View more on these topics

My three big calls: Peter Askew on European asset-backed securities, healthcare and Japan


In the first half of 2014 equity and bond markets have not performed quite as investors were expecting.

Developed market equities struggled to make any headway for some time and there was savage sector rotation and sell-offs in the US tech and healthcare sectors.

But more recently, developed markets performed better, with US equity indices setting new highs.

The pattern was similar in emerging market equities, which started the year unloved but staged a comeback in the second quarter.

Like equity markets, bond markets were confused by data in but have also now  turned positive. 

Overall, most investments have ended up having a decent half-year, which has left investors scratching their heads about where to find value in equities and bonds.

European asset-backed securities

In early June the European Central Bank announced a €400bn (£318.4bn) targeted long-term refinancing operations programme, which will provide banks with four-year funding at 0.25 per cent.

While this gained the headlines, what received less attention was the ECB’s decision to “intensify the work related to outright purchases in the ABS market to enhance the functioning of the monetary policy transmission mechanism”. 

The ECB has a habit of buying cheap assets. The simply structured and transparent European ABSs fit the bill. They are generally well capitalised with excellent asset coverage. Already at attractive yield spreads, they appear to be about to find a significant purchaser, lending strength to the investment case.


The healthcare sector exhibited extreme volatility earlier this year as valuations were questioned. While some stocks were running on vapour, many companies with strong long-term stories were victims of an indiscriminate sell-off. This allowed some good specialist funds to acquire or add to long-term holdings at good prices.

Healthcare offers a good long-term opportunity. There is an emphasis on monitoring and prevention rather than treatment and cure, and easier access to genome sequencing is enabling medicine to become more specific to individuals. 

There will still be market oscillations but it makes sense to tune out the noise and focus on the long-term healthcare theme.


At the time of writing, the Nikkei was down about 5.5 per cent in the year to date. This is due to concern about April’s sales tax (VAT) hike from 5 per cent to 8 per cent and a lack of clarity about prime minister Shinzo Abe’s ‘third arrow’ structural reform.

But Japanese earnings estimates remain less challenging than other regions and there are plans to cut corporation tax from about 36 per cent to below 30 per cent.

Despite a weak performance so far this year, we believe there is good reason to stick with Japanese equities.

Peter Askew is co-manager of the T Bailey Growth, Dynamic and Defensive funds




Church of England severs ties with Wonga

The Church of England has severed its ties with Wonga by ending its investment in the payday lender. Last year Archbishop of Canterbury Justin Welby suffered embarrassment after it emerged the Church of England pension fund invests in a key financial backer of Wonga just 24 hours after he said he wanted to compete the […]

Jesse Norman TSC

TSC member calls on HMRC to expose ‘dodgy’ tax advisers

Treasury select committee member Jesse Norman has called on HMRC to publish a league table of tax advisers based on the number of unsuccessful tax schemes they promote. HMRC has been clamping down on advisers who promote aggressive tax avoidance schemes through initiatives like the Disclosure of Tax Avoidance Schemes programme. Under the scheme, advisers […]


MAS staff costs rise 56% to £13m

The Money Advice Service’s staff costs have increased by 56 per cent to £12.9m. The amount the MAS spent employing staff has risen by over £4m from £8.3m in 2012/13, its annual review reveals. It has increased staff numbers by 28 per cent over the year, from an average of 76.1 full-time employees in 2012/13 […]


John Cupis: Why intermediaries are taking a bigger share of the mortgage market

The Mortgage Market Review has been live for just two months but feedback I have been getting from advisers is that some lenders are already struggling with new processes, IT glitches and overwhelming demand for mortgages. This has led inevitably to delays, plus extended offer and completion times. And that is for advisers. As a […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm