit and equity markets saw heightened volatility as investors weighed the uncomfortable prospect of rising costs, tighter monetary conditions and fading economic growth. Backdrop Russia and Ukraine: The conflict morphed into a grinding land war and the focus turned to eastern Ukraine as the Russian’s intensified their attacks on the Donbas region. As new horrors emerged with...
Read more >Backdrop Russia and Ukraine: The war raged on, but Russia’s hopes of a quick victory were dashed. Reports from Ukraine highlighted the terrible human cost of the conflict, with 4 million people fleeing the country, leaving unimaginable destruction and suffering behind them. Various talks to end the conflict came to nothing and the economic pressure on Russia built. The US banned imports of Russian oil and gas, and the UK made plans to phase out the import of Russian oil by the end o...
Read more >Backdrop Russia and Ukraine: The news of Russia’s invasion of Ukraine took centre stage. Despite extensive diplomatic efforts, the world looked on in disbelief as Russia recognised two breakaway regions in Eastern Ukraine and sent in troops for “peacekeeping” operations. This was followed swiftly by a full-scale attack. The stakes were raised when Russia placed its nuclear deterrents on high alert, although this was regarded as a tactic to distract from military missteps and log...
Read more >Backdrop Economics: Financial conditions tightened as bond yields rose and central banks engaged in “quantitative tightening” by fading their bond buying activities. According to Goldman Sachs Global Investment Research, global financial conditions are now tighter than they were before the arrival of COVID-19. Rhetoric from the Federal Reserve reinforced the bank’s hawkish stance as the inflation picture worsened and inflation hit 7% for the first time since the 1980s. Wage gr...
Read more >Backdrop Economics: Inflation was top of the economic agenda again this month. The UK Consumer Prices Index hit 5.1%, the highest in a decade, and the speed of this increase took forecasters by surprise. It was a similar picture in the US, where consumer prices rose at the fastest pace in three decades, forcing the annual inflation rate to over 6%. Higher energy costs were a significant contributor to these increases. The same stresses were seen in Europe, illustrated by a record ...
Read more >Backdrop Economics: The mantra of ‘transitory’ inflation was replaced by the growing acceptance that price pressures are embedding themselves into the global economy. The US inflation rate (CPI) reached its highest level since 1990, rising to 6.2%. Contributing factors were port congestion, labour shortages and energy costs. Producer prices in China accelerated, with factory gate prices rising at the fastest rate in over 20 years. The economic recovery in the UK maintained its...
Read more >Backdrop Economics: Supply chain issues continued to make the headlines. By way of illustration, new vehicle sales in the UK plunged amid delays and chip shortages. Signs of more persistent inflation were also in evidence as data showed a sharp increase in hiring and starting salaries in the UK. It was a similar picture in the US, with survey data showing that smaller businesses are struggling to hire. The IMF cut its global growth forecast and pointed to a stalling recovery. Th...
Read more >Backdrop Economics: Inflationary pressures continued to loom large, with the US printing its highest core inflation rate since the 1980s. In Europe, spiralling energy bills added to the inflation picture. There were signs that the pace of recovery around the world was weakening, due, in part, to the spread of the Delta variant of COVID-19. It also became increasingly apparent that supply constraints were tempering the economic recovery. A flurry of headlines served to highlight the ...
Read more >Backdrop COVID-19: There were ongoing concerns about the Delta variant, with the spread particularly voracious in the US. Indeed, Florida saw its worst death toll of the health crisis so far. The waning effectiveness of the vaccines pointed to the need for a booster programme. Travel curbs were eased, providing a much-needed reprieve to the leisure industry. Concerns turned to the new school term and the likelihood of faster circulation of the virus. Economics: There was furthe...
Read more >Backdrop COVID-19: Nervousness about the Delta variant of the virus grew, as did fears that it might threaten the global economic recovery. Cases around the world began to rise again, despite progress with vaccinations. It became clearer that emerging markets are facing more difficult circumstances because of a lack of vaccine supply. The Olympics began in Japan, with no spectators and with the country in a state of emergency. In the UK, “lockdown” was replaced by “shutdown”...
Read more >Backdrop COVID-19: The vaccination programme in the UK moved on apace, but concerns mounted as the Delta variant of the virus became increasingly prevalent. Indeed, this variant, first identified in India, was on track to become the dominant strain globally. Holiday plans were complicated by ever-changing foreign travel restrictions and so-called “Freedom Day” in England was delayed. Flare ups around the world reminded us that the health crisis is far from over. UK politics and...
Read more >Backdrop COVID-19: Restrictions were eased in the UK but there was growing anxiety about the “Indian” variant of the virus, which was seen to threaten the long-anticipated full opening date of 21 June. Indeed, France and Germany placed restrictions upon British visitors. Given the severity of the situation in India, vaccine exports were halted, impacting the inoculation programmes in many African countries. Asian infection rates re-accelerated. President Biden re-opened investig...
Read more >Backdrop COVID-19: In the UK, as the vaccination program made further progress and the unlocking process continued, discussions turned to foreign travel and vaccine passports. There were further concerns about rare blood clots thought be caused by some of the vaccines. The enormous scale of the health catastrophe in India became evident. UK politics and Brexit: The unrest in Northern Ireland continued, fuelled by discontent about the Irish Sea border. The UK and the EU committed to...
Read more >It’s been a long 40 years! This article may have a very grand title, but it serves to highlight the significance of a change to the very tapestry of economic policy-making that has guided central banks and governments since Ronald Reagan and Margaret Thatcher came to power in 1979/80. As a reminder, both leaders sought to end the era of big government through a combination of tax cuts, reduced social spending and the deregulation of domestic markets. The plan was to change the mix of the...
Read more >Backdrop COVID-19: The UK’s vaccination programme made good progress and infection rates and hospital admissions continued to decline. Roadmaps for reopening were announced and children returned to school. However, by the end of the quarter, it became apparent that the unlocking process would not be straight-forward, with foreign travel continuing to bear the brunt of the restrictions on our movements. Indeed, with European countries lagging in their vaccination efforts, renewed loc...
Read more >Backdrop COVID-19: The inoculation programme in the UK rolled on and recorded new cases of the virus began to diminish. However, there was growing anxiety about different variants of the virus that may be more resistant to the vaccine. Roadmaps for reopening were announced, sparking a flurry of foreign holiday bookings. There was slower progress in administering the vaccine amongst EU countries. Brexit: In light of the difficulties transporting goods from Britain into Northern Irel...
Read more >Backdrop COVID-19: The UK saw in the new year with tightened lockdown measures as infection numbers and hospital admissions rose sharply. More positively, the first Oxford-AstraZeneca vaccine was administered, allowing the nationwide inoculation programme to accelerate. The “South African” strain became a cause of concern. Chancellor Sunak announced new measures to assist those companies hardest hit by the pandemic, notably retail, leisure and hospitality businesses. It became c...
Read more >2020: A record-breaker Superlatives abound when describing the events of 2020. Here are a few of the highlights: The shortest and sharpest bear market on record. One of the strongest and sharpest recoveries on record. A significant rise in the quantum of bonds globally offering (!) negative yields. Unprecedented central bank interventions in markets. Collectively, central bankers released US$15 trillion of liquidity, or close to 30% of global GDP, to support markets....
Read more >Backdrop COVID-19: The vaccination programme began in the UK and elsewhere, with the Pfizer/BioNTech vaccine the first to be administered. Later, the University of Oxford/Astra Zeneca vaccine was approved for use in the UK. This good news was overshadowed by the discovery of a new and highly infectious strain of the virus that saw the caseload soar. The worrying picture in London and South East England affected travel and caused heavy disruption at the ports, threatening supply chains...
Read more >Backdrop COVID-19: Three separate vaccine announcements brought relief and provided some much-needed hope about a return to some form of normality in the coming year. The UK stock market surged by almost 5% on the first announcement from Pfizer. However, authorities remained on high alert about the short-term trajectory of the virus as Christmas drew nearer, knowing that the distribution of any vaccine to the population at large would be months away. Economics: While risk assets re...
Read more >Backdrop COVID-19: The month began with the news that President Trump had contracted the virus. He recovered in short order but the administration attracted criticism for its lack of precautions in the White House. As the month drew on, so the global tally of infections and deaths worsened and countries introduced various restrictions in an attempt to curb its spread. Anger erupted as specific areas of England were placed into “tier 3”. Scotland introduced its own tiered system ...
Read more >2020 has certainly offered some unique challenges for those whose day job it is to try and assess markets in the Covid-19 netherworld in which we find ourselves. We witnessed one of the sharpest bear markets ever in February and March, provoking massive and coordinated central bank intervention, led by the US Federal Reserve. This added much-needed liquidity to markets and put a floor under the falling prices of risk assets. The subsequent rally from the March lows has been equally ferocious,...
Read more >Backdrop COVID-19: Globally, confirmed infections exceeded 34 million and the number of deaths breached the 1 million mark. The UK government began a campaign to persuade people to return to work and school just as infection rates began to re-accelerate. The “rule of six” was imposed nationally and local restrictions were also implemented, eliciting frustration from those captured by the tighter measures. To make matters worse, the UK’s testing process was found wanting. Many ot...
Read more >Backdrop COVID-19: Confirmed infections topped 25 million. The US and India continued to register large numbers of new cases, while many other countries experienced local flare-ups. The UK government attracted harsh criticism for its quarantine policy, while the exam results debacle added to its tally of U-turns. Policy news: Federal Reserve Chairman Powell announced a major policy shift towards a greater tolerance of inflation, as well as a focus on lower-paid workers. Governo...
Read more >ESG is now a key part of the investment process for the vast majority of fund management firms. For some, this has been a natural progression while for others, a great deal of work has been undertaken to embed these factors anew. Fund research businesses are often called upon to provide their views or to highlight “best in class” funds in this arena. But perhaps this isn’t as straightforward, or indeed appropriate, a task as it seems. Baseline ESG considerations in mainstream fun...
Read more >Backdrop COVID-19: World authorities remained nervous as confirmed cases topped 18 million. The virus continued its march through the US and rising cases in some European countries caused concern. Specific lock-downs were announced from Greater Manchester to Melbourne, while UK citizens were told to quarantine after travel to Spain, dealing yet another blow to the tourism industry. Policy news: After much wrangling, European leaders reached a landmark deal to support eurozone eco...
Read more >Market review of Q2 2020 The best financial quarter in twenty years, the worse economic quarter in living memory: that is how one commentator described the second quarter of 2020. As world leaders contended with the evolving coronavirus pandemic, enormous monetary and fiscal responses rode to the rescue of investor sentiment, engendering the fastest recovery from a crash in history. Equity markets Although virus headlines were ever present, the vast fiscal and monetary actions from ...
Read more >Introduction As a follow-up to our article on the winning investment styles during the COVID-19 crisis, this piece explores why value as a style has fallen out of favour and explores some circumstances that might engender a renaissance. Growth continues to trounce value and the fear of a deep recession resulting from pandemic has only reinforced the belief that economic growth remains elusive and that corporate earnings will therefore be scarce. It is no coincidence that in recent weeks,...
Read more >Backdrop COVID-19: As many regions of the world eased lockdown measures, the virus tightened its grip on the US population. Elsewhere, countries took a targeted approach to quashing local outbreaks, with Leicester becoming the first full local lockdown in the UK. By the end of June, confirmed infections globally had surpassed 10 million. Policy news: China provided additional liquidity injections to counter weak economic conditions. The US Federal Reserve cheered markets by con...
Read more >Backdrop COVID-19: As the virus took hold in the US and the UK‘s death toll worsened, European countries took tentative steps towards ending the lockdown. President Trump elevated his attacks on China and raised the prospect of tariffs, thereby intensifying the trade war tensions. Policy decisions: The Bank of England held rates at 0.1% and warned of severe house price falls. In the EU, the principle of burden-sharing was finally acknowledged by all member states, making way for ...
Read more >Backdrop COVID-19: As the virus took hold in the US, European countries took tentative steps towards ending the lockdown. President Trump began to refer openly to the possibility that the outbreak was a deliberate act. Policy decisions: Central banks and authorities around the world announced further stimulus and support measures. In a dramatic move, the Federal Reserve announced its intention to purchase selected parts of the high yield market. Meanwhile, the EU’s stimulus h...
Read more >Introduction Most fund managers were reasonably constructive on risk assets for 2020. There was no obvious deterioration in the default cycle for bonds and, while US equities were expensive, there was a good chance that earnings would rise to justify those lofty multiples as global growth accelerated. Indeed, risk assets started the year in a buoyant mood. Then came COVID-19. The dawning realisation of the scale of the health emergency and its impact upon our lives ushered in the fastest ...
Read more >Review of Q1 2020 In our current extraordinary circumstances, it is hard to believe that the term “COVID-19” was unknown to us at the beginning of the quarter. Risk assets may have started the year in relatively buoyant form, but the shadow of the coronavirus soon made its presence felt. As the virus spread from China and further into Asia and Europe, so risk assets tumbled and at break-neck speed. Equity indices posted eye-watering daily price moves during February and into March....
Read more >Backdrop COVID-19: As cases of the virus spread worldwide, risk assets began to wake up to the severity of the situation. As the world watched the emerging disaster in Italy, other countries applied their own lock-down rules as a first line of defence against uncontrolled infection rates and overwhelmed healthcare services. Policy decisions: Policy responses to the pandemic were unprecedented. Governments made hurried announcements in support of individuals and businesses, but th...
Read more >Although uncertainty about the future is extremely high, it is helpful to consider scenarios that may play out from here. From a financial market perspective, the variables that dictate the duration and depth of this bear market are clear: 1. The success of the lockdown in achieving a peak in the number of deaths for this wave of infections. 2. The speed with which the authorities can release the lockdown. 3. The degree to which the economic damage is seen as cyclical rather t...
Read more >Bear markets are punctuated by high volatility and sharp rallies. Here are some thoughts on what we can expect in this time of crisis. First phase The initial phase is typified by a significant drop in asset prices in a very short space of time. There is no question that we have already experienced this first wave; indeed, the speed of the fall has exceeded that seen during the Wall Street Crash of 1929. Tug of war We are now in the phase of greatest uncertainty, during which we ...
Read more >As a research team, we are reading as much as we can about the COVID-19 virus in order to understand more about the potential economic consequences of the crisis. Following our Guidance note posted on 16 March 2020, we offer some further thoughts below. The virus itself The Imperial College report (“Impact of non-pharmaceutical interventions (NPIs) to reduce COVID-19 mortality and healthcare demand”, published 16 March 2020) is extremely helpful in highlighting the key facts to consi...
Read more >The reaction of financial markets to the spread of COVID-19 has been dramatic and, as economic statistics roll in over the coming weeks and months, and companies report their earnings, the actual scale of the damage will become clearer. Whilst acknowledging that the situation, and the authorities’ responses to it, are changing by the day, we have put together our current thoughts on the economic and financial impacts and also suggested some possible policy actions that could be deployed to ...
Read more >Backdrop Coronavirus: Cases of the virus accelerated in China and spread further into Asia and Europe. UK Politics and Brexit: The UK and the EU postured on trade, with the Prime Minister threatening to walk away from talks. Sajid Javid resigned as Chancellor as part of a cabinet re-shuffle. Global Politics and Events: The Iowa caucuses signaled the start of the US primaries. Tensions between Turkey and Russia intensified after Turkish soldiers were killed in an attack in Syri...
Read more >Backdrop UK Politics and Brexit: The UK left the EU on 31st January, opening the way for more intense trade discussions against a tight timetable. The Labour leadership battle got into full swing. Controversially, FlyBe was saved by government intervention. Huawei’s involvement in the UK’s 5G network was also in the spotlight. Global Politics and Events: In the Middle East, the US killed an Iranian military commander. Amid rising tension, the Iranians shot down a Ukrainia...
Read more >Review of December Equity markets chalked up strong returns in December, rounding off a banner year for stocks. With risk appetite high and yields on the rise, credit markets outperformed government bonds. Oil and gold prices rose. Backdrop UK Politics and Brexit: The Conservative party won a resounding victory in the general election. Jeremy Corbyn resigned and announced a “period of reflection” after Labour’s heavy defeat. An impressive result for the SNP in Scotland re-opened...
Read more >Just over a year ago, in the midst of a market downturn, we wrote a note entitled, “Time to hibernate?”. In reflecting upon this question at that time, we concluded that it was not the right moment to turn away from risk assets, on the basis that a further run into 2020 was possible if certain conditions were met. We pointed to the following dependant factors and, a year on, we can reflect upon how events have transpired: The Federal Reserve blinks and changes course from further ti...
Read more >We have seen a great deal of commentary about fund liquidity this year, with the travails at Woodford Investment Management bringing increased scrutiny to the issue portfolio composition in the context of fund or strategy size and in/out flows. More recently, the issue of liquidity in open-ended property funds has returned the fore and along with it, the threat and reality of dealing suspensions. This article seeks to clarify how we capture liquidity considerations in our research process an...
Read more >Backdrop UK Politics and Brexit: Electioneering began in earnest, with politicians falling over themselves to make bolder spending promises. Whoever wins the general election, the public sector is predicted to return to a size not seen since the 1970s. The London Bridge terrorist incident brought security issues to the forefront. Global Politics: Unrest in Hong Kong intensified and in local elections, the vote was overwhelmingly pro-democratic. The US Senate passed legislation ...
Read more >Backdrop UK Politics and Brexit: Brinkmanship was the order of the day, with PM Johnson pledging to enact a no-deal Brexit if the EU refused to compromise. While a withdrawal deal was secured just in time for the EU summit, its passage through Parliament was thwarted. A Christmas-time general election was called. Global Politics: There was ongoing unrest in Hong Kong, leading to fears of a more concerted Chinese clamp-down. President Trump’s shock announcement that US troops wo...
Read more >September was a positive month for equities, recovering some ground after a difficult August. Total returns from fixed income were mixed, with some segments struggling to make headway. Backdrop UK Politics and Brexit: The Westminster drama continued. Long-standing Tory MPs were amongst those expelled from the Tory party for seeking to prevent a no-deal exit. Parliament was suspended but MPs returned after the Supreme Court judged the decision to prorogue unlawful. Meanwhile,...
Read more >Backdrop UK Politics and Brexit: The government caused outrage by confirming its plan to suspend parliament and political parties began preparations for a possible general election. PM Johnson visited the German and French leaders, but a withdrawal deal remained as elusive as ever. Global Politics: Clashes between Hong Kong protestors and the authorities became increasingly violent. In Italy, the coalition fell apart and PM Conte was given the go-ahead to form a new government. In ...
Read more >In this Q&A Guidance note, we put forward our thoughts on some of the puzzling questions of the day: There were good reasons to be pro-bond, but what now? What equity bull market? Continued largesse from central bankers and the implications for assets. Possible routes to a change of regime. Thoughts for portfolio allocations. Roll up, roll up, for the bargain of the century: a sovereign bond that matures in 100 years and gives you the princely yield of 1%! This bond ...
Read more >Backdrop UK Politics and Brexit: Boris Johnson became Prime Minister and kicked off on a no-deal “war footing”. The new European Commission President, Ursula von der Leyen, reiterated the EU’s desire to avoid a hard exit. Reports indicated that Brexit uncertainty may have already pushed the UK into a technical recession. Global Politics: Tensions with Iran ratcheted up, with tanker attacks and seizures. Protests in Hong Kong about Chinese control intensified. A snap electio...
Read more >Recent high-profile events in the world of investment funds have reminded us of the risks that fund managers run by allocating to less liquid investments. Understandably, the focus has been upon the liquidity issues surrounding unlisted stocks, but questions can also be asked of more mainstream and listed assets, where liquidity is not always what it seems. In the case of the Woodford Equity Income fund, the vicious circle of redemptions and liquidity issues that has emerged in recent weeks...
Read more >June was a blockbuster month for many equity markets due to expectations of looser monetary policy and optimism on trade. Bond markets also delivered positive returns as yields fell. The gold price made positive strides. Backdrop UK Politics and Brexit: Theresa May ended her premiership and the Tory leadership campaign began. President Trump visited the UK. Global Politics and Trade: US-Iran tensions intensified after the oil tanker attack in the Gulf of Oman and the sh...
Read more >Backdrop UK Politics and Brexit: It was a bruising month for Conservative and Labour, with both the local elections and the European elections revealing the extent to which support for the main parties has ebbed away. Cross-party talks on Brexit came to nothing. Under intense pressure, Prime Minister May finally announced her resignation. Trade: President Trump shattered the relative calm in global markets by threatening to raise and extend Chinese tariffs. With trade talks grinding ...
Read more >The FCA’s spotlight on fees engendered a long over-due focus on charges for all in financial services who reside along the multiple links of a customer’s value chain. In the world of funds, industry-wide launches of “clean” share classes from 2013 onwards was part of a huge “unbundling” exercise, which promoted greater understanding about the cost of purchasing and holding investment products. The debate about costs and “value for money” is far from over and this remains a c...
Read more >Backdrop Brexit: having failed to exit the EU at the end of March, a Brexit extension was granted until 31st October 2019. Parliament rejected “no deal” by a single vote and Prime Minister May and Jeremy Corbyn began collaborative talks with a view to finding an acceptable path through the impasse. Trade: President Trump hailed a forthcoming “very monumental” trade deal with China. The US and the EU commenced trade talks, under threats of new tariffs from the US. Economic...
Read more >Equity markets made progress, although the impressive Q1 rally began to fade. Sovereign bonds and investment grade corporate bonds performed strongly, particularly at the longer end of the curve. High yield markets were mixed. Oil and other commodity prices rose due to supply issues. The gold price fell back. Backdrop March was a fruitful month for most investors. Sovereign bonds performed strongly as the global growth story continued to flounder, while equities continue...
Read more >Equities pushed ahead, although an undercurrent of trade and global growth concerns persisted. Negative returns were seen from UK gilts, while credit markets were flat to positive, with high yield outperforming. The oil price rose on news of output cuts while gold fell modestly. Backdrop It was another good month for risk assets, with equities and high yield building upon the strong returns seen in January. Economically, there was mixed news from the US. A strong January jobs re...
Read more >On 27th February 2019, we introduced Orbis OEIC Global Balanced (Standard) to The Adviser Centre (see bulletin and fund factsheet). The Standard Share Class of this fund is subject to an innovative fee structure and we thought it would be useful to provide some more detail, particularly as it is a topical subject at present. In summary, the only way in which Orbis Investment Management Limited (Orbis) is paid for running the fund is through the performance fee. There is no annual man...
Read more >A more dovish US central bank and some optimism about the US-China trade talks helped risk assets to rebound from a dismal December. The positive picture extended across government bonds, credit and equities. Oil and gold prices also rose. Backdrop After a truly dismal December, the new year glittered as investors were attracted back to cheaper, oversold risk assets. This sharp recovery in equities and credit markets occurred in spite of a continuing daily digest of macro a...
Read more >Traditional asset classes have enjoyed a remarkably strong innings for many years. A portfolio consisting of 60% in global equities and 40% in global government bonds would have generated a total return of around 7% per annum (compounded) over the past 25 years (source: Waverton Investment Management, based upon FTSE All World Total Return Index and FTSE World Government Bond Index, in sterling terms). Fixed income contributed meaningfully to this fine outcome; the 10-year gilt yield began thi...
Read more >It was a dreadful month for stock markets, with sentiment fragile and volatility high. Safe havens were in the vanguard, with sovereign bonds, gold and the yen gaining ground as investors’ nerves were tested. The oil price continued to slide. Backdrop Santa Claus failed to sprinkle his festive cheer onto Wall Street this Christmas. In fact, it was the worst December for US stocks in nearly a decade, including the worst-ever Christmas Eve decline for the S&P 500. Technica...
Read more >Overview It is no secret that we have spent the last 12 months being highly sceptical about the likely path of long-term returns for risk assets. We saw the giddy mix of high momentum and unappealing valuations, combined with investors being very long of risk assets, as a difficult backdrop. We questioned the likelihood of the momentum of the global economy and indeed, risk assets, being maintained, as well as the almost universal belief that inflation was back and that bonds were therefo...
Read more >With political and macro issues still dominating, sentiment remained fragile. Equities were mixed; the UK and European markets were laggards, but gains were seen in the US, Asia and emerging markets. Sovereign bonds were mixed and credit markets underperformed as spreads widened, particularly in high yield. The oil price fell sharply. Backdrop Once again, markets were buffeted by Brexit, US-China trade and Italian budget headlines. In her efforts to sign off a Brexit deal with B...
Read more >It has been a golden age for fixed income investments. “The Great Moderation”, falling interest rates, muted inflation and quantitative easing have been great friends to holders of bonds. The 10-year gilt yield reached a high of 16% in 1981 and fell to a low of 0.5% in 2016. Years before that nadir, however, investors were beginning to fret about the prospects for bonds and looking for alternatives, fearful of negative returns from an asset class that had been so good for them. Turni...
Read more >After “Red October”, and as a rocky 2018 draws to a close, is it time to hibernate? Our last attempt to explain the madness in risk markets was in February 2018, just ahead of the first mini-meltdown of the year. Our main contention was that, as central bankers had turned from “lenders of last resort” to “buyers of last resort”, asset prices were a work of fiction. We also argued that any attempt to remove the monetary punch bowl would, at the very least, increase volatility a...
Read more >It was a rough month for equities as renewed concerns about tighter financial conditions added to nervousness about US-China trade and a less buoyant outlook for corporate earnings. Bond yields climbed, then fell back in response to the risk-averse conditions. The oil price fell sharply and the gold price made some progress. Backdrop Ten years on from the global financial crisis, October upheld its (somewhat unwarranted) reputation as a rough month for risk assets. Higher U...
Read more >Equity markets were mixed, with Asia and emerging markets underperforming again. US markets crept up to record highs, despite continued nervousness about trade and higher US rates. Rises in government bond yields resulted in negative returns. High yield markets outperformed. The oil price moved up in response to supply issues. The gold price fell back. Backdrop September was a choppy month for risk assets, with the worries of trade tariffs, emerging market challenges and risi...
Read more >Trump’s trade threats and events in Turkey and Argentina stoked risk aversion across global equity markets. Most equity markets fell, although US equities ignored the prevailing mood to chalk up new highs. Fixed income markets delivered modest positive returns. The oil price rose, while the prices of industrial metals and gold were under pressure. Backdrop Emerging market woes and ongoing trade tensions between the US and China overshadowed this month’s proceedings and did ...
Read more >Higher yielding bonds outperformed UK gilts and corporate bonds. Global equity markets made progress in the face of political noise. The UK market was a laggard, but still chalked up a positive return. Volatility was seen in emerging markets. Commodity markets, including gold, were under pressure. Backdrop With scant progress on Brexit negotiations since the spring, the Prime Minister and her cabinet met at Chequers to thrash out the UK’s position regarding its future rela...
Read more >US/China trade tariffs dominated the month, unsettling risk assets and particularly emerging markets. It was a negative month for bonds, with UK government bond yields rising and credit spreads widening. The oil price rallied sharply, while the gold price fell to a six-month low. Backdrop June began with an optimistic tone but disquiet about the trading relationship between the US and China soon cast its shadow. President Trump approved tariffs on $50bn of Chinese goods and propo...
Read more >The debate about the use of active and passive funds is well-rehearsed, but it is very often couched in the context of one “versus” the other. This is a phoney war. The reality is that either or both types of vehicles have merits and can be valid, depending upon needs and circumstances. A passively-managed fund can be an appropriate choice when: Pure exposure to market direction is the overriding concern. A low management fee is a priority. There is no desire/ability to tak...
Read more >Gilts outperformed credit, with disappointing economic data in the UK suppressing yields. Italian politics caused peripheral European bond spreads to widen. UK equities performed relatively well for a second month, but European equities were overshadowed by political trauma in Italy and some emerging markets suffered extreme weakness. The stronger US dollar was a headwind for commodity prices. Backdrop It was a gloomy month for UK plc, with manufacturing and services data weak an...
Read more >Fixed income markets weakened, with the US treasury 10-year breaching the psychologically-important 3% level during the month. US equities traded nervously, while UK and European equities made strong gains. Commodities rose, with the aluminium price spiking after Russian sanctions. The oil price reached a three-year high, while the gold price ended the month in negative territory. Backdrop The fragile tone of the first quarter persisted this month, as investors digested major new...
Read more >Introduction Strategic bond funds come in all shapes and sizes and the IA £ Strategic Bond can be one of the more difficult sectors to navigate. Following the removal of Man GLG Strategic Bond fund from our Recommended list (see Bulletin, 23rd April 2018), we are putting pen to paper to express some of our thoughts about the sector and the role of strategic bond funds in portfolios. “Dynamic” strategic bond funds We categorised Man GLG Strategic Bond as “Dynamic” (see our ...
Read more >March was replete with unnerving news for equity investors. Most markets ended the month in negative territory. Government bonds re-asserted their safe-haven status and gilts outperformed credit materially. Risk-aversion sapped enthusiasm for commodities, although oil rose on demand/supply news. Backdrop The UK newswires were dominated by the poisoning of a former Russian double agent and his daughter in Salisbury by means of a military-grade agent, recalling the dark days of the C...
Read more >With increasing numbers of financial advisers using outsourced solutions for their clients’ investment needs, the multi-asset market, in all its different guises, has swelled. This level of choice is a boon but, by the same token, the task of reviewing this investment labyrinth to find the most appropriate products and services is not to be under-estimated. Multi-asset solutions are available in a number of different forms, from simple packaged solutions at one end of the spectrum, to dir...
Read more >Fixed income markets delivered flat to negative returns, with higher risk credits impacted by risk aversion. A spike in US bond yields was the big story of the month. This backdrop unseated equity markets and investors experienced material negative returns. Sterling weakness mitigated some of the negative impact from overseas equities. Oil and gold prices fluctuated. Backdrop In the UK, there was little change to the muddled Brexit storyline. Tory hard-liners demanded a “clea...
Read more >There was exuberance in equities, with new highs seen in several world markets. However, the UK lagged, delivering a negative total return thanks to Brexit worries and stock specific news. Government bond yields rose as economic growth reinforced the idea that interest rates will have to rise. The oil price moved up, supported by the economic backdrop and continued supply cuts. The weaker dollar was positive for commodities overall. Backdrop In the UK, a cabinet reshuffle tur...
Read more >The problem - the normal rules of engagement no longer apply While we can spend many hours contemplating the rights and wrongs of the great central bank experiment we are living with, we can all agree on the consequences, namely, that risk asset prices are fully priced, bond yields are artificially low and consequently, volatility has been completely suppressed. The confusion - where did the economic cycle go? Most of us have been brought up on a diet of economic cycles, with booms, bus...
Read more >It was another positive month for most equity markets. Sector rotation saw some unloved areas return to favour as investors locked in profits from high-flying stocks before the year end. Sterling bond investors also enjoyed positive total returns, as gilt yields were steady despite rising US treasury and bund yields. Commodity prices rose, with supply disruptions bolstering oil and gas prices. Backdrop A strong year for risk assets did not prevent Santa Claus from stopping by ...
Read more >Central bankers have spent nearly 10 years stimulating the global economy to: Prevent balance sheet recessions Generate positive wealth effects by deliberately targeting asset prices. Central bankers’ actions have suppressed volatility and, thanks to their constant interference in markets, true asset price discovery has become elusive and normal valuation metrics subverted. Indeed, the Goldman Sachs US Financial Conditions Index (which uses a variety of financial indicators to mea...
Read more >Attitude to risk and capacity for loss Risk profiling and asset allocation tools have received mixed press over recent years, especially after the FCA highlighted that, in their view, some tools had “flawed outputs”. Nevertheless, the usage of such tools has marched onwards and they have become embedded more widely into advisers’ investment processes. Risk profiling is a multi-faceted task that must take account of an investor’s attitude to risk, time horizon and ability to withs...
Read more >Global equities gained ground, led by the US. Elsewhere, it was a mixed picture. Government bonds found favour as risk appetite slipped, while selling pressure hit higher yielding credits. The oil price responded to dramatic events in Saudi Arabia. Backdrop November was a broadly positive month for investors, but it was not all plain sailing, with nervousness building mid-month and momentum turning against much-loved technology stocks towards the end. In the political scene, “...
Read more >Equities rose during an inauspicious anniversary month. Government bonds and credit markets also made progress. In commodities, the oil price continued to rise, while gold was little changed. Backdrop This month marked thirty years since the 1987 market crash and ten years since the onset of the global financial crisis. Such inauspicious anniversaries caused some to wonder whether October 2017 was to be another significant turning point for markets and the UK’s stormy weather add...
Read more >For the third time in twenty years, central banks around the globe have created the circumstances for yet another bubble. It is hard to dispute that, in aggregate, investors are long of expensive assets but short of the volatility that usually accompanies them. The global money-printing exercise has anaesthetised the post-GFC patient and ensured that there is an absence of true price discovery in assets. What is the problem? Valuations! The world is priced for perfection; in fact, the...
Read more >On 7th November 2017, we introduced Orbis OEIC Global Equity (Standard) to The Adviser Centre (see bulletin and fund factsheet). The Standard Share Class of this fund is subject to an innovative fee structure and we thought it would be useful to provide some more detail, particularly as it is a topical subject at present. In summary, the only way in which Orbis Investment Management Limited (Orbis) is paid for running the fund is through the performance fee. There is no annual manage...
Read more >A mixed picture in equities; the UK market was lacklustre while other developed markets performed well. Sterling strength diminished returns from overseas assets, however. Negative total returns were seen in sovereign and investment grade corporate bonds as yields rose. Lower quality bonds outperformed. The oil price rose, but gold weakened as risk appetite returned to the fore. Market Review – September 2017 In the news over the month, we saw the hurricane season deal a heavy ...
Read more >Sector characteristics There are five “Mixed Asset” sectors, according to the Investment Association (IA) - Flexible Investment, Mixed Investment 0-35% Shares, Mixed Investment 20-60% Shares, Mixed Investment 40-85% Shares and UK Equity and Bond Income. In terms of assets under management, the 20-60% Shares and the 40-85% Shares sectors are the most popular by a significant margin. Of the £130bn invested in the mixed asset sectors overall, these two can claim 35% and 38% of the asset...
Read more >Geo-political risk sapped enthusiasm for risk assets. Safe-haven assets of gold, government bonds and the yen were favoured. Market Review – August 2017 Geo-political concerns and light summertime trading added up to a mixed month for risk assets. President Trump’s “fire and fury” comment, referring to North Korea’s threats against the United States, was met by a renewed risk-off tone to markets, prompting rallies in the classic safe-havens of gold, government bonds and the ...
Read more >When we consider the sheer diversity of the countries that make up the emerging market complex, it reminds us that establishing an investment process to incorporate and organise the information required to manage a fund is no simple undertaking. What has Brazil got to do with Taiwan? Or South Africa with the UAE? Resources and scale Gaining sufficient knowledge about the different countries in emerging Asia, emerging Latin America, emerging Europe, emerging Africa and emerging Middle Eas...
Read more >After a short bout of volatility at the end of June following hawkish comments from central bankers, investor sentiment improved. Equity, bond and commodity markets made progress. Market Review – July 2017 After the central bank-inspired volatility at the end of June, investor sentiment recovered during July, allowing both bond and equity markets to make progress. The technology sector, which had been the subject of bouts of profit-taking, recovered its poise. Investors were prepa...
Read more >Central bankers shocked bond markets out of their narrow trading ranges. Equity markets struggled, with technology stocks under pressure and cyclical stocks enjoying a sudden renaissance. The oil price fell on fears of a supply glut and the gold price was also weak. Market Review – June 2017 It’s hard to believe that the ill-conceived UK general election took place only just over month ago. In what turned out to be a tragic month, this game-changing political event was over...
Read more >Central bankers have returned to the limelight with a vengeance in the past few days and just as the quarter ends, markets are shifting their perceptions about the speed of monetary policy changes. The previous title of this piece when I sat down to write it at the beginning this week, “Has anyone seen the reflation trade?”, has become rather irrelevant for now. Half-time report This year, equity market leadership has had a distinctly cautious feel; bond markets have been pretty chi...
Read more >Technology: the only game in town? The buzzwords abound - the “internet of things”, in the Cloud, B2B (wasn’t that a pop band in the 1980's? Ah no, that was ABC…). All of this newly-coined terminology is a means of capturing a phenomenon that leaves those of a certain age rather vexed, while Generation X quite rightly looks on and sniggers.We are now at a point where technology calls into question the every business model, offering new solutions for operational efficiency and client in...
Read more >In our bulletin of 21st June 2017, we communicated the news that Vincent Devlin, manager of BlackRock Continental European, is stepping away from portfolio management and research responsibilities. As a result of this change, we removed the fund from The Adviser Centre. Who are the new managers? Stefan Gries and Giles Rothbarth, both established members of BlackRock’s European Equity team, have been appointed co-managers of the BlackRock Continental European fund. Stefan Gries ...
Read more >May was another eventful month on the world stage. Bond markets moved ahead, with the ongoing “hunt-for-yield” supporting credit. Equity markets were also broadly positive, although sector leadership narrowed. The oil price gyrated in response to supply news and industrials metals were weaker. Market Review – May 2017 May was another eventful month on the political scene. As widely expected, Emmanuel Macron won the French presidential election. In the US, President Trump...
Read more >In 1875, Anthony Trollope wrote the magnificent "The way we live now", a story of greed, corruption and the madness of crowds. Today, trying to stand above the parapet and ask for some considered perspective doesn't get you very far. In today's rapid opinion-forming world, which is predicated on instant information, long-term perspectives are often frowned upon as if you aren't quite playing the game. In this note we shall briefly reiterate our key concerns, which are: 1. 10-year bon...
Read more >At the recent Professional Adviser Multi Asset Roadshows, David Jane and Anthony Rayner, managers of Miton’s Multi Asset Funds, presented their approach to income investing. This session was a reminder of the opportunities, challenges and dangers of income investing. Investors have typically relied upon the idea that investing in income-generating assets is a lower risk approach, as it points a portfolio naturally towards fixed income securities and dividend-paying shares of more establis...
Read more >Politics took centre stage again in April. Bond markets were positive, with risk aversion attracting safe-haven buyers early in the month. Investors cheered the prospect of a Macron victory in France and this helped equities to move ahead. Weakness in the oil price and other commodities emerged towards the end of the month. Market Review – April 2017 April was another politically-charged month, although risk assets generally made further progress. Investors were nervous ahead...
Read more >Bond yields rose initially and then fell away towards the end of the month as risk aversion crept back. Equity markets made progress, although the US and the UK weakened towards the end of the month. European and Asian/emerging markets were positive. The oil price moved in a wide range, while gold recovered from weakness early in the month. Market Review – March 2017 After all the fun of the fair in February, some harder truths made their presence felt during March. That said...
Read more >We’ve heard the end of the bull market in bonds story many times over. Indeed, the end seems to have been coming for an awfully long time. Without wishing to get hung up on these well-rehearsed arguments, it’s worth pausing for a moment to contemplate what this means for diversified portfolios and mixed asset funds. Notwithstanding a few bumps in the road, fixed income markets have had a pretty continuous party through the 1980s, 1990s and into this century. Not surprisingly, bonds ha...
Read more >Market Review – February 2017 Equity markets pushed ahead strongly over the month, overcoming President Trump’s twitterings and European political uncertainty ahead of the Dutch and French elections. Fixed income markets joined in the party, with government bonds, in particular, delivering robust returns. Interest rate sensitivity was a friend to bond investors this month. In commodities, the oil price gyrated on supply news and the gold price rose. It was a good month for...
Read more >Gold and gold-related equities are structural features of a number of popular managed funds. This most familiar of commodities can play a multi-faceted role in investment portfolios. Most obviously, it remains one of the most enduring safe havens. Are you worried about a new military conflict? Hold some gold. Are you concerned that President Trump’s policies will cause economic mayhem? Hold some gold. Do you think that equity markets are vulnerable? Hold some gold. Gold pri...
Read more >This time last year, we were concerned about falling equity markets and even that a recession may be coming along the tracks. It’s quite something to reflect upon that fact that 12 months on, deflationary gloom has been replaced by reflationary optimism. Equity markets – notably the US – are priced for a seamless transition from low growth and low inflation, to higher growth and controlled (“good”) inflation. The thing is, it is not really clear that fixed income markets agree, ...
Read more >Market Review – January 2017 The month was dominated by President Trump – his inauguration, Tweets and executive orders. Developed equity markets made some progress overall, while emerging markets were, in aggregate, robust. A negative month for government bonds but credit markets, particularly high yield bonds, outperformed. The gold price has been rising, as have industrial metals prices. Oil has been range-bound on mixed supply news. The year began in a buoyant mood, an...
Read more >Looking back at 2016 – it’s behind you (phew)! If you had paid a visit to Mystic Meg at the beginning of 2016 and she had revealed the political events of the year to come, how would you have positioned your portfolios? Sterling weakness would have been an obvious pick after the vote to leave the EU. How about the sheer scale of the move in the FTSE 100 and the international earners? More difficult to predict. Would you have been courageous enough to maintain a healthy allocation ...
Read more >Had you known what 2016 had in store, what would have been your central expectations for markets and currencies? Sterling weakness – yes, pretty much a slam dunk in the event of a vote to leave the EU. The surge of the FTSE 100 index and the international earners? Probably, but to what extent? How about keeping a healthy allocation to the relatively expensive US market in the aftermath of the Trump victory? A much more debateable decision. And how about the sterling bond market? Wo...
Read more >Overview Main Street continues its fight back, with populism on the march globally. Fiscal stimulus is expected to replace monetary policy as a driver of growth this year. Inflationary pressures are building, with wage pressures intensifying in the likes of the US and the UK. World trade growth remains sluggish. Globally, trade volumes are flat and the picture is weaker for Asia, where volumes are falling. At the same time, global trade prices are rising. This combination poi...
Read more >Market Review – December 2016 Most equity markets enjoyed a Santa rally, although emerging markets were more subdued. The Italian referendum and a US interest rate hike failed to dampen festive spirits. “Value” continues to be broadly in favour. The oil price rallied on hopes of supply cuts. Sterling bonds had a better month, while US yields continued to rise. The Santa rally really got into its stride in December and equity markets extended the “Trump Bump”. US eq...
Read more >Investors looking for income from equities have a wide variety of funds to consider, over and above the traditional starting point of the IA UK Equity Income sector. Ultra-low interest rates around the world have spurred a search for income that has extended investors’ risk exposures, both down the market cap scale and across to overseas markets that would not previously have been considered, or indeed been available. Income-orientated products are available in most equity sectors nowaday...
Read more >Market Review – November 2016 The month was dominated by the US election and investors’ responses to the perception of stronger growth and higher inflation. In equities, economically-sensitive sectors were favoured, while bond yields rose. US equity markets forged ahead, making new highs, but other equity markets were in a less euphoric frame of mind. Sterling staged a partial recovery, particularly against the euro. Commodities were generally strong, but gold continued its r...
Read more >Market Review – October 2016 It was a mixed month for risk assets, with the upcoming US election taking centre stage. Equity markets lacked clear direction while bond markets were weak, particularly sovereign bonds, as investors looked ahead to regime and policy changes in the US. “Hard” Brexit chatter took its toll on sterling. October was not an easy month for many investors, particularly if you were a bondholder, and especially if you were an overseas investor holding ster...
Read more >At the risk of writing one of those, “on the one hand, on the other hand” articles, with apologies, here is one! The election of Donald Trump means that we are all on a level playing field of guessing games now. Over the days since the result was known, markets have moved from horror, to relief, to nervousness, but in the process of doing this, some clear sector trends are emerging. Spend, spend, spend Removing the rhetoric (let's hope it is mostly that…) around walls, immigrati...
Read more >The Global sector is not an easy one to chew through, featuring, as it does, around 250 funds. Stripping out the income-orientated funds to form their own sector in 2012, IA Global Equity Income, eased the fund selection task to a degree, but nevertheless, if choice is what you want, you certainly have it here. Reinforcing this point, funds’ KIID SRRI scores in this sector range between 4 and 7, which, in itself, speaks volumes about its diversity. Any collection of funds that has a mu...
Read more >Fixed income allocations in portfolios, and more specifically gilt allocations, have been strong performance drivers for much longer than many commentators expected. There was much fretting about gilt valuations when the 10-year was still yielding well over 2% a few years ago. In August this year, 10-year yields almost touched 0.50%. At that moment, there was a feeling that the market was ringing a bell for the low in yields for this extraordinary, if distorted, phase in markets. Since ...
Read more >Investors could be forgiven for feeling a little disappointed by their strategic bond funds when judged by relative performance alone. Over one, three and five years, the sector average performance is behind that of the £ Corporate Bond and the UK Gilts sectors. It is closer to the average return of the £ High Yield sector average, although still behind over five years (source: Investment Week/Morningstar, to 09/09/16). Is this purely returns-based disappointment fair? On the basis of some ...
Read more >Market Review – September 2016 Markets awoke from their summer slumber in September, with a host of (the same) issues returning to roost – central bank policy decisions, Brexit-related headlines, weakness in European banks, the US presidential race and also an OPEC meeting. It was a fairly mixed month for equities, in local currency terms. The UK’s leading shares index continued its cheer, with further sterling weakness supporting the big international earners. The mid and small...
Read more >The month of August very often serves up an unwelcome drama, which is then exasperated by thin market volume and the absence of senior members of staff. Not this year! The storm of the EU referendum vote gave way to strangely becalmed waters, with most people either on the beach, or thinking about being on the beach. Perhaps it was some kind of post-Brexit vote trance, with markets anaesthetised by the prospect, and then reality, of further monetary stimulus. Or perhaps people were just ex...
Read more >Market Review – August 2016 Market participants seemed to be mostly on the beach, or thinking about the beach in August. Equities: Markets were relatively becalmed and moved ahead, with low volatility and on low volume. Bonds: The Bank of England cut interest rates to 0.25% and returned to its bond-buying program, setting the gilt and sterling bond markets alight. Commodities: Commodities were generally weak, with the exception of the oil price. Market participants seemed to b...
Read more >Some IA sectors are a collection point for a disparate range of funds and the Targeted Absolute Return sector can boast particularly eclectic credentials. The IA requires funds in the Targeted Absolute Return sector to achieve a positive return, over a timeframe not longer than three years. Over and above this outcome-based rule, funds can be invested in any asset classes and can operate in a host of different ways, generating a variety of customer journeys. Inevitably, investors become u...
Read more >It feels opportune to be writing about UK equity funds at a time when the main UK index return, to date in 2016, would be placed in the first quartile of the IA UK All Companies sector. By comparison it would have featured in the third quartile in 2015. It is somewhat unusual to see the index doing quite so well; to some extent, this represents a reversal of some of the trends and dynamics that have previously been in play. Reversal of fortunes 2016 started in a turbulent fashion, with gl...
Read more >Investors looking for income from equities have a wide variety of funds to consider, over and above the traditional starting point of the IA UK Equity Income sector. Ultra-low interest rates around the world have spurred a search for income that has extended investors’ exposures, both down the market cap scale and across to overseas markets that would not previously have been considered, or indeed been available. If we thought emerging market income products were stretching normal boundar...
Read more >Market Review – July 2016 July was “Brexit bounce-back” month. Risk assets moved ahead and sterling stabilised. Equities: Overall, equity markets posted robust positive returns, fuelled by stimulus hopes. Bonds: Credit outperformed sovereign bonds, with sterling credit and gilts performing particularly well. Commodities: The oil price was notably weak, while precious metals were in positive territory. July was Brexit bounce-back month which saw risk assets firmly in favo...
Read more >Gold has regained its lustre this year. From its low point in December 2015, when the gold price bottomed at just over $1,000 per ounce, it reached a high this year of over $1,300 per ounce earlier in July, before falling away in the past week (as at the time of writing, 15th July 2016) as risk assets have moved back into favour. That rise of almost 30% in US dollar terms is enhanced by another 10% or so for sterling-based investors. Silver arrived a little late to the precious metals par...
Read more >Market Review – June 2016 The EU referendum was the main event, impacting upon global markets both before and after the vote. Sterling weakness boosted international earners, but banks and domestic stocks were hit hard. Flight-to-safety trades boosted government bonds and precious metals. The UK population voiced its opinion on June 23rd and the EU referendum dominated newsflow and market action over the month. After an emotion-fuelled month before the vote, the markets were ...
Read more >There has been a good deal of press lately about the renaissance in the performances of value-orientated funds. Is this a passing phase, or we are finally seeing the beginning of more rewarding time for value managers, after the longest ever period of underperformance from the style? Alastair Mundy of Investec Asset Management, a rare champion of long-term value in an industry that is increasingly short-term in its perspectives, pointed us to an interesting piece that was written by US inve...
Read more >In May’s review of the IA Mixed Investment 20-60% Shares sector, we discussed the fact that the (then) IMA reviewed and made changes to the mixed sectors back in 2012. The IA Mixed Investment 40-85% Shares sector loosely corresponds to the old IMA Balanced Managed sector. The “six-lane highway” description that we used for the 20-60% sector equally applies to the 40-85% sector. Quite plainly, when the equity allocation within a single sector can range between such wide boundaries, the...
Read more >Market Review – May 2016 Most risk assets made progress during May, with the notable exceptions of emerging market equity and debt. Sovereign bonds were also in positive territory, particularly the gilt market. The oil price was strong, but weakness was seen in precious metals and other commodities during the month. May was a nervy month, as investors contemplated the real possibility of another rate hike from the US Federal Reserve. However, a late push from equities enabled m...
Read more >There have been important announcements affecting two funds in the IA £ High Yield sector, as follows: 31st May 2016: Standard Life Investments Higher Income fund was removed from our Recommended list, following the departure of manager and Head of European High Yield, David Ennett (please see our Bulletin). 1st June 2016: Kames Capital announced changes to the management team for the Kames High Yield Bond fund, including the arrival of David Ennett as co-manager of the fund from...
Read more >The importance of financials The approach that managers have taken to financials has been a critical factor in their ability to out or underperform over the past decade. In spite of its travails, financials remain the largest component of the main indices, at a weight of over 20%. Following the financial crisis, the majority of managers were quite correctly under-exposed to banks but in the rehabilitation phase, they have been a more difficult play, with short bursts of strong performance...
Read more >Market Review – April 2016 After a strong month for risk assets in March, markets generally made further progress in April. Positive returns were seen across most equity and credit markets. Sovereign bonds were laggards this month. Commodities performed strongly across the board. Core equity markets made headway and the main UK, US and European markets delivered returns that were in positive territory. Some of the peripheral European markets were particularly strong as the...
Read more >The IA Mixed Investment 20-60% Shares sector corresponds to the old Cautious Managed sector, which was re-named by the (then) IMA at the beginning of 2012. Rather like the current debate about the definition for the IA UK Equity Income sector, there was much consternation and discussion around this change, given the number of interested parties involved. The change was partly inspired by the desire to harmonise the naming convention with the Association of British Insurers (ABI) and to shif...
Read more >“Brexititis”, a debilitating condition causing a sense of disquiet and a lack of activity, is spreading through markets. While the subject of the June EU referendum usually incites passionate reactions, fund managers are staying focused upon the task in hand – how to navigate their portfolios through this disruptive period. I’m sure it won’t come as a surprise that the majority of those we meet in the industry would prefer a win for the “Britain Stronger in Europe” campaign. ...
Read more >Market Review – March 2016 March provided some much needed relief to battered risk assets. Mid-February saw a change in sentiment which persisted into the following month, with the result that many markets returned strong positive numbers. Some of the more challenged equity markets recovered ground against this backdrop. The global emerging markets index generated a double digit return for March, with Brazil’s Bovespa leading the way – news about the domestic political situatio...
Read more >We last wrote about Japan for Adviser-Hub in May 2015 and it seems appropriate to revisit the sector on the occasion of the fifth anniversary of the devastating tsunami. The government has spent billions of dollars on reconstruction work but there is a long way to go and many thousands have been unable to return to their homes. Prime Minister Abe has pledged to bolster reconstruction efforts in northern Japan and to progress decontamination work in irradiated areas near the Fukushima nuclear...
Read more >Market Review – February 2016 After a torrid start to 2016, one of the worst in the post-Lehman era, the month of February continued in a highly nervous and volatile mode until around mid-month, when the appetite for risk dialled up again thanks in large part to soothing central bank rhetoric and an apparent bottoming in the oil price. Equity markets therefore improved over the second half of the month and the main UK market managed to eke out a positive return. The same was not true ...
Read more >Following the news that Richard Marwood, lead manager of the AXA Distribution fund, is leaving AXA Investment Managers (AXA IM) (see our Bulletin dated 22nd February 2016), please find below a series of questions and answers which we hope will assist you. Why has The Adviser Centre removed AXA Distribution from its Recommended list? As a result of Richard Marwood’s departure, Head of Distribution, Jim Stride, is now the manager of the AXA Distribution fund. Mr Stride is the architec...
Read more >Some IA sectors are a collection point for a particularly disparate range of funds. Global Bonds, Specialist and Targeted Absolute Return take the award for the most eclectic mixes. The IA requires funds in the Targeted Absolute Return sector to achieve a positive return, over a timeframe not longer than three years. Over and above this outcome-based rule, funds can be invested in any asset classes and can operate in a host of different ways. A (relatively) safe harbour This sector a...
Read more >The IA definition of the £ Strategic Bond sector The £ Strategic Bond sector only came into existence in 2008, having evolved out of the IMA UK Other Bond sector. The IA definition for the sector is very broad. In fact there is only one necessity - “funds must invest at least 80% of their assets in sterling-denominated (or hedged back to sterling) securities”. There are no constraints on asset allocation, with funds having the ability to invest globally across the different fixed...
Read more >Market Review – January 2016 It was a whirlwind start to January, with south being the prevailing direction. There were unnerving reminders of 2008, with equity markets posting their worst start to the year in post-Lehman times. 2015’s main themes continued to set the tone, namely China growth fears, the broader emerging markets slowdown and continued weakness in the oil price. Attention also turned to deteriorating economic data in the US and the worry that the Federal Reserve's...
Read more >2015 was always set to be a wild year. Central bankers were offering contradictory signals. The ECB was determined to slay the deflation dragon with ever larger quantities of bond buying, while the Federal Reserve was busy preparing the market for the first interest rate hike in nearly ten years. Investors moved from greed to fear in equal measure throughout the year, with risk assets coming under pressure from April on. The credit markets weakened in capital terms as spreads began to wide...
Read more >Market Review – December 2015 As we review the final month of 2015, it is a good opportunity to look at how markets fared over the year as a whole. December marked an inauspicious end to a mixed year for investors. The highlight of December 2015 was the first rate rise in the US for almost 10 years. In the end, the market was not sure what to make of it, probably because it had been analysed to death and people had been waiting so long for it to happen. There was certainly relief ...
Read more >Global manufacturing is in recession and deflation, not inflation, is the current threat. Net debt in the US is at all-time highs as revenues and earnings slide. Fund managers in most asset classes are uninspired, cautious or nervous. Buying the dips has worked since 2009, this year sell the rallies. Keep your powder dry for the downturns when they come. Any existing exposures should favour risk-diversified and absolute return strategies. Gold and sovereign bonds should be bett...
Read more >After decades of rapid economic growth, emerging markets have begun to slow down and mature. Now they are only growing at a modestly faster rate than developed economies, with no obvious reason for them to return to the heydays of the 1990s and 2000s. In many cases, the economic “miracle” that the emerging markets experienced has been wasted. Countries, corporates and individuals have been busy leveraging their balance sheets – private sector debt-to-GDP has doubled since 2001 and is ...
Read more >Market Review - November 2015 Commodity weakness returned to being the key theme for the month. Oil, metals and also many soft commodity prices ended in negative territory, with copper being notably weak. This theme has continued into the beginning of December and at the time of writing, commodity equities are in the midst of a rout. The oil industry’s torture is being played out vividly in the US high yield market. This sector-specific distress, coupled with other idiosyncratic c...
Read more >Most would agree that we are entering a more complex phase for fixed income markets. The 30 year+ bond bull market is in its final act and all eyes are on the timing of the Federal Reserve’s “lift-off” interest rate rise. Prevailing views are that the Bank of England will follow suit in the foreseeable future. While December 2015 was beginning to look like a real possibility for action by the Fed, the full repercussions of the appalling terrorist acts in Paris, which are unknown at t...
Read more >Market Review - October 2015 October saw the return of the stimulus addicts, with markets responding positively to dovish signals from central bankers around the world. The Federal Reserve’s inaction in September was followed up by a weak US payroll number at the beginning of October, reinforcing the idea that the highly accommodative monetary stance will remain. Supportive comments from the ECB, with Draghi signalling the potential for further stimulus, bolstered European markets (al...
Read more >Index underperformance We talk a good deal about how tough it is to outperform equity indices, particularly on a net of fees basis. In UK equities over the past five years, this objective has been much more attainable if you have been able to, or chosen to invest materially in small and mid-cap (SMID) stocks. This has not necessarily been a shameless beta play on the part of performance-hungry fund managers. There is a wealth of opportunity further down the market cap scale. Managers...
Read more >Market Review - September 2015 After a torrid August, September failed to offer any respite for risk assets and left investors licking their wounds, with many equity markets chalking up their worst quarter for some years. Emerging markets and commodity weakness remained the dominant themes, intensifying worries about the path of global growth. The keenly anticipated FOMC meeting on 16th-17th September was a marker in the sand. Having prepared the market for a possible hike, the c...
Read more >Executive summary Central banks are in a bind. They have tried to manage the economic cycle as never before. They cannot cure all ills and as far as we are aware, they haven’t banished the economic cycle…! Suggested investment strategy favours diversified strategies, but value opportunities are emerging. Central bank nervousness? One of the most expansive monetary experiments in history is about to face an acid test. Central bankers are now hostages to their own fortun...
Read more >Our meetings with sector specialist investors are always highly informative and our recent review with the managers of the Guinness Global Energy fund was no exception. Much of the factual material in this piece is drawn from the team’s detailed presentation, for which I am very grateful. The oil price fall and its implications has been a major feature of 2014-15 market and economic backdrop. UK equity investors are particularly alert to the sector’s fortunes, given its significance i...
Read more >Market Review - August 2015 August 2015 was a weak and volatile month for risk assets. China again grabbed the headlines but unlike last month, the stockmarket’s weakness leaked into most other equity markets. The main worry has been the impact of a China slowdown upon global economic growth, but the devaluation of the yuan and the authorities’ blatant and almost comical attempts to prop up its falling equity market also unnerved investors. In the mêlée that ensued, many comment...
Read more >Why is active management in US equities such a challenge?Before putting fingers to keyboard to tap up this article, I updated our IA Sector Overview for the North American sector and was reminded of the challenges of running active money in this market. This is a well-rehearsed but nevertheless perplexing subject - we would cite the following factors as headwinds for active managers: The efficiency of the market. Gaining an information edge, particularly in the larger-cap arena, is to...
Read more >Unloved and misunderstood? Even after 25 years of relatively mediocre economic growth and with a stockmarket that has been in the wilderness for most of that time, Japan is still the third largest economy in the world. The equity market has traditionally been seen as an uncorrelated play within developed world markets, very much dancing to its own tune. In reality, that perceived wisdom was always questionable, as broadly speaking, the market only made significant progress when foreign b...
Read more >We are at a fascinating juncture for markets, but that is hardly big news. The prospect of monetary tightening is highly significant for all asset classes, but that is not news either and the industry has been commenting liberally on the subject. The associated challenges for equity income fund managers are an interesting insight into the consequences of extreme monetary policies and the drive for yield and safety. A rational re-pricing Markets and investors have been behaving rationa...
Read more >Following the news that Ed Legget, manager of the Standard Life Investments UK Equity Unconstrained fund, is leaving Standard Life Investments (SLI) (see our Bulletin 23rd June 2015), please find below a series of questions and answers which we hope will assist you in your decisions on the next steps for both existing and new investors. Why has The Adviser Centre removed Standard Life Investments UK Equity Unconstrained from its Recommended list? Ed Legget is leaving SLI and will join A...
Read more >It is funny to see that managed funds, in all their guises, are the new sexy things in the fund industry. It seems that we have come full circle since the days of the traditional managed funds and, along the way, we have seen fund managers indulging investors - and themselves - in niche and esoteric products that were only ever going to have a limited shelf life. Small-cap European technology funds may have had their time in the sun but boy, did they become unpopular as the nineties gave way t...
Read more >A potted history The Japanese equity market has been the bane of asset allocators’ lives for decades. In the 1990s, the market was dismissed as “super-cyclical”, destined to perform only when global growth was booming; if you wanted to add cyclical beta to your portfolio, Japanese equities were an answer. Having reached outrageous price/earnings multiples by the end of 1989 (54x according to Nomura Research), the Japanese equity went into free-fall, spending much of the next 20 ye...
Read more >Following the news that Sajiv Vaid, lead manager of the Royal London Corporate Bond fund, is leaving Royal London Asset Management (RLAM) (see our Bulletin 27th April 2015), please find below a series of questions and answers which we hope will assist in your decisions on the next steps for existing and new investors. Why has The Adviser Centre removed Royal London Corporate Bond from its Recommended list? Following Sajiv Vaid’s departure, Jonathan Platt, Head of Fixed Income at RLAM, w...
Read more >In contrast to the innate sense of discomfort expressed by the vast majority of the fund managers who we speak to, UK equities have moved ahead smartly since the beginning of the year. We had some meaty things to consider at the turn of 2015 – the ECB’s QE announcement, the Greek election and what happens next, deflation and the implications of oil price weakness. All of that, plus a perplexing UK election to look forward to. But perish the thought that challenging or downright distu...
Read more >Government bonds may still offer attractive tactical opportunities. Their strength in 2014 confounded all but a very few commentators as economic growth proved disappointing and deflationary forces were very evident. Entering 2015, the consensus outlook was again for economic “lift-off” to be achieved and consequently, for government bonds to post losses. But once again, they started the year extremely strongly and despite a sell-off in February, US yields were lower on 12 March than a...
Read more >Going global Institutions in the UK are progressively adopting a global approach to their investment allocations. Actuaries increasingly favour market cap-weighted indices as a better reflection of the investment opportunities available to investors and this approach is gradually being adopted by retail investors. Keen to capture the broader income-generating opportunity set, income investors have also been subtly shifting their emphasis towards globally-orientated products. The ration...
Read more >A funny kind of ‘region’ My favourite comment of the week has been from Prashant Khemka of Goldman Sachs Asset Management, who said that articulating a view on global emerging markets is like, ‘asking for a weather forecast for the world’. Treating the countries that are featured in global emerging markets index as a single investment unit is anachronistic, of course, but also inevitable. How else would you squeeze emerging Asia, Latin America, Europe, Africa and Middle East into...
Read more >Heaven and hell The IA Specialist sector: both a land of milk and honey and of drawdown hell, very often at the same time; a land that requires careful navigation and a keen eye on investment timing. Putting pen to paper for this article was a useful reminder of what is inside this treasure trove of funds that do not have a home anywhere else. Here is a broad summary of the groupings therein: country and regional equities (eg Brazil, Eastern Europe), energy, agriculture, resources, gold...
Read more >Asia – headwinds to tailwinds? The headwinds of muted global growth, consternation about China’s economic well-being and a lack of corporate earnings progression have all played their part in overshadowing the Asia ex Japan region over recent years. However, 2014 has been more rewarding for investors, with the IA Asia ex Japan sector average posting a robust return that was ahead of most other IA equity sector averages. Monetary policy is now a key driver of markets in Asia, just as it...
Read more >Following the news that Bradley George, Head of the Commodities & Resources Investment Team at Investec, is changing role within the firm (see our Bulletins, 12th February 2015), please find below a series of questions and answers which we hope will assist in your decisions on the next steps for existing and new investors. Why has The Adviser Centre removed Investec Global Gold and Investec Enhanced Natural Resources from its Recommended list? Investec Global Gold While the fund w...
Read more >Low interest rates, quantitative easing, gradually improving fundamentals and supply constraints have done wonders for property as an asset class since 2009. Over one year to 2nd January 2015, the IA Property sector average posted a return of 13.3%. By comparison, the IA £ Corporate Bond sector delivered an average return of 9.7% and the IA UK All Companies sector average stands at a very modest 0.9%. As a sub-group, most of the traditional UK commercial property funds delivered double-d...
Read more >The market environment We continue to face de-synchronised global growth. Cheap money forces investors along the risk curve in search of returns and this dynamic continues to bolster asset prices. "Defensive" equities are becoming ever more expensive. Their yields and their stability (real or perceived) remain attractive in a near zero interest rate world. US equities have outperformed, such that there is now a significant valuation divergence between the US market and ...
Read more >What’s in the Mixed Investments stocking? The Mixed Investments sectors are a veritable feast of different funds that come in all sorts of shapes and sizes. The task of understanding the differences and similarities, not to mention their merits (or otherwise), tests the most diligent and persistent of fund selectors. So how do you make sure you get the posh chocolates in your stocking and not the shrivelled satsumas? Cracking the performance brazil nut The ‘shares’ allocation ...
Read more >In the furore related to quantitative easing, it has largely gone unnoticed that since 2009, the US and continental Europe have been quietly closing their current account deficits.In the teeth of the financial crisis, China adopted a highly accommodative stance, significantly increasing its imports at the same time as import demand from the US, and more particularly Europe, was collapsing. However, as economic activity in China has slowed and imports have declined, this key engine of global gr...
Read more >Overwhelming consensus, overwhelmingly wrong The performance of the gilt market has been one of this year's big surprises and has wrong-footed many market participants. With a total return of 9.2% this year (to 13/11/14) for the main gilt index (source Morningstar Direct), an allocation to government bonds in a portfolio has proved its worth when it was least expected to do so. 2014 began with an almost universal view that interest rates would move up in the foreseeable future, but growth ...
Read more >European equity allocations – ouch! For investment portfolios, European equities do not tell a happy tale this year so far. For the year-to-date to 16/10/14, the IMA Europe ex UK sector average performance number had dipped down into negative double digits, at -10.5% (source: Morningstar Direct). The main indices are only marginally better than this. This weakness from a UK investor’s perspective is, in part, due to the euro’s weakness versus sterling – it has lost around 5% com...
Read more >Following the news that Richard Pease, the manager of Henderson European Growth, and James Milne, assistant on the fund, have resigned (see our Bulletin, 15th October 2014), please find below a series of questions and answers which we hope will assist in your decisions on next steps for existing and new investors. Why has The Adviser Centre removed Henderson European Growth from its Recommended list? Simon Rowe, previously co-manager of Henderson European Growth alongside Richard Pease, ...
Read more >We have seen strong performance from funds in the Asia ex Japan sector so far this year, with double digit returns achieved from funds at the top of the IMA sector table (performance to 18/09/14, sourced from Morningstar). Sentiment towards the region had been cautious and Asian markets, in aggregate, struggled to make progress last year. Nonetheless, while 2014 so far has been robust in performance terms, investors have broadly continued to favour more defensive stocks and sectors, and fund...
Read more >Following the news that Simon Brazier, the manager of Threadneedle UK, and other members of the Threadneedle UK Equities team have resigned (see our Bulletin, 4th September 2014), please find below a series of questions and answers which we hope will assist in your decisions on next steps for existing and new investors. Why has The Adviser Centre removed Threadneedle UK from its Recommended list? Our Recommended list is focused on our best ideas across the IMA sectors. We featured the T...
Read more >All good things come to an end, as they say. Most actively-managed UK equity funds are biased towards mid-cap companies, and often for good reason and to good effect. But the warm glow of outperformance was extinguished in the spring, as investors took fright from areas of the market perceived to be most highly valued. Mid caps have underperformed large caps since then and growth styles, in particular, have been in the firing line. Meanwhile, the smaller the better for those managers o...
Read more >The shifting sands of the financial services industry are leading to significant changes in the extended supply chain that serves the end investor. Prompted by regulatory changes and the drive for cost transparency, all industry participants are being forced to adapt in order to position themselves for the next phase of the industry’s development. At City Financial, we have recently launched The Adviser Centre, an online fund research and consultancy service that is designed specifically ...
Read more >Exchange traded funds (ETFs) are an increasingly important feature of the investing landscape, particularly as the focus on investment fund costs has intensified. Determining how and when ETFs are most effectively and appropriately used is dependent upon the purpose of the investment, the asset class in question, the time horizon of the investment, liquidity considerations and last but not least, the investor’s needs and expectations. Deploying ETFs for asset allocation purposes Passiv...
Read more >Following a visit to Woodford Investment Management’s offices this week to meet with Craig Newman, CEO and Neil Woodford, Head of Investment, we are pleased to present our thoughts below in a Q&A format. What inspired the creation of Woodford Investment Management (WIM)? The firm was established on the basis of a genuine desire to build an asset management business that is founded upon investment competence and a focus on its clients. Simplicity, transparency and openness are the f...
Read more >The popularity and appeal of UK Equity Income funds is enduring – and for good reason. The UK equity market has a strong income-paying heritage, with around 60% of returns for the UK equity market attributable to reinvested dividends over the past 25 years (source: Fidelity). With this in mind, an income-biased fund arguably has an innate head start, thanks to its income cushion. The yield requirement also encourages buy and sell disciplines that make intuitive sense, as more expensive, ...
Read more >At the end of 2013, corporate bonds offered a distribution yield of 3.6%, using the Vanguard UK Investment Grade Bond Index fund as a proxy for the asset class. This historically-low yield level is, of course, the result of the rock-bottom interest rates that have now been in place for over five years. With limited returns therefore available from cash and, subsequently, government bonds, the gradual healing of the economy and strong investment demand have allowed corporate bonds to enjoy a ...
Read more >The active versus passive debate is constantly couched in terms of cost, when there are in fact many factors to consider. The initial appeal of passive vehicles as low cost entry points for investors remains the most relevant. In their purest form, the level of transparency is also highly appealing to investors. The slightly puerile debate about the failure of active management being responsible for the rise of passive management somewhat misses the point. Passive investment is about trying to r...
Read more >The IMA Targeted Absolute Return sector has been the subject of significant comment and debate over recent years. The column inches dedicated to the subject certainly demonstrate that many investors are sceptical towards the concept and/or usefulness of the sector. We argue that the sector contains a number of attractive investment vehicles that merit consideration at either the core or periphery of investors’ portfolios. However, the extreme range of mandates and objectives incorporated...
Read more >At The Adviser Centre, our primary aim is to support financial professionals in their fund selection and suitability work through independently-minded research, borne of decades of industry experience. Our process is framed by the fundamental concepts of “quality”, “value” and “utility”, through which we answer the key questions of why to invest in a fund, how it is likely to behave and how it can be deployed.
The Adviser Centre team members are some of the most experienced in the fund research industry. We can always look forward to robust and constructive discussions and we have great respect for their views and perspectives, which, given the breadth of their fund and market knowledge, come from an extremely well-informed position.
We have known and worked with the team for several years and we value their experience and the insights they provide to our own investment process. The service differentiates itself by its more focused nature and the information on their factsheets is useful in emphasising a fund’s key mandate, exposure and style biases, helping to explain the risk/return journey that our customers can expect.
©2021 The Adviser Centre | All Rights Reserved. The Adviser Centre is a trading name of Embark Investments Limited and is not authorised to carry out regulated activities. Embark Investments Limited is a company registered in England (No. 03383730) and a wholly owned subsidiary of Embark Group Limited, with its registered office at 100 Cannon Street, London EC4N 6EU. Embark Investments Limited is authorised and regulated by the Financial Conduct Authority (Registration No. 628981). This website is provided by The Adviser Centre and is a service for financial professionals only. Information on this website, including data and information from asset managers and third party sources, is deemed to be correct at the time of publication but The Adviser Centre takes no responsibility for its accuracy. Opinions are stated honestly and with careful consideration but they can change at any time and should not be solely relied upon. Information featured on the website does not constitute financial or investment advice.
Your use of this website is subject to the terms of use set out in the website. By continuing to use our website we will assume that you are happy to receive non-privacy intrusive cookies. Please be aware that if you disable cookies some functionality on the site will not work. Read our cookies policy to find out more about our cookie use and how to disable cookies.
Alternatively, if you are not a financial professional and are seeking financial advice, you may wish to visit unbiased.co.uk to search for a financial adviser.