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McQuaker says firms have regained their grip on profitability

Henderson New Star’s multi-manager team believes it is likely that the economic recovery will be sustained but concedes that a rise in interest rates will be challenging for equity markets.

Head of equities and director of multi-manager funds Bill McQuaker says one of the positive indications of a sustained recovery is that companies have got a grip on profitability again. He says there is not as much pressure on costs as six months ago and we are not seeing the same level of job cuts.

McQuaker says this really matters because firms will be looking at how to restructure and expand and may go as far as job creation. He says that it will be a struggle to keep interest rates at the current low level if there are reasonably normal growth rates and at some stage, interest rates will have to go up.

“This would be a challenge for equities and gilts. Higher interest rates are designed to dampen things, but there is a concern that they could maybe put the fire out. Higher interest rates would not necessarily stop the recovery – that is a kneejerk reaction – but we think it’s too early to do much about this now.”

McQuaker and his team like part of their portfolios to be sensitive to market perceptions of inflation, so they are holding gold as an indicator of whether inflation will be a problem.

He says: “If you look at what has happened over the last two years, there has been a lot of policy stimulus and a lot of money has been printed. There are concerns about that level of money creation and inflation is a possibility. Currencies have been devalued one way or another, so the gold price will be inflated to compensate. If there is a reason to be concerned about inflation, we will put up the gold weightings in the future.”


Manager focus: Julius Lipner

Aviva’s latest recruit, Julius Lipner, has outlined the investment process he is using on the group’s recently-launched UK Absolute Return fund

Long-term care gets a deserved place on agenda

Long-term care seems to have finally made it on to the political radar following the Government’s recent green paper and the Conservatives’ home protection plan proposals.

In at the deep end

Apart from advising on suitable investments for existing trusts (a potentially important market for those looking to collaborate with solicitors, especially in light of the 25 per cent increase in the rate of tax to be suffered on trust income from April 6 next year), for many years, the only “retail” trusts that most financial advisers had to deal with in connection with “new” investments were those connected with insurance policies – first protection and then investment.

The return of securitisation

Lloyds Banking Group’s oversubscribed £4bn securitisation last week has been welcomed as a positive sign of investor confidence returning.


Five ways to make your employee focus group session a success

by Debra Corey, group reward director  You just planned and booked what you thought was the perfect vacation for you and your family. You call everyone together to share the great news and instead of receiving sounds of glee and delight, you receive groans and complaints.Your youngest says: “I hate beaches, didn’t you know that?” (You think to […]


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