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The lion roars

Last week saw me visiting Liontrust in its offices adjacent to the Savoy. Nigel Legge, one of its founders, and I go back a long way. Indeed, it is true to say that most of the original team and I are old muckers, as we all worked together at James Capel. Liontrust may have had its downs as well as its ups but it now looks after an impressive £5bn and has an enviable record in retaining its managers.

It recently announced its intention to launch funds invested in European shares – a brave move for a group that has steadfastly stuck to its UK roots throughout the decade of its existence. To mark that decade, Liontrust has published a compendium of reports written by Jeremy Lang, the architect of one of the highly-defined processes adopted by Liontrust to ensure consistency of delivery. Nigel presented me with a copy. Investment process is a must-have these days if investors are going to take you seriously. Dipping in and out of this book promises to provide some interesting diversions as the days shorten.

Earlier the same day, I had the privilege of addressing US students polishing up their knowledge of how financial markets work in Europe. If they are the future, we need to continue to sharpen up our act. For a start, they were far from parochial in their outlook. They were interested in cross-border mergers and the implications for company listings and execution of transactions. More worryingly, they were concerned about regulation creep from one jurisdiction to another. They also took interest in all matters technological. Many were set on careers in financial services, with private banking a clear favourite.

My topic was the changing nature of wealth management. No wonder they displayed so much interest in what I had to say. When they pitch up in this great industry of ours, their attitudes are likely to be more aligned with those of the new breed of consumers. Those people insufficiently prepared to embrace the new techniques and different approaches that are being developed will, I fear, lose out.

However interesting the peripheral activities of a communications director tasked with expounding on investment issues, in the end, the market will bring you back to earth with a bump. There was a two-way pull for shares last week. The pause in monetary tightening in the US may have been expected but was welcomed none the less. After the unsettling effect of the Bank of England’s rate rise, it was nice to get some positive news. The feelgood factor did not last long, though. The threat of terrorism reared its ugly head again later in the week, sending shares into reverse.

My young audience had what I felt to be an unhealthy preoccupation with risk but you only have to look at the likely influences on markets to realise how important it has become to assess risk in a portfolio. Current undemanding valuation levels lessen the risk element but it is by no means eliminated. Concentrating on defensive sectors and value continues to make good sense.

Brian Tora is investment communications director at Gerrard Investment Management


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