Insights

Outlook September 2017

Volatility has collapsed over the summer months with the standard deviation of returns on the S&P 500 running at well below half the normal level. This is not to say nothing has happened. Brexit negotiations are proceeding painfully slowly. This is scarcely a surprise but political commentators and insiders are becoming disheartened by the calibre of many of those in the Cabinet. Such are the complexities of the task at hand, it would tax the very ablest. Worryingly, many of the current crop of British politicians are firmly from the second division.

Events in the Korean peninsula are serious but we should not forget that North Korea has been a nuclear nation for almost a decade. However unpleasant, the world needs to learn to live with this threat. If America had any good means to deter North Korea from pursuing its nuclear programme, it would have surely used them already. The biggest risk we face is from an overreaction, but as I wrote here, even ratcheting up the war of words is counterproductive. The DKK has an agenda and this clearly does not involve thermonuclear war. Even an impetuous set of sanctions could do far more to damage international trade than this tin pot country warrants. Let us not forget that Kim Jong Un spends less on feeding his people than Americans lavish on their pets.

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Polar Capital Global Insurance - new Talking Factsheet

We have added a new Talking Factsheet to the Square Mile Academy of Funds, featuring Research Manager Amaya Assan reviewing the objectives and risks and giving her view of the fund:

Polar Capital Global Insurance - This is a sensible global equity strategy focusing well-managed and proven insurance companies.

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Rating changes for Aberdeen Emerging Markets Equity, Aberdeen Asia Pacific Equity and Aberdeen Asia Pacific & Japan Equity funds

Whilst we continue to have a positive view of the management teams behind these three funds, we believe that market conditions have changed somewhat in recent years and other emerging markets and Asian equity franchises have developed more compelling propositions in what is a highly competitive space. Our ratings are an expression of our conviction in managers' abilities to meet their objectives.

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Square Mile introduces the HSBC Global Strategy Adventurous and Conservative Portfolios to the Square Mile Academy of Funds

We are pleased to announce the addition of the HSBC Global Strategy Adventurous and Conservative Portfolios to the Square Mile Academy of Funds and have awarded a Recommended rating.

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Changes to the Fidelity Special Situations fund

We are pleased to announce the upgrade of the Fidelity Special Situations fund from Positive Prospect to an A rating. This is a reflection of the fact that the manager, Alex Wright, who took over the strategy in January 2014, has since then consistently managed the fund very much in line with his investment philosophy and process.

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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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Fund Rating Removal

Square Mile has taken the decision to remove the GS Global Strategic Income Bond Portfolio from the Academy of Funds. This fund is backed up the considerable resources of Goldman Sachs, and managed by an able team.

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This Time It’s Different

It is often said that the most dangerous words in investment are that 'this time it's different'. The phrase resonates through stockmarket history as experts pontificated that old rules of valuation no longer apply and the current crisis/situation bears little similarity with what occurred in the past. The words were widely echoed during the 1990s tech boom, as they were during the depths of the bear market of 2008. Since the days when it was first formally identified by Graham & Dodd, the value philosophy has proved its worth and presented investors with one of the few reliable ways to earn super normal returns, since valuation levels typically revert to the mean. Indeed such is our respect for its power, it plays a principal role in Square Mile's tactical asset allocation process.

Reasoning that things are different this time is typically an expensive mistake. So, I almost fell off my chair the other day when I read that no less an authority than Jeremy Grantham was postulating that valuations may be reaching a new, higher plateau and that "it can be very dangerous indeed to assume that things are never different".

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Fund Rating Removals

The Square Mile research team has taken the decision to remove the ratings of the Veritas Global Focus and the Veritas Global Equity Income funds. Having rated the funds since the launch of our Academy, ongoing access to the managers has proved challenging.

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Trump is going to end up with kimchi on his face

Donald Trump really does not need anyone's help to make him look foolish; he seems perfectly capable of doing this all by himself. Over recent weeks, I have been following his comments on North Korea with disdain and North Korean President, Kim Jong-un, must be relishing the propaganda victories that Trump has continually presented him.

My wife was born in Seoul, so I tend to follow events on the Korean peninsula with more interest than many. Events north of the border are often disturbing, sometimes weird and occasionally comical. This Telegraph report about Kim Jong-un's father provides some flavour to this. The people of the South are also incredibly proud of their small nation. Koreans are typically a passionate people and are sometimes referred to as being the Italians of Asia. If you are ever in search of an entertaining evening, I would strongly recommend taking a drink in a Korean bar when the national football team is playing.

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