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Quiet confidence

This year has so far proven tricky for investors. On the whole, corporate news has been good but this has been offset by a macro environment that could be viewed as unhelpful at best. Unrest in the Middle East, the threat of Greek default and inflation fears in emerging markets, most notably China, has dominated news headlines and created a volatile and uncertain environment. These factors will all continue to be significant going into the second half of the year, in particular the Greek situation, which seems to have been resolved only temporarily.

The US is about to enter its second-quarter reporting season and we wait anxiously to see whether earnings can continue their upwards trajectory or if they have peaked already. It is quite possible we could see a greater number of unpleasant surprises as previous upgrades become harder to meet. We have already seen a couple of disappointing figures from UK companies in recent weeks, such as Charter International, which could prove to be an early warning sign.

However, despite this slightly gloomy outlook, there are pockets of value the multi-manager can take advantage of. Mega-caps, particularly in the UK, remain on historically low valuations and may be due their time in the sun. The prospect of attractive, well covered dividends coupled with undemanding growth ratings could be investments better suited to an environment of uncertainty. They also have the benefit of being truly international and therefore enjoying diversified revenue streams. There are several excellent managers that have been playing this theme for some time and I expect it to become a more mainstream view as the year goes on.

Another area I believe that could provide good returns over the next 12 months is the listed private equity vehicles. They have been ignored due to their poor share price performance during the credit crunch and subsequent recession. The fund of private equity funds in particular offer compelling value, with the added benefit of massive diversification at the underlying company level.

The sector is now in a position of far greater health and has rallied strongly since the market bottom in 2009 but as long as you believe we are not entering a double dip or that global growth is going to fall off a cliff, these vehicles on discounts of between 25 per cent and 30 per cent still look extremely interesting.

Finally, on a more positive macro point, it is possible that the next few months will see the end of the latest round of monetary tightening in China. Quite what impact this will have on the region is uncertain but as emerging market equities on the whole have lagged developed ones so far, we may see equity performance reflecting the growth areas of the world again as we did in 2009 and 2010. Overall there is lots to be cautious about but also reasons to believe that more positive returns can be made by multi-managers throughout the rest of the year.


Ignis shuffles UK equity team

Ignis Asset Management has announced a number of changes to its UK equity team, including the appointment of Vestra Wealth’s Mark Holden. Holden, a partner at Vestra, will take over the management of the £112m Ignis UK Focus fund later this year and will report directly to Mark Lovett, the chief investment officer for equities […]

Baring Asset Management – Dynamic Emerging Markets Fund

Type: Offshore Oeic Aim: Growth by investing in emerging markets through a range of assets including equities, equity-related securities, fixed income, currencies, money markets and cash, plus indirect commodity exposure through funds, exchange traded commodities, derivatives and the equity or debt of commodity companies Minimum investment: Lump sum £2,500, euro 3,500, $5,000 Investment split: 100% […]

CAM provides access to infrastructure with First State global fund

Discretionary fund manager City Asset Management is holding the First State global listed infrastructure fund in its Elite CAM balanced discretionary portfolio to benefit from its blend of infrastructure and global equities. The First State fund invests in the equities of firms in the infrastructure sector and related sectors. CAM says it likes infrastructure because […]

EC claims Esis won’t hit key documents

The European Commission says it is confident that the introduction of the European standardised information sheet for brokers and lenders will not force the UK to water down its key facts illustration document. In March, the EC published its draft mortgage credit directive. It said lenders and brokers will be required to issue an Esis, […]

Time for a new approach to asset allocation

Trevor Greetham, RLAM’s head of multi asset, introduces the recentlylaunched RL GMAPs. Asset allocation has become an increasingly difficult challenge for investors and advisers in the years since the financial crisis. Sometimes violent price swings in stock and commodity markets coupled with the collapse in the rate of interest on bonds have made it harder […]


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