From the category archives: Market Views

Market Views

Chatfeild-Roberts to step down as Jupiter CIO

Over recent years the landscape for multi asset investing has changed - the introduction of Multi Asset Income and Risk Targeted funds for example, has brought generally lower cost and more outcome orientated products to the market which directly compete with more traditionally managed funds and funds of funds. With competition for viable solutions ever increasing, we view the decision of John Chatfeild-Roberts to pass on his CIO responsibilities to Stephen Pearson, thus allowing him to focus solely on the Merlin fund range, as a positive.

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Risk Targeted Funds - What We Consider Good Practice

Since the stockmarket falls suffered during the 2008 financial crisis, investors have tended to be more focused on their investment journey and therefore less concerned about how their investment is behaving on a relative basis. This can be partly explained by a reduction in risk appetite, following heavier losses than some had been expecting, and the desire to maintain a level of flexibility in line with their lifestyle.

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Sustainable Income Ideas

Whilst the search for yield continues, a well-discussed issue by more eloquent observers than myself, we have decided to focus in on a popular home market sector-UK Equity Income. Although yield should be an important deciding factor for income hungry investors, we also believe that an analysis and understanding of the actual monetary amount received, and the growth of that amount, is equally important. Yield may be a good starting point but it will fluctuate based on the fortune, or misfortune, of the underlying asset base. As such we have decided to highlight a number of strategies where we believe there is a focus not only on yield but also on the absolute level and/or the growth of distributions.

Whilst many of these do rely, to varying degrees, on some of the UK's traditional income stalwarts (ten well-known companies have historically provided around half of the market's income) and there is some natural overlap (particularly in the pharmaceutical sector) we would argue that there is generally not an overreliance on these names in these funds. In essence we believe that these portfolios are well placed to meet their objectives, even in a climate of increasing dividend uncertainty.

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Attitude To Risk (ATR) Tools, Suitability and The Regulator

We recently finished a tour with the Sense Network and, after travelling 2,000 miles to see 200 advisers across eight venues, one overriding theme came through loud and clear (though admittedly we asked some leading questions): suitability.

It is abundantly clear that, while there is a drive towards the de-risking and operational efficiency that a combined attitude to risk (ATR) and centralised investment proposition (CIP) strategy affords, there is also a strong sense of unease over where the regulator will go next on suitability. Benjamin Franklin said nothing was certain except death and taxes. I'd add regulation.

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Five funds to benefit from European tailwinds

Europe appears to be in fashion at the moment. Short-term tailwinds, such as euro weakness, monetary stimulus and the fall in oil prices, have all been factors which the market has looked upon favourably.

For those wishing to invest, the asset class has a number of compelling fund managers. They share common characteristics which we like to see: experience of companies and markets; consistency in the application of their investment philosophy and approach; well-constructed portfolios with a sensible view on risk and strategies that have proven to work over time.

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The hidden depth of covered call strategies

Covered call strategies have been around for many years and are particularly well known in the US market. As yields on financial assets have diminished, the popularity of these strategies has surged, by as much as 25 per cent per annum over the past 10 years according to some estimates, and some $45bn is currently invested. The approach is less accepted in the UK, but a handful of equity-focused funds are managed in this way. A covered call position involves taking a long equity position and writing a call option on the same security. In essence, some of the future potential capital growth is sold in exchange for an option premium. During bull markets, share prices may go through the pre-set strike price of the options, and the positions can be called away; such strategies will typically lag the market's advance. In down markets, the strategies are exposed to declines in share prices, but the revenues generated by call writing mitigate the drawdown. 

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The Emerging Picture

As is widely known many emerging countries boast favourable demographics or are experiencing rapid urbanisation. Their markets can provide access to a long-term growth story where well-managed companies with unique assets, such as good distribution networks, are able to meet the demands of surging demographics and economic expansion. Questionable corporate governance, poor transparency, corruption and weakly functioning institutions are some of the risks of investing in the region.

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Client reporting: What fund managers should be telling advisers

The reporting of anything can, of course, mean rather different things to different people. 

According to Oxford Dictionaries (online version, naturally) the word ‘reporting', in its guise as a noun, translates as ‘an account given of a particular matter, especially in the form of an official document, after thorough investigation or consideration by an appointed person or body.' 

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Sector Focus: Strategic Bonds

The strategic bond sector has to be one of the most diverse as defined by the Investment Association. With managers' mandates varying drastically, both in terms of what they are trying to achieve and how they go about doing it, the sector can be a potential minefield for those who are less familiar with its nuances, with the difference in performance between the best and the worst fund often extreme. Of course, the plus side of this is that such diversity provides wonderful choice for investors, with a range of potential outcomes for clients. 

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What to expect from 2015

Square Mile's Managing Director Richard Romer-Lee talks with FE Trustnet about the year ahead. Richard explains how investors can make the most of their portfolios.

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