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From the category archives: Market Views

Market Views

Talking With Nick Mustoe

Nick Mustoe, Chief Investment Officer, Invesco Henley Investment Centre talks being a contrarian investor, multi asset funds and karate with Richard Romer-Lee, Square Mile.

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Talking With Neil Woodford

Neil Woodford, Head of Investment, Woodford Investment Management talks transparency, doing things differently and equestrian sports with Richard Romer-Lee, Square Mile.

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LF Woodford Equity Income fund removed from IA UK Equity Income sector

Following the news that the Investment Association (IA) have removed the LF Woodford Equity Income fund from the UK Equity Income sector and placed it into the IA UK All Companies sector, Square Mile’s view of the fund has not changed and it retains its AAA rating.

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Chinese Evolution

The strength of emerging market economic growth this century has been well documented, as has the shift, broadly speaking, from commodity and manufacturing based economies to ones more supported by shifting demographics and the burgeoning middle class, which has been central to supporting domestic change. The current MSCI EM index is heavily skewed towards China and its immediate Asian neighbours, representing a combined weight of 56%, and one would be hard placed to argue against their importance to the global economy.

In more recent years, Chinese growth has been driven by increased domestic wealth, technological innovation, entrepreneurship and, of course, infrastructure spending. This has all been further supported by financial reform and involvement at the highest political levels. A more recent structural reform is the opening up of China's A-share market to foreign investors via the Hong Kong - Shanghai and Hong Kong - Shenzhen 'Connect' initiatives. This 3,000 plus stock universe was previously unavailable to the majority of international investors and could prove to be a rich hunting ground for investors seeking access to successful domestic-based companies.

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Growing a Culture of Social Impact Investing in the UK

In December 2016, the Minister for Civil Society and Economic Secretary to the Treasury appointed Elizabeth Corley, vice chair of Allianz Global Investors, to chair an Advisory Group looking at how we can create a culture of social impact investment and savings in the UK.

Senior representatives from 50 firms across the financial services industry have been seeing how they can make it easier for people to invest and are exploring what the industry can do to encourage greater social impact investment.

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Active & Passive

The current view, held by a number of investors, is that active and passive are polarised. Investors need to "pick a team" and go entirely active or entirely passive. At Square Mile, we believe that a portfolio should consist of a combination of the best funds to meet the clients' objectives, at a cost that represents value for money. That may be active, passive or a blend of both

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The Evolution Of Multi-Asset

In the beginning, investors wanting a diversified portfolio of assets had two main choices. With profits funds were often chosen by investors who wanted greater security through perceived guarantees. Alternatively, managed funds were selected by those who preferred more transparency and control over their investments. Broadly speaking, both of these approaches unfortunately left investors disappointed. With profits funds ultimately failed to deliver the returns investors expected when they discovered they were exposed to market risk and the imposition of Market Value Adjustments (MVAs) to reflect the underlying performance of the assets in the fund. Managed funds typically had more equity risk than many had appreciated. Indeed, funds labelled as "balanced" often had up to 85% exposure to equities and "cautious" funds often held in the region of 60%. This led the Investment Association to rename their managed sector classifications to better reflect the equity risk funds could take and introduced the Mixed Investment sectors alongside the Flexible Investment sector.

Today, the multi-asset sector is a diverse, vibrant and strongly growing area of the market. The global financial crisis reinforced the importance of diversification and clear and transparent communication to investors. Changes in the regulatory environment, particularly post RDR, and the continued demise of defined benefit pensions schemes have contributed to the increased demand for multi-asset funds and their popularity has soared. Furthermore, an increasing number of advisers have turned to multi-asset specialists to support their investment advice process as an outsourced solution.

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Fund Selector Chat with Richard Romer-Lee and Jake Moeller at Thomson Reuters Lipper

In this podcast Richard Romer-Lee talks to Jake Moeller at Thomson Reuters Lipper about key influences affecting the evolution of the industry as the dynamics of the financial planning industry change and outlines what makes a good mutual fund. He also examines some of the key issues faced by the fund selectors in light of recent key regulatory initiatives.

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Q&A Session with Neil Woodford at the Cofunds Conference

This video features Richard Romer-Lee's Q&A session with Neil Woodford, Woodford Investment Management at the Cofunds Investment Conference on 20 June 2017. They discuss reasons to be positive post-election, the risks to the global economy, strategies for a total return outcome and is small cap investing a missed opportunity?

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A Guide to Style

This is the first in a series of articles about investment style. Managers and funds are being increasingly categorised by their underlying investment approaches and the arrival of smart beta strategies will only serve to accelerate the process. The Morningstar style box was very formative early in my career as I am sure it has been to many fund analysts. After all there is little point in comparing a large cap value fund with a small cap growth fund. Of course, over time the limitations of this became apparent. Can managers be pigeon holed so neatly? Is it really impossible to find growth stocks trading on below average valuations? How can low beta equities produce market or even excess returns? These are questions that I am sure that many of you will have grappled with.

Over time I have refined the way that I look at funds and I tend now to only loosely classify them into one or more styles. These are: value, quality, growth/momentum and size. As none of these are mutually exclusive and the relationship can be best illustrated using the schools boy's favourite chart, the Venn diagram. For the sake of clarity, small/large caps have been omitted.

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