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UK UK Smaller Companies Europe North America Japan Asia Pacific (Ex Japan) Emerging Markets UK Gilts Corporate Bonds UK Property Global Property
Baillie Gifford
BlackRock N/A N/A N/A
Gartmore
Ignis
Investec
M&G
Newton (BNY Mellon) N/A N/A
Old Mutual N/A N/A N/A
Schroder UTL N/A
Standard Life Investments N/A
Threadneedle
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Documents - Baillie Gifford
Title Pages Date
Fund Manager Comment
The UK equity market fell in value, in tandem with other equity markets, during the quarter. Recent events have confirmed that the UK economy is entering a new phase of austerity, as the newly-installed coalition government has settled quickly into pursuing this path in order to ‘re-balance the books’. It has become readily apparent that cuts in government spending, rather than rises in taxation, will be the principal tool used to redress the financial position in which the UK finds itself, although tax rises, particularly in the VAT regime, will also play a part. Both the scale and the speed with which the changes are being implemented could be important for markets and they continue to shape our thinking on exposure to UK domestic cyclical companies.
The UK equity market fell in value, in tandem with other equity markets, during the quarter. Recent events have confirmed that the UK economy is entering a new phase of austerity, as the newly-installed coalition government has settled quickly into pursuing this path in order to ‘re-balance the books’. It has become readily apparent that cuts in government spending, rather than rises in taxation, will be the principal tool used to redress the financial position in which the UK finds itself, although tax rises, particularly in the VAT regime, will also play a part. Both the scale and the speed with which the changes are being implemented could be important for markets and they continue to shape our thinking on exposure to UK domestic cyclical companies.
Fund Manager Comment
The UK equity market fell in value, in tandem with other equity markets, during the quarter. Recent events have confirmed that the UK economy is entering a new phase of austerity, as the newly-installed coalition government has settled quickly into pursuing this path in order to ‘re-balance the books’. It has become readily apparent that cuts in government spending, rather than rises in taxation, will be the principal tool used to redress the financial position in which the UK finds itself, although tax rises, particularly in the VAT regime, will also play a part. Both the scale and the speed with which the changes are being implemented could be important for markets and they continue to shape our thinking on exposure to UK domestic cyclical companies.
The UK equity market fell in value, in tandem with other equity markets, during the quarter. Recent events have confirmed that the UK economy is entering a new phase of austerity, as the newly-installed coalition government has settled quickly into pursuing this path in order to ‘re-balance the books’. It has become readily apparent that cuts in government spending, rather than rises in taxation, will be the principal tool used to redress the financial position in which the UK finds itself, although tax rises, particularly in the VAT regime, will also play a part. Both the scale and the speed with which the changes are being implemented could be important for markets and they continue to shape our thinking on exposure to UK domestic cyclical companies.
Fund Manager Comment
Market sentiment towards European stocks was weak over the quarter, as concerns relating to the fiscal health of peripheral economies and the likely impact on growth in the region escalated. At the corporate level, companies are continuing to recover operationally as the benefits of severe cost cutting start to come through, and incremental demand is improving as the global economy continues along the path to recovery. Despite the extreme conditions in the European economy, our philosophy is unchanged; we continue to seek out durable, growing businesses which can survive downturns and expand during upswings. We believe that equity valuations in Europe look attractive at current levels and continue to identify opportunities to buy higher-quality companies which are currently out of favour with the market.
Market sentiment towards European stocks was weak over the quarter, as concerns relating to the fiscal health of peripheral economies and the likely impact on growth in the region escalated. At the corporate level, companies are continuing to recover operationally as the benefits of severe cost cutting start to come through, and incremental demand is improving as the global economy continues along the path to recovery. Despite the extreme conditions in the European economy, our philosophy is unchanged; we continue to seek out durable, growing businesses which can survive downturns and expand during upswings. We believe that equity valuations in Europe look attractive at current levels and continue to identify opportunities to buy higher-quality companies which are currently out of favour with the market.
Fund Manager Comment
We retain our faith in the US economic recovery, although progress is somewhat uneven and relatively finely balanced. Cutting through the barrage of data releases, we view consumer spending levels as broadly encouraging, while the improvement in industrial production has been helped by the global recovery and world trade levels. However, question marks remain over the housing and labour markets, which have yet to generate any real momentum. The corporate sector is performing much better than many had expected. Profits growth in the first quarter was the strongest for many years but, more importantly, cash flow generation has also been particularly impressive, partly as a result of the rapid cost cutting measures taken during the downturn. Most companies tend not to sit on cash piles for too long however, not least because of shareholder pressure, and it is interesting that share buyback levels have picked up recently. Ultimately, we expect the improvement in cash flow to stretch beyond returning it to shareholders and to feed through into capital expenditure.
We retain our faith in the US economic recovery, although progress is somewhat uneven and relatively finely balanced. Cutting through the barrage of data releases, we view consumer spending levels as broadly encouraging, while the improvement in industrial production has been helped by the global recovery and world trade levels. However, question marks remain over the housing and labour markets, which have yet to generate any real momentum. The corporate sector is performing much better than many had expected. Profits growth in the first quarter was the strongest for many years but, more importantly, cash flow generation has also been particularly impressive, partly as a result of the rapid cost cutting measures taken during the downturn. Most companies tend not to sit on cash piles for too long however, not least because of shareholder pressure, and it is interesting that share buyback levels have picked up recently. Ultimately, we expect the improvement in cash flow to stretch beyond returning it to shareholders and to feed through into capital expenditure.
Fund Manager Comment
The political landscape in Japan has again been shrouded in uncertainty over the future direction of both fiscal and monetary policy. Following the resignation of Prime Minister Hatoyama, the DPJ lawmakers elected Naoto Kan, who, as a supporter of fiscal reform and a weaker yen, has already shaped consensus views on the future direction and shape of the economy. Tackling the large government debt has been one of the main subjects of Kan’s rhetoric and would appear to be a key concern for the new Prime Minister. However, fiscal reform is a sizeable challenge to the entrenched system. GDP growth turned positive and there were signs of consumer and business confidence starting to improve. On a corporate level, cost-cutting appears to have been reasonable throughout the crisis and therefore profits margins have survived relatively well.
The political landscape in Japan has again been shrouded in uncertainty over the future direction of both fiscal and monetary policy. Following the resignation of Prime Minister Hatoyama, the DPJ lawmakers elected Naoto Kan, who, as a supporter of fiscal reform and a weaker yen, has already shaped consensus views on the future direction and shape of the economy. Tackling the large government debt has been one of the main subjects of Kan’s rhetoric and would appear to be a key concern for the new Prime Minister. However, fiscal reform is a sizeable challenge to the entrenched system. GDP growth turned positive and there were signs of consumer and business confidence starting to improve. On a corporate level, cost-cutting appears to have been reasonable throughout the crisis and therefore profits margins have survived relatively well.
Fund Manager Comment
There was a change of Prime Minister in Australia. Kevin Rudd’s fall from grace was spectacular, with the mining super-tax appearing to be the straw that broke the camel’s back. The biggest challenge facing policy makers in the region is how to keep a lid on inflation and manage the continuing strong growth witnessed over the last 12 months. Australia was the first OECD nation to increase interest rates back in late 2009 and subsequently increased rates by 0.25% on five further occasions. A pause in June was explained away by uncertainty elsewhere in the world, and the fact that the rates paid by borrowers in Australia are now at an average of where they have been in the last decade. In both Singapore and Hong Kong, measures have been taken to try and cool property markets. We are encouraged to see the authorities taking action to alleviate the pressures in these markets and we are hopeful that the actions will have the necessary effect.
There was a change of Prime Minister in Australia. Kevin Rudd’s fall from grace was spectacular, with the mining super-tax appearing to be the straw that broke the camel’s back. The biggest challenge facing policy makers in the region is how to keep a lid on inflation and manage the continuing strong growth witnessed over the last 12 months. Australia was the first OECD nation to increase interest rates back in late 2009 and subsequently increased rates by 0.25% on five further occasions. A pause in June was explained away by uncertainty elsewhere in the world, and the fact that the rates paid by borrowers in Australia are now at an average of where they have been in the last decade. In both Singapore and Hong Kong, measures have been taken to try and cool property markets. We are encouraged to see the authorities taking action to alleviate the pressures in these markets and we are hopeful that the actions will have the necessary effect.
Fund Manager Comment
Despite volatility over the quarter, Emerging Markets continued to outperform their developed peers during a period in which the spotlight was on sovereign balance sheets across the globe. With the axis of debtor and creditor nations tipped firmly in favour of the emerging universe, it should perhaps come as no surprise that the relative performance has held up reasonably well. Nevertheless, we continue to keep a close eye on myriad different factors that could alter the balance of power or knock our ongoing bullishness on Emerging Markets off course.
Despite volatility over the quarter, Emerging Markets continued to outperform their developed peers during a period in which the spotlight was on sovereign balance sheets across the globe. With the axis of debtor and creditor nations tipped firmly in favour of the emerging universe, it should perhaps come as no surprise that the relative performance has held up reasonably well. Nevertheless, we continue to keep a close eye on myriad different factors that could alter the balance of power or knock our ongoing bullishness on Emerging Markets off course.
Fund Manager Comment
Global growth currently stands well ahead of expectations from the levels it reached last summer but, despite this, markets remain nervous. The key concern for investors is whether growth will be sufficient to allow governments to repay the debts they incurred during the crisis. Our view is that aggregate growth will be stronger than the market expects, but that problems will continue to arise from the uneven distribution of growth and, more pertinently, debt.
Global growth currently stands well ahead of expectations from the levels it reached last summer but, despite this, markets remain nervous. The key concern for investors is whether growth will be sufficient to allow governments to repay the debts they incurred during the crisis. Our view is that aggregate growth will be stronger than the market expects, but that problems will continue to arise from the uneven distribution of growth and, more pertinently, debt.
Fund Manager Comment
Strength in corporate cash flow, balance sheet repair in the banking sector and loose monetary policy continue to support credit spreads. Corporate health is solid in aggregate, as companies were able to cut costs over the past year and profitability has rebounded from depressed levels as a result of the stimulus in the financial system. The uncertain outlook has also acted as a restraint on company management, with lower than usual capital expenditures, few debt-financed acquisitions and some dividend cuts. Regulatory pressure in the financial sector continues to prompt further delevering of bank balance sheets. Market nervousness has also created opportunities, notably in the securitised sector, as unusually high liquidity and complexity premiums prevail.
Strength in corporate cash flow, balance sheet repair in the banking sector and loose monetary policy continue to support credit spreads. Corporate health is solid in aggregate, as companies were able to cut costs over the past year and profitability has rebounded from depressed levels as a result of the stimulus in the financial system. The uncertain outlook has also acted as a restraint on company management, with lower than usual capital expenditures, few debt-financed acquisitions and some dividend cuts. Regulatory pressure in the financial sector continues to prompt further delevering of bank balance sheets. Market nervousness has also created opportunities, notably in the securitised sector, as unusually high liquidity and complexity premiums prevail.
Fund Manager Comment
We do not invest in property
We do not invest in property
Fund Manager Comment
We do not invest in property
We do not invest in property
Fund Manager Comment
There was a change of Prime Minister in Australia. Kevin Rudd’s fall from grace was spectacular, with the mining super-tax appearing to be the straw that broke the camel’s back. The biggest challenge facing policy makers in the region is how to keep a lid on inflation and manage the continuing strong growth witnessed over the last 12 months. Australia was the first OECD nation to increase interest rates back in late 2009 and subsequently increased rates by 0.25% on five further occasions. A pause in June was explained away by uncertainty elsewhere in the world, and the fact that the rates paid by borrowers in Australia are now at an average of where they have been in the last decade. In both Singapore and Hong Kong, measures have been taken to try and cool property markets. We are encouraged to see the authorities taking action to alleviate the pressures in these markets and we are hopeful that the actions will have the necessary effect.
There was a change of Prime Minister in Australia. Kevin Rudd’s fall from grace was spectacular, with the mining super-tax appearing to be the straw that broke the camel’s back. The biggest challenge facing policy makers in the region is how to keep a lid on inflation and manage the continuing strong growth witnessed over the last 12 months. Australia was the first OECD nation to increase interest rates back in late 2009 and subsequently increased rates by 0.25% on five further occasions. A pause in June was explained away by uncertainty elsewhere in the world, and the fact that the rates paid by borrowers in Australia are now at an average of where they have been in the last decade. In both Singapore and Hong Kong, measures have been taken to try and cool property markets. We are encouraged to see the authorities taking action to alleviate the pressures in these markets and we are hopeful that the actions will have the necessary effect.
Fund Manager Comment
There was a change of Prime Minister in Australia. Kevin Rudd’s fall from grace was spectacular, with the mining super-tax appearing to be the straw that broke the camel’s back. The biggest challenge facing policy makers in the region is how to keep a lid on inflation and manage the continuing strong growth witnessed over the last 12 months. Australia was the first OECD nation to increase interest rates back in late 2009 and subsequently increased rates by 0.25% on five further occasions. A pause in June was explained away by uncertainty elsewhere in the world, and the fact that the rates paid by borrowers in Australia are now at an average of where they have been in the last decade. In both Singapore and Hong Kong, measures have been taken to try and cool property markets. We are encouraged to see the authorities taking action to alleviate the pressures in these markets and we are hopeful that the actions will have the necessary effect.
There was a change of Prime Minister in Australia. Kevin Rudd’s fall from grace was spectacular, with the mining super-tax appearing to be the straw that broke the camel’s back. The biggest challenge facing policy makers in the region is how to keep a lid on inflation and manage the continuing strong growth witnessed over the last 12 months. Australia was the first OECD nation to increase interest rates back in late 2009 and subsequently increased rates by 0.25% on five further occasions. A pause in June was explained away by uncertainty elsewhere in the world, and the fact that the rates paid by borrowers in Australia are now at an average of where they have been in the last decade. In both Singapore and Hong Kong, measures have been taken to try and cool property markets. We are encouraged to see the authorities taking action to alleviate the pressures in these markets and we are hopeful that the actions will have the necessary effect.
Fund Manager Comment
Recent earnings reports have tended to be more positive than expected as firms have controlled costs tightly in the downturn, dampening the impact of weaker revenues, and financial earnings have improved. The trough in the earnings cycle is close and we expect some recovery into 2010, particularly as financial sector write-offs diminish. The consensus for earnings growth in 2010 is now around 30%, which we regard as a feasible outturn.
Recent earnings reports have tended to be more positive than expected as firms have controlled costs tightly in the downturn, dampening the impact of weaker revenues, and financial earnings have improved. The trough in the earnings cycle is close and we expect some recovery into 2010, particularly as financial sector write-offs diminish. The consensus for earnings growth in 2010 is now around 30%, which we regard as a feasible outturn.
Fund Manager Comment
Fund Manager Comment
European equity valuations have retreated. The region has seen once of the smallest valuation increases in the recovery; returns at or above average seem most likely in the coming few years. Analyst consensus estimates are now for 2010 earnings to come in some 19% above 2008 levels, with a 28% year-on-year gain. These estimates have been increasing even as the domestic turmoil in financial markets deepens. This is consistent both with company reporting and the weakening of the euro as it helps translation and competitiveness for international businesses.
European equity valuations have retreated. The region has seen once of the smallest valuation increases in the recovery; returns at or above average seem most likely in the coming few years. Analyst consensus estimates are now for 2010 earnings to come in some 19% above 2008 levels, with a 28% year-on-year gain. These estimates have been increasing even as the domestic turmoil in financial markets deepens. This is consistent both with company reporting and the weakening of the euro as it helps translation and competitiveness for international businesses.
Fund Manager Comment
Reported US earnings are rebounding as financials' write-offs are diminishing significantly. Recent trends have been upbeat. With positive economic growth now evident, the profits outlook is improving, even in financials (where the impact of write-offs will fade).
Reported US earnings are rebounding as financials' write-offs are diminishing significantly. Recent trends have been upbeat. With positive economic growth now evident, the profits outlook is improving, even in financials (where the impact of write-offs will fade).
Fund Manager Comment
The Japanese equity market is finally starting to see a moderate increase in profit expectations. Since May 2009, 2010/2011 profit estimates have increased by just 13.5%. Even on 2009/2010 earnings, the market is on a 35x multiple. This leaves valuations unattractive in comparison with other equity markets.
The Japanese equity market is finally starting to see a moderate increase in profit expectations. Since May 2009, 2010/2011 profit estimates have increased by just 13.5%. Even on 2009/2010 earnings, the market is on a 35x multiple. This leaves valuations unattractive in comparison with other equity markets.
Fund Manager Comment
Earnings in the region are still being upgraded by analysts. The consensus on earnings growth is now around 40% over the coming year, a relatively high rate which suggests that a significant earnings recovery is already in the price. The valuation headwind evident at the start of the year has diminished significantly on the recent correction. However, we still expect the earnings cycle to be a more relevant driver of equity returns going forward.
Earnings in the region are still being upgraded by analysts. The consensus on earnings growth is now around 40% over the coming year, a relatively high rate which suggests that a significant earnings recovery is already in the price. The valuation headwind evident at the start of the year has diminished significantly on the recent correction. However, we still expect the earnings cycle to be a more relevant driver of equity returns going forward.
Fund Manager Comment
We continue to expect stronger economic growth in emerging markets, ahead of that in developed markets. Corporate earnings growth also remains strong and, in many cases, earnings forecasts have increased further. Against this background, we believe emerging markets equities offer good value on lrelatively ow valuations.
We continue to expect stronger economic growth in emerging markets, ahead of that in developed markets. Corporate earnings growth also remains strong and, in many cases, earnings forecasts have increased further. Against this background, we believe emerging markets equities offer good value on lrelatively ow valuations.
Fund Manager Comment
The Gilt market has joined in the 'flight to quality' rally in evidence in recent months. Although the initial uncertain outcome to the general election saw the market briefly question the safety of UK government debt, the formation of the Conservative-Liberal Democrat coalition has generally been well-received by bond investors.
The Gilt market has joined in the 'flight to quality' rally in evidence in recent months. Although the initial uncertain outcome to the general election saw the market briefly question the safety of UK government debt, the formation of the Conservative-Liberal Democrat coalition has generally been well-received by bond investors.
Fund Manager Comment
Valuations have become more attractive given the recent sell-off. Credit markets remain volatile; against this backdrop, we see opportunities to buy relatively cheap securities without making concessions on credit quality.
Valuations have become more attractive given the recent sell-off. Credit markets remain volatile; against this backdrop, we see opportunities to buy relatively cheap securities without making concessions on credit quality.
Fund Manager Comment
Fund Manager Comment
Fund Manager Comment
Earnings in the region are still being upgraded by analysts. The consensus on earnings growth is now around 40% over the coming year, a relatively high rate which suggests that a significant earnings recovery is already in the price. The valuation headwind evident at the start of the year has diminished significantly on the recent correction. However, we still expect the earnings cycle to be a more relevant driver of equity returns going forward.
Earnings in the region are still being upgraded by analysts. The consensus on earnings growth is now around 40% over the coming year, a relatively high rate which suggests that a significant earnings recovery is already in the price. The valuation headwind evident at the start of the year has diminished significantly on the recent correction. However, we still expect the earnings cycle to be a more relevant driver of equity returns going forward.
Fund Manager Comment
Earnings in the region are still being upgraded by analysts. The consensus on earnings growth is now around 40% over the coming year, a relatively high rate which suggests that a significant earnings recovery is already in the price. The valuation headwind evident at the start of the year has diminished significantly on the recent correction. However, we still expect the earnings cycle to be a more relevant driver of equity returns going forward.
Earnings in the region are still being upgraded by analysts. The consensus on earnings growth is now around 40% over the coming year, a relatively high rate which suggests that a significant earnings recovery is already in the price. The valuation headwind evident at the start of the year has diminished significantly on the recent correction. However, we still expect the earnings cycle to be a more relevant driver of equity returns going forward.
Documents - Gartmore
Title Pages Date
Fund Manager Comment
"We still see difficulties in the UK and as a result we remain broadly neutral in the region. During the month the newly elected coalition government held an emergency budget meeting to tackle Britain’s huge budget deficit (12.6% of GDP). George Osborne, the new Chancellor of the Exchequer, announced a swath of measures to tackle the UK’s deficit problems. The Chancellor’s plans envisaged the complete wiping out the UK budget deficit over the next five years through huge cuts in spending rather than raising taxes. The broad consensus has been that it is a significant step in the right direction. Sterling rallied and credit agencies declared that Britain had protected its AAA rating for now. The OECD praised Osborne, hailing his plans as a “courageous move”. However, all this assumes that the coalition will stick to plan. They will face many perils in the years to come; potential threats of civil unrest from cutbacks or the coalition government falling apart. Osborne’s moves also mean that it is likely that interest rates will remain where they are for the foreseeable future. It is hard to envisage the Monetary Policy Committee raising rates in a climate of cut backs as this could cause economic growth to flounder."
"We still see difficulties in the UK and as a result we remain broadly neutral in the region. During the month the newly elected coalition government held an emergency budget meeting to tackle Britain’s huge budget deficit (12.6% of GDP). George Osborne, the new Chancellor of the Exchequer, announced a swath of measures to tackle the UK’s deficit problems. The Chancellor’s plans envisaged the complete wiping out the UK budget deficit over the next five years through huge cuts in spending rather than raising taxes. The broad consensus has been that it is a significant step in the right direction. Sterling rallied and credit agencies declared that Britain had protected its AAA rating for now. The OECD praised Osborne, hailing his plans as a “courageous move”. However, all this assumes that the coalition will stick to plan. They will face many perils in the years to come; potential threats of civil unrest from cutbacks or the coalition government falling apart. Osborne’s moves also mean that it is likely that interest rates will remain where they are for the foreseeable future. It is hard to envisage the Monetary Policy Committee raising rates in a climate of cut backs as this could cause economic growth to flounder."
Fund Manager Comment
No comment available
No comment available
Fund Manager Comment
"We are cautious in Europe as worries of contagion over the ability of some eurozone countries (namely Greece) to service their sovereign debt continue to persist. It is becoming increasingly apparent that tackling the issues of sovereign debt and growth concerns will be a drawn out process, leading to an uncertain outlook for the next three to six months. Although stock level valuations remain compellingly cheap, strong fundamentals are being drowned out by macroeconomic news which continues to weigh on investor’s minds. We do however, remain confident that once the peak of uncertainty has passed, the environment for stock pickers will normalise again. So far many European companies have surpassed analyst earnings expectations, delivered strong cash flows against robust balance sheets."
"We are cautious in Europe as worries of contagion over the ability of some eurozone countries (namely Greece) to service their sovereign debt continue to persist. It is becoming increasingly apparent that tackling the issues of sovereign debt and growth concerns will be a drawn out process, leading to an uncertain outlook for the next three to six months. Although stock level valuations remain compellingly cheap, strong fundamentals are being drowned out by macroeconomic news which continues to weigh on investor’s minds. We do however, remain confident that once the peak of uncertainty has passed, the environment for stock pickers will normalise again. So far many European companies have surpassed analyst earnings expectations, delivered strong cash flows against robust balance sheets."
Fund Manager Comment
"We remain positive US equities as we are believers in the US economic recovery and think it will continue to strengthen, rather than wane. Equity valuations continue to remain attractive, especially so for high quality, franchise growth companies. The equity market rally from March 2009 to April 2010 was primarily led by lower quality companies, many which delivered no earnings, no dividends, low returns on equity and high debt-to-equity ratios. High quality companies have not been re-rated by analysts by as nearly as much; in fact, the degree of their underperformance compared to lower quality companies since US equity markets tumbled, is historically high. We believe that when individual company fundamentals matter more to investors, high quality companies will outperform. There is also a wide swath of positive real-time economic indicators that point to a broader US recovery; port activity, vehicle production and sales, trucking, retail sales, consumer credit, restaurant and shopping mall traffic etc. The US banking system appears to have recovered in a remarkably short period of time. Credit and liquidity spreads have improved dramatically. Banks have already repaid nearly 75% of the TARP funds. The Federal Reserve Bank’s withdrawal from the mortgage market has been very orderly and Inflation is off the table as an issue for now."
"We remain positive US equities as we are believers in the US economic recovery and think it will continue to strengthen, rather than wane. Equity valuations continue to remain attractive, especially so for high quality, franchise growth companies. The equity market rally from March 2009 to April 2010 was primarily led by lower quality companies, many which delivered no earnings, no dividends, low returns on equity and high debt-to-equity ratios. High quality companies have not been re-rated by analysts by as nearly as much; in fact, the degree of their underperformance compared to lower quality companies since US equity markets tumbled, is historically high. We believe that when individual company fundamentals matter more to investors, high quality companies will outperform. There is also a wide swath of positive real-time economic indicators that point to a broader US recovery; port activity, vehicle production and sales, trucking, retail sales, consumer credit, restaurant and shopping mall traffic etc. The US banking system appears to have recovered in a remarkably short period of time. Credit and liquidity spreads have improved dramatically. Banks have already repaid nearly 75% of the TARP funds. The Federal Reserve Bank’s withdrawal from the mortgage market has been very orderly and Inflation is off the table as an issue for now."
Fund Manager Comment
"We remain positive in Japan as we believe that earnings expectations embedded in stock prices remain low. It is true that reporting season is likely to be overshadowed by the economic clouds which are gathering but we believe that, in the long run, fundamentals will prevail. At present markets are preoccupied with macro concerns. Although worries over Europe seemed to have been put on hold, investors have turned their attention to the recovery of the US and Chinese markets which are more consequential for Japanese corporate earnings. We believe that Japanese equity markets offer some compelling opportunities."
"We remain positive in Japan as we believe that earnings expectations embedded in stock prices remain low. It is true that reporting season is likely to be overshadowed by the economic clouds which are gathering but we believe that, in the long run, fundamentals will prevail. At present markets are preoccupied with macro concerns. Although worries over Europe seemed to have been put on hold, investors have turned their attention to the recovery of the US and Chinese markets which are more consequential for Japanese corporate earnings. We believe that Japanese equity markets offer some compelling opportunities."
Fund Manager Comment
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
Fund Manager Comment
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
Fund Manager Comment
"We are currently cautious on investment grade credit, favouring less interest rate sensitive names. We are also cautious on government bonds due to the high level of issuance in some countries, which has raised concerns of sovereign default. Long term inflationary pressures are starting to appear as monetary authorities continue to hold interest rates at extremely low levels. It appears that the crisis surrounding debt markets remains, shifting from corporate to sovereign debt in certain regions. Evidence of a flight to quality by investors has been witnessed in global fixed income markets placing downward pressure on short term government debt. Corporate spreads have widened as fears of contagion from the eurozone debt crisis and economic uncertainty continue to grow."
"We are currently cautious on investment grade credit, favouring less interest rate sensitive names. We are also cautious on government bonds due to the high level of issuance in some countries, which has raised concerns of sovereign default. Long term inflationary pressures are starting to appear as monetary authorities continue to hold interest rates at extremely low levels. It appears that the crisis surrounding debt markets remains, shifting from corporate to sovereign debt in certain regions. Evidence of a flight to quality by investors has been witnessed in global fixed income markets placing downward pressure on short term government debt. Corporate spreads have widened as fears of contagion from the eurozone debt crisis and economic uncertainty continue to grow."
Fund Manager Comment
"We are currently cautious on investment grade credit, favouring less interest rate sensitive names. We are also cautious on government bonds due to the high level of issuance in some countries, which has raised concerns of sovereign default. Long term inflationary pressures are starting to appear as monetary authorities continue to hold interest rates at extremely low levels. It appears that the crisis surrounding debt markets remains, shifting from corporate to sovereign debt in certain regions. Evidence of a flight to quality by investors has been witnessed in global fixed income markets placing downward pressure on short term government debt. Corporate spreads have widened as fears of contagion from the eurozone debt crisis and economic uncertainty continue to grow."
"We are currently cautious on investment grade credit, favouring less interest rate sensitive names. We are also cautious on government bonds due to the high level of issuance in some countries, which has raised concerns of sovereign default. Long term inflationary pressures are starting to appear as monetary authorities continue to hold interest rates at extremely low levels. It appears that the crisis surrounding debt markets remains, shifting from corporate to sovereign debt in certain regions. Evidence of a flight to quality by investors has been witnessed in global fixed income markets placing downward pressure on short term government debt. Corporate spreads have widened as fears of contagion from the eurozone debt crisis and economic uncertainty continue to grow."
Fund Manager Comment
"Anecdotal evidence suggests that the property cycle may not be too far away from the bottom although weak demand from potential occupiers and excess stock will continue to afflict the market and act as a drag on performance for a while yet. Property and house building groups have been addressing their balance sheet weaknesses, making them a more attractive investment proposition. Overall, we remain cautious about the impact of rising interest rates on demand for the asset class."
"Anecdotal evidence suggests that the property cycle may not be too far away from the bottom although weak demand from potential occupiers and excess stock will continue to afflict the market and act as a drag on performance for a while yet. Property and house building groups have been addressing their balance sheet weaknesses, making them a more attractive investment proposition. Overall, we remain cautious about the impact of rising interest rates on demand for the asset class."
Fund Manager Comment
"Anecdotal evidence suggests that the property cycle may not be too far away from the bottom although weak demand from potential occupiers and excess stock will continue to afflict the market and act as a drag on performance for a while yet. Property and house building groups have been addressing their balance sheet weaknesses, making them a more attractive investment proposition. Overall, we remain cautious about the impact of rising interest rates on demand for the asset class."
"Anecdotal evidence suggests that the property cycle may not be too far away from the bottom although weak demand from potential occupiers and excess stock will continue to afflict the market and act as a drag on performance for a while yet. Property and house building groups have been addressing their balance sheet weaknesses, making them a more attractive investment proposition. Overall, we remain cautious about the impact of rising interest rates on demand for the asset class."
Fund Manager Comment
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
Fund Manager Comment
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
"We remain positive in this region as we believe it represents good long term value for investors, although there is some evidence of policy tightening against rising inflationary pressures. In our view, market concerns of a prolonged monetary tightening programme are being well digested and, as confidence in the global economic recovery returns, it will benefit the region. The Chinese authorities also recently announced that they plan to make the Chinese Yuan exchange rate more flexible. This has been positively received by markets and we expect this move will improve China’s diplomatic relations with the west and, in particular, the US."
Documents - Ignis
Title Pages Date
 Global Emerging Markets Snapshot : May 2010 2 01/05/2010
 Argonautica : Olly Russ 2 01/05/2010
 European Outlook : Ian Ormiston 2 01/05/2010
 European Outlook : Ian Ormiston 2 26/03/2010
 Argonautica : Olly Russ 2 26/03/2010
Fund Manager Comment
Macroeconomic indicators are mixed and rolling over, and the strong earnings momentum that has boosted markets is going to fade. The downward momentum properly reflects a change in risk appetite amongst investors responding to significant macro threats. It also suggests some prospect of a near term rebound within a highly volatile market pattern. At the micro level, companies are now being appropriately punished for negative announcements with profit warnings coming from defensive areas such as household products and public transport as well as more risky sectors. Companies able to demonstrate structural growth should be better placed to weather these headwinds.
Macroeconomic indicators are mixed and rolling over, and the strong earnings momentum that has boosted markets is going to fade. The downward momentum properly reflects a change in risk appetite amongst investors responding to significant macro threats. It also suggests some prospect of a near term rebound within a highly volatile market pattern. At the micro level, companies are now being appropriately punished for negative announcements with profit warnings coming from defensive areas such as household products and public transport as well as more risky sectors. Companies able to demonstrate structural growth should be better placed to weather these headwinds.
Fund Manager Comment
The nervousness surrounding the UK economy continues as economic data continues to disappoint. More specifically, the euro debt crisis is not only fuelling volatility in the markets but raising fears of contagion and the possibility of a double dip recession. Traditionally, smaller companies trade at a premium to the larger market because they grow much faster than bigger firms. At present, however, this is not the case with valuations of UK small caps in certain sectors continuing to look particularly attractive.
The nervousness surrounding the UK economy continues as economic data continues to disappoint. More specifically, the euro debt crisis is not only fuelling volatility in the markets but raising fears of contagion and the possibility of a double dip recession. Traditionally, smaller companies trade at a premium to the larger market because they grow much faster than bigger firms. At present, however, this is not the case with valuations of UK small caps in certain sectors continuing to look particularly attractive.
Fund Manager Comment
With the forward P/E multiple back to single digit, European markets certainly appear to be factoring in a lot of bad news. Global leading economic indicators certainly have peaked but this is normal at this stage of any recovery. The outlook for the remainder of the summer will no doubt be dominated by government bond markets. However, stress in European sovereign markets seems to have peaked, for now at least, while the current concerns over a double dip recession appear to be overdone. Although markets need some comfort on the likelihood and magnitude of any “double dip”, the associated policy response and its results and the extent and depth of southern Europe’s sovereign crises. Once addressed, then some of the value in markets can be realised as perceptions toward Europe and perhaps the euro are now too negative relative to the opportunities.
With the forward P/E multiple back to single digit, European markets certainly appear to be factoring in a lot of bad news. Global leading economic indicators certainly have peaked but this is normal at this stage of any recovery. The outlook for the remainder of the summer will no doubt be dominated by government bond markets. However, stress in European sovereign markets seems to have peaked, for now at least, while the current concerns over a double dip recession appear to be overdone. Although markets need some comfort on the likelihood and magnitude of any “double dip”, the associated policy response and its results and the extent and depth of southern Europe’s sovereign crises. Once addressed, then some of the value in markets can be realised as perceptions toward Europe and perhaps the euro are now too negative relative to the opportunities.
Fund Manager Comment
The market outlook remains fairly neutral with investors turning their intention to the second quarter results season. While valuations across the market are reasonable, improving economic indicators, such as employment gains and housing stability, are necessary if current corporate profitability levels are to be maintained.
The market outlook remains fairly neutral with investors turning their intention to the second quarter results season. While valuations across the market are reasonable, improving economic indicators, such as employment gains and housing stability, are necessary if current corporate profitability levels are to be maintained.
Fund Manager Comment
No comment
No comment
Fund Manager Comment
It remains to be seen whether the global economy will experience a “double dip”. Loose monetary policy may eventually work but it might take longer than a typical cycle and policy makers are likely to continue to respond to negative news by extending monetary and fiscal programs. It is important to be stock specific - some stocks may have fallen significantly already, whereas others are still vulnerable to earnings or ratings downgrades. Concensus is already bearish, and if it is correct then it is entirely possible that policy makers will respond with further quantitative easing - if that happens, markets will immediately bounce.
It remains to be seen whether the global economy will experience a “double dip”. Loose monetary policy may eventually work but it might take longer than a typical cycle and policy makers are likely to continue to respond to negative news by extending monetary and fiscal programs. It is important to be stock specific - some stocks may have fallen significantly already, whereas others are still vulnerable to earnings or ratings downgrades. Concensus is already bearish, and if it is correct then it is entirely possible that policy makers will respond with further quantitative easing - if that happens, markets will immediately bounce.
Fund Manager Comment
The long term outlook for emerging market equities remains attractive on a growth to valuation basis, although the market has suffered from increased risk aversion. Increased volatility, increasing dispersion in returns and more reasonable valuations offer good opportunities for stock specific managers.
The long term outlook for emerging market equities remains attractive on a growth to valuation basis, although the market has suffered from increased risk aversion. Increased volatility, increasing dispersion in returns and more reasonable valuations offer good opportunities for stock specific managers.
Fund Manager Comment
UK government bonds have benefited as investors clung to the UK as a 2nd tier safe haven and the new coalition government’s first Budget did not disappoint the financial markets. The initial response has been positive and gilt yields have moved lower as the market has removed the discount in the price of bonds due to fears over a downgrade of the UK’s credit rating. Inflation is likely to fall from its recent highs as weaker wage growth and a higher savings rate will lead to lower prices. This will be reflected by a large flattening of the yield curve caused by a rally in long dated forward rates.
UK government bonds have benefited as investors clung to the UK as a 2nd tier safe haven and the new coalition government’s first Budget did not disappoint the financial markets. The initial response has been positive and gilt yields have moved lower as the market has removed the discount in the price of bonds due to fears over a downgrade of the UK’s credit rating. Inflation is likely to fall from its recent highs as weaker wage growth and a higher savings rate will lead to lower prices. This will be reflected by a large flattening of the yield curve caused by a rally in long dated forward rates.
Fund Manager Comment
Going forward credit appears to be fairly valued but there are concerned over general macroeconomic risks, including the outlook for the consumer and the risks of a slowing domestic economy in the face of substantial public expenditure cuts.
Going forward credit appears to be fairly valued but there are concerned over general macroeconomic risks, including the outlook for the consumer and the risks of a slowing domestic economy in the face of substantial public expenditure cuts.
Fund Manager Comment
Prime yields have generally stabilised and investor demand has weakened in recent months as a result of growing nervousness over the economy, as well as renewed financial market uncertainty. Office markets, particularly those where the public sector makes up a sizeable proportion, will be affected by government cuts. However, while capital growth and total returns continue to moderate, in line with general forecasts, overall positive total returns for UK commercial property for 2010 are anticipated.
Prime yields have generally stabilised and investor demand has weakened in recent months as a result of growing nervousness over the economy, as well as renewed financial market uncertainty. Office markets, particularly those where the public sector makes up a sizeable proportion, will be affected by government cuts. However, while capital growth and total returns continue to moderate, in line with general forecasts, overall positive total returns for UK commercial property for 2010 are anticipated.
Fund Manager Comment
No comment
No comment
Fund Manager Comment
It remains to be seen whether the global economy will experience a “double dip”. Loose monetary policy may eventually work but it might take longer than a typical cycle and policy makers are likely to continue to respond to negative news by extending monetary and fiscal programs. It is important to be stock specific - some stocks may have fallen significantly already, whereas others are still vulnerable to earnings or ratings downgrades. Concensus is already bearish, and if it is correct then it is entirely possible that policy makers will respond with further quantitative easing - if that happens, markets will immediately bounce.
It remains to be seen whether the global economy will experience a “double dip”. Loose monetary policy may eventually work but it might take longer than a typical cycle and policy makers are likely to continue to respond to negative news by extending monetary and fiscal programs. It is important to be stock specific - some stocks may have fallen significantly already, whereas others are still vulnerable to earnings or ratings downgrades. Concensus is already bearish, and if it is correct then it is entirely possible that policy makers will respond with further quantitative easing - if that happens, markets will immediately bounce.
Fund Manager Comment
It remains to be seen whether the global economy will experience a “double dip”. Loose monetary policy may eventually work but it might take longer than a typical cycle and policy makers are likely to continue to respond to negative news by extending monetary and fiscal programs. It is important to be stock specific - some stocks may have fallen significantly already, whereas others are still vulnerable to earnings or ratings downgrades. Concensus is already bearish, and if it is correct then it is entirely possible that policy makers will respond with further quantitative easing - if that happens, markets will immediately bounce.
It remains to be seen whether the global economy will experience a “double dip”. Loose monetary policy may eventually work but it might take longer than a typical cycle and policy makers are likely to continue to respond to negative news by extending monetary and fiscal programs. It is important to be stock specific - some stocks may have fallen significantly already, whereas others are still vulnerable to earnings or ratings downgrades. Concensus is already bearish, and if it is correct then it is entirely possible that policy makers will respond with further quantitative easing - if that happens, markets will immediately bounce.
Documents - Investec
Title Pages Date
Fund Manager Comment
Great value for the longer term owing to strong earnings growth but the Euro-zone crisis is likely to hold markets back shorter term
Great value for the longer term owing to strong earnings growth but the Euro-zone crisis is likely to hold markets back shorter term
Fund Manager Comment
Small cap should continue to out-perform this year and expectations are too low
Small cap should continue to out-perform this year and expectations are too low
Fund Manager Comment
Great value for the longer term owing to strong earnings growth and a falling Euro but the Euro-zone crisis is likely to hold markets back shorter term
Great value for the longer term owing to strong earnings growth and a falling Euro but the Euro-zone crisis is likely to hold markets back shorter term
Fund Manager Comment
Great value for the longer term owing to strong earnings growth but the Euro-zone crisis is likely to hold markets back shorter term
Great value for the longer term owing to strong earnings growth but the Euro-zone crisis is likely to hold markets back shorter term
Fund Manager Comment
Improving economy and positive earnings surprises support out-performance and rating is reasonable but the recent Yen strength is a major headwind
Improving economy and positive earnings surprises support out-performance and rating is reasonable but the recent Yen strength is a major headwind
Fund Manager Comment
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Fund Manager Comment
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Fund Manager Comment
Recent fall in yields have matched the improving fiscal outlook so still expensive
Recent fall in yields have matched the improving fiscal outlook so still expensive
Fund Manager Comment
Credit spreads are attractive again but bonds are vulnerable to higher government yields. EM debt is preferred
Credit spreads are attractive again but bonds are vulnerable to higher government yields. EM debt is preferred
Fund Manager Comment
Reits continue to mark time and could be undermined by higher gilt yields. Physical market is advancing steadily
Reits continue to mark time and could be undermined by higher gilt yields. Physical market is advancing steadily
Fund Manager Comment
Reits continue to mark time and could be undermined by higher gilt yields. Physical market is advancing steadily
Reits continue to mark time and could be undermined by higher gilt yields. Physical market is advancing steadily
Fund Manager Comment
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Fund Manager Comment
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Starting to out-perform and less affected by Eurozone criss: great value and strong earnings growth
Documents - M&G
Title Pages Date
Fund Manager Comment
We remain neutral on the outlook on UK equities, given our cautious view on the UK economy's growth prospects.
We remain neutral on the outlook on UK equities, given our cautious view on the UK economy's growth prospects.
Fund Manager Comment
We remain neutral on the outlook on UK equities, given our cautious view on the UK economy's growth prospects.
We remain neutral on the outlook on UK equities, given our cautious view on the UK economy's growth prospects.
Fund Manager Comment
Economic uncertainty weighs on the regions prospects
Economic uncertainty weighs on the regions prospects
Fund Manager Comment
We are comfortable with current valuation levels
We are comfortable with current valuation levels
Fund Manager Comment
We believe that Japanese equities remain a diversifying asset, given their negative correlation with other equity markets.
We believe that Japanese equities remain a diversifying asset, given their negative correlation with other equity markets.
Fund Manager Comment
Valuation now neutral. Favour Western plays on Asian growth theme
Valuation now neutral. Favour Western plays on Asian growth theme
Fund Manager Comment
Although valuations are now more supportive, given current levels of volatility we favour less risky asset classes
Although valuations are now more supportive, given current levels of volatility we favour less risky asset classes
Fund Manager Comment
We are wary of upward yield pressure from weight of issuance
We are wary of upward yield pressure from weight of issuance
Fund Manager Comment
Recent yield compression in corporate bonds means they are no longer as attractive as before.
Recent yield compression in corporate bonds means they are no longer as attractive as before.
Fund Manager Comment
UK property yields are still at attractive levels
UK property yields are still at attractive levels
Fund Manager Comment
Over the long term we favour property for its real returns and diversification qualities, particularly through 'bricks and mortar' investment rather than property shares which have exposure to equity market risk.
Over the long term we favour property for its real returns and diversification qualities, particularly through 'bricks and mortar' investment rather than property shares which have exposure to equity market risk.
Fund Manager Comment
Valuation now neutral. Favour Western plays on Asian growth theme
Valuation now neutral. Favour Western plays on Asian growth theme
Fund Manager Comment
Valuation now neutral. Favour Western plays on Asian growth theme
Valuation now neutral. Favour Western plays on Asian growth theme
Fund Manager Comment
In the UK, George Osborne, Chancellor of the Exchequer, delivered the coalition government’s emergency budget intended to eliminate the budget deficit within five years and placate investors. Earlier in the month, the Chancellor had announced the abolition of the Financial Services Authority and the conferral of greater powers to the Bank of England in a regulatory shake-up.
In the UK, George Osborne, Chancellor of the Exchequer, delivered the coalition government’s emergency budget intended to eliminate the budget deficit within five years and placate investors. Earlier in the month, the Chancellor had announced the abolition of the Financial Services Authority and the conferral of greater powers to the Bank of England in a regulatory shake-up.
Fund Manager Comment
[N/A]
[N/A]
Fund Manager Comment
The Eurozone sovereign debt crisis rumbled on, with contagion concerns focused on Spain this time. Spain announced plans to publish bank stress tests, an initiative – subsequently adopted across the Eurozone – that was intended to help the country’s lenders regain access to capital markets by improving sentiment. (Late in May, Fitch Ratings downgraded Spain’s credit rating to AA+ from AAA, a move that unsettled investors.) Peripheral European markets also experienced varied performance. Still in the spotlight, Greece (-9.2%) was the worst performer, while Turkey went up 1.7%. In Central and Eastern Europe, the Czech Republic achieved a 0.1% gain, whileHungary fell 5.3%, Poland saw a decline of 6.0%, and Russia one of 3.6%.
The Eurozone sovereign debt crisis rumbled on, with contagion concerns focused on Spain this time. Spain announced plans to publish bank stress tests, an initiative – subsequently adopted across the Eurozone – that was intended to help the country’s lenders regain access to capital markets by improving sentiment. (Late in May, Fitch Ratings downgraded Spain’s credit rating to AA+ from AAA, a move that unsettled investors.) Peripheral European markets also experienced varied performance. Still in the spotlight, Greece (-9.2%) was the worst performer, while Turkey went up 1.7%. In Central and Eastern Europe, the Czech Republic achieved a 0.1% gain, whileHungary fell 5.3%, Poland saw a decline of 6.0%, and Russia one of 3.6%.
Fund Manager Comment
June proved to be yet another volatile month for the US market, as weak economic data increased fears of a ‘double-dip’ recession. The US unemployment rate edged down marginally, to 9.5% from 9.7%, despite non-farm payroll employment declining by 125,000. Meanwhile, private sector payroll growth fell short of market expectations, adding just 83,000 jobs over the month. Elsewhere, there was little to celebrate in the US housing market. Following the conclusion of a tax bracket for house buyers, sales of new homes slumped by 33% in May compared with the previous month, to an annual rate of 300,000 – the lowest level on record. Against this backdrop, the US Federal Reserve kept interest rates on hold at between 0% and 0.25%.
June proved to be yet another volatile month for the US market, as weak economic data increased fears of a ‘double-dip’ recession. The US unemployment rate edged down marginally, to 9.5% from 9.7%, despite non-farm payroll employment declining by 125,000. Meanwhile, private sector payroll growth fell short of market expectations, adding just 83,000 jobs over the month. Elsewhere, there was little to celebrate in the US housing market. Following the conclusion of a tax bracket for house buyers, sales of new homes slumped by 33% in May compared with the previous month, to an annual rate of 300,000 – the lowest level on record. Against this backdrop, the US Federal Reserve kept interest rates on hold at between 0% and 0.25%.
Fund Manager Comment
Japanese government bond yields fell across the curve in June, helping 30-year bonds to return +3.3%, aided by the Bank of Japan’s quantitative easing programme. Meanwhile, yields on short-dated Australian government bonds rose modestly, while falling on medium and longer dated debt. Returns were nevertheless positive across the curve.
Japanese government bond yields fell across the curve in June, helping 30-year bonds to return +3.3%, aided by the Bank of Japan’s quantitative easing programme. Meanwhile, yields on short-dated Australian government bonds rose modestly, while falling on medium and longer dated debt. Returns were nevertheless positive across the curve.
Fund Manager Comment
Asian markets suffered a fresh bout of volatility in June, influenced by macroeconomic concerns in Europe, as well as noise surrounding Chinese wage hikes and slowdown in the property market. China and Taiwan signed a landmark agreement designed to liberalise trade and investment across the Taiwan strait. Elsewhere, Chinese exports rose by 48.5% in May compared with the same month last year. Imports grew by 48.3%.
Asian markets suffered a fresh bout of volatility in June, influenced by macroeconomic concerns in Europe, as well as noise surrounding Chinese wage hikes and slowdown in the property market. China and Taiwan signed a landmark agreement designed to liberalise trade and investment across the Taiwan strait. Elsewhere, Chinese exports rose by 48.5% in May compared with the same month last year. Imports grew by 48.3%.
Fund Manager Comment
The rally in risk assets continued in the first quarter as markets were reassured of the ongoing economic recovery worldwide. Emerging markets, in particular, benefited from inflows of global capital. Emerging economies’ currencies performed strongly, up 2.0% on an index-weighted basis, thanks to large capital inflows attracted by faster economic growth in emerging economies compared to the developed countries. The top performing emerging market currencies versus the US dollar were the Mexican peso, the Indonesian rupiah and the Malaysian ringgit.
The rally in risk assets continued in the first quarter as markets were reassured of the ongoing economic recovery worldwide. Emerging markets, in particular, benefited from inflows of global capital. Emerging economies’ currencies performed strongly, up 2.0% on an index-weighted basis, thanks to large capital inflows attracted by faster economic growth in emerging economies compared to the developed countries. The top performing emerging market currencies versus the US dollar were the Mexican peso, the Indonesian rupiah and the Malaysian ringgit.
Fund Manager Comment
In the UK, Gilt investors saw strong returns in June, with 10-year gilts returning +2.1% as the coalition government used its working majority to outline an aggressive programme of fiscal austerity, which placated the credit rating agencies and helped large volumes of new gilt issuance to be covered easily by rising demand.
In the UK, Gilt investors saw strong returns in June, with 10-year gilts returning +2.1% as the coalition government used its working majority to outline an aggressive programme of fiscal austerity, which placated the credit rating agencies and helped large volumes of new gilt issuance to be covered easily by rising demand.
Fund Manager Comment
Corporate bonds enjoyed a very strong start to the year, significantly outperforming government bonds, as economic data was sufficiently robust to allay the worst fears about sovereign rating downgrades, and support company profitability, but sufficiently fragile to push back the prospect of significant interest-rate rises or inflation.
Corporate bonds enjoyed a very strong start to the year, significantly outperforming government bonds, as economic data was sufficiently robust to allay the worst fears about sovereign rating downgrades, and support company profitability, but sufficiently fragile to push back the prospect of significant interest-rate rises or inflation.
Fund Manager Comment
N/A
N/A
Fund Manager Comment
N/A
N/A
Fund Manager Comment
Asian markets suffered a fresh bout of volatility in June, influenced by macroeconomic concerns in Europe, as well as noise surrounding Chinese wage hikes and slowdown in the property market. China and Taiwan signed a landmark agreement designed to liberalise trade and investment across the Taiwan strait. Elsewhere, Chinese exports rose by 48.5% in May compared with the same month last year. Imports grew by 48.3%.
Asian markets suffered a fresh bout of volatility in June, influenced by macroeconomic concerns in Europe, as well as noise surrounding Chinese wage hikes and slowdown in the property market. China and Taiwan signed a landmark agreement designed to liberalise trade and investment across the Taiwan strait. Elsewhere, Chinese exports rose by 48.5% in May compared with the same month last year. Imports grew by 48.3%.
Fund Manager Comment
Asian markets suffered a fresh bout of volatility in June, influenced by macroeconomic concerns in Europe, as well as noise surrounding Chinese wage hikes and slowdown in the property market. China and Taiwan signed a landmark agreement designed to liberalise trade and investment across the Taiwan strait. Elsewhere, Chinese exports rose by 48.5% in May compared with the same month last year. Imports grew by 48.3%.
Asian markets suffered a fresh bout of volatility in June, influenced by macroeconomic concerns in Europe, as well as noise surrounding Chinese wage hikes and slowdown in the property market. China and Taiwan signed a landmark agreement designed to liberalise trade and investment across the Taiwan strait. Elsewhere, Chinese exports rose by 48.5% in May compared with the same month last year. Imports grew by 48.3%.
Documents - Old Mutual
Title Pages Date
Fund Manager Comment
Equity markets remain attractively valued and we believe that the medium term outlook is positive with company newsflow remaining strong. In the near term further volatility is likely until it becomes clear whether the recent modest softening of some economic indicators marks no more than a typical post-recovery slowdown or is a precursor to more significant economic weakness in 2011.
Equity markets remain attractively valued and we believe that the medium term outlook is positive with company newsflow remaining strong. In the near term further volatility is likely until it becomes clear whether the recent modest softening of some economic indicators marks no more than a typical post-recovery slowdown or is a precursor to more significant economic weakness in 2011.
Fund Manager Comment
The economic outlook is now more uncertain than was the case at the end of the previous quarter and in the near term further volatility is likely until it becomes clear whether the recent modest softening of some economic indicators is a precursor to more significant economic weakness, or whether it just typifies a phase of slower growth during the ongoing recovery. Given this, we are seeking a balance between higher conviction cyclicals and structural growth stocks, while maintaining a focus on international earnings, given our expectation that UK growth will lag international growth in the coming year.
The economic outlook is now more uncertain than was the case at the end of the previous quarter and in the near term further volatility is likely until it becomes clear whether the recent modest softening of some economic indicators is a precursor to more significant economic weakness, or whether it just typifies a phase of slower growth during the ongoing recovery. Given this, we are seeking a balance between higher conviction cyclicals and structural growth stocks, while maintaining a focus on international earnings, given our expectation that UK growth will lag international growth in the coming year.
Fund Manager Comment
Financial markets have left regional governments in no doubt about the need to rein in their deficits and while the austerity measures announced during the quarter have had little impact on growth forecasts for 2010, forecasts for 2011 have generally been lowered and the European Central Bank is likely to maintain interest rates at current levels until at least the end of next year. Fiscal concerns are continuing to constrain the region, particularly the southern European countries, and fiscal consolidation is a key reason for Europe having the weakest outlook among the developed investment regions. Meanwhile the uninspiring economic outlook is weighing on earnings momentum.
Financial markets have left regional governments in no doubt about the need to rein in their deficits and while the austerity measures announced during the quarter have had little impact on growth forecasts for 2010, forecasts for 2011 have generally been lowered and the European Central Bank is likely to maintain interest rates at current levels until at least the end of next year. Fiscal concerns are continuing to constrain the region, particularly the southern European countries, and fiscal consolidation is a key reason for Europe having the weakest outlook among the developed investment regions. Meanwhile the uninspiring economic outlook is weighing on earnings momentum.
Fund Manager Comment
Fears of a double dip may prove to be overdone, given that lead indicators and analysts’ forecast typically roll over at this stage in the cycle. The recovery is therefore likely to slow down rather than go into reverse, as the economy faces a number of headwinds, not least of which will be budgetary constraints at federal and state level. The market has struggled under the weight of European sovereign contagion, unsustainably high earnings revisions and waning economic momentum. Equity market valuations remain among the highest in the main developed markets, trading on 12.6 times 2010 expected earnings and at a 3% premium to global equities the US appears expensively rated.
Fears of a double dip may prove to be overdone, given that lead indicators and analysts’ forecast typically roll over at this stage in the cycle. The recovery is therefore likely to slow down rather than go into reverse, as the economy faces a number of headwinds, not least of which will be budgetary constraints at federal and state level. The market has struggled under the weight of European sovereign contagion, unsustainably high earnings revisions and waning economic momentum. Equity market valuations remain among the highest in the main developed markets, trading on 12.6 times 2010 expected earnings and at a 3% premium to global equities the US appears expensively rated.
Fund Manager Comment
Signs of a slowing global recovery are of concern to Japan, given the more cyclical nature of the market compared to the other major investment regions. Meanwhile Japan’s unemployment rate rose and both factory output and household consumption fell in May, raising concerns over the domestic recovery. Nonetheless, the market offers potential for strong earnings growth over the medium term, particularly given the Chinese moves to allow the renminbi to appreciate.
Signs of a slowing global recovery are of concern to Japan, given the more cyclical nature of the market compared to the other major investment regions. Meanwhile Japan’s unemployment rate rose and both factory output and household consumption fell in May, raising concerns over the domestic recovery. Nonetheless, the market offers potential for strong earnings growth over the medium term, particularly given the Chinese moves to allow the renminbi to appreciate.
Fund Manager Comment
On the positive side, the economic recovery is underway, driving earnings recovery and the upgrade cycle; regional GDP forecasts are being revised higher; recovery has broadened; and valuations are reasonable and appear attractive on a medium term view. Against this, concerns remain over the withdrawals of stimulus across the region, while sentiment remains impacted by high levels of sovereign debt in Europe. Although regional economies do not have these structural problems, in a globalised world investment, trade and liquidity will be impacted.
On the positive side, the economic recovery is underway, driving earnings recovery and the upgrade cycle; regional GDP forecasts are being revised higher; recovery has broadened; and valuations are reasonable and appear attractive on a medium term view. Against this, concerns remain over the withdrawals of stimulus across the region, while sentiment remains impacted by high levels of sovereign debt in Europe. Although regional economies do not have these structural problems, in a globalised world investment, trade and liquidity will be impacted.
Fund Manager Comment
Fund Manager Comment
Deficit reduction and declining inflation is sending Western government bond yields down towards their Japanese equivalents and the UK is no exception. In the absence of private sector recovery and a resurgence of inflation, this process should continue in the medium-term, a theme which is best captured by a tendency to be strategically long duration.
Deficit reduction and declining inflation is sending Western government bond yields down towards their Japanese equivalents and the UK is no exception. In the absence of private sector recovery and a resurgence of inflation, this process should continue in the medium-term, a theme which is best captured by a tendency to be strategically long duration.
Fund Manager Comment
Corporate bonds hold value for medium-term investors but quality of earnings and financial stability dictates whether an investment in any one name is advisable. We are continuing to move up the credit quality scale as we expect the markets to remain volatile in the short term, but still remain positive over the longer term. Our strategy will continue to be to take advantage of market volatility to buy quality bonds at attractive yields.
Corporate bonds hold value for medium-term investors but quality of earnings and financial stability dictates whether an investment in any one name is advisable. We are continuing to move up the credit quality scale as we expect the markets to remain volatile in the short term, but still remain positive over the longer term. Our strategy will continue to be to take advantage of market volatility to buy quality bonds at attractive yields.
Fund Manager Comment
Fund Manager Comment
Fund Manager Comment
On the positive side, the economic recovery is underway, driving earnings recovery and the upgrade cycle; regional GDP forecasts are being revised higher; recovery has broadened; and valuations are reasonable and appear attractive on a medium term view. Against this, concerns remain over the withdrawals of stimulus across the region, while sentiment remains impacted by high levels of sovereign debt in Europe. Although regional economies do not have these structural problems, in a globalised world investment, trade and liquidity will be impacted.
On the positive side, the economic recovery is underway, driving earnings recovery and the upgrade cycle; regional GDP forecasts are being revised higher; recovery has broadened; and valuations are reasonable and appear attractive on a medium term view. Against this, concerns remain over the withdrawals of stimulus across the region, while sentiment remains impacted by high levels of sovereign debt in Europe. Although regional economies do not have these structural problems, in a globalised world investment, trade and liquidity will be impacted.
Fund Manager Comment
On the positive side, the economic recovery is underway, driving earnings recovery and the upgrade cycle; regional GDP forecasts are being revised higher; recovery has broadened; and valuations are reasonable and appear attractive on a medium term view. Against this, concerns remain over the withdrawals of stimulus across the region, while sentiment remains impacted by high levels of sovereign debt in Europe. Although regional economies do not have these structural problems, in a globalised world investment, trade and liquidity will be impacted.
On the positive side, the economic recovery is underway, driving earnings recovery and the upgrade cycle; regional GDP forecasts are being revised higher; recovery has broadened; and valuations are reasonable and appear attractive on a medium term view. Against this, concerns remain over the withdrawals of stimulus across the region, while sentiment remains impacted by high levels of sovereign debt in Europe. Although regional economies do not have these structural problems, in a globalised world investment, trade and liquidity will be impacted.
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Documents - Standard Life Investments
Title Pages Date
 Global Outlook (Quarterly) : 3rd Quarter 2010 24 14/07/2010
 Global Outlook (Quarterly) : 2nd Quarter 2010 24 14/04/2010
 Global Perspective : March 2010 4 19/03/2010
 Global Perspective : February 2010 4 24/02/2010
 Global Outlook (Quarterly) : 1st Quarter 2010 24 15/01/2010
Fund Manager Comment
The market can make headway, supported by valuations and the benefits of sterling’s depreciation on overseas earnings, but faces headwinds from weak real income growth and fiscal tightening.
The market can make headway, supported by valuations and the benefits of sterling’s depreciation on overseas earnings, but faces headwinds from weak real income growth and fiscal tightening.
Fund Manager Comment
Fund Manager Comment
Profitability is restrained by less cost cutting than seen in the US and UK, plus the impact of tight fiscal policy on economic growth, albeit some sectors are supported by their exposure to emerging market economies.
Profitability is restrained by less cost cutting than seen in the US and UK, plus the impact of tight fiscal policy on economic growth, albeit some sectors are supported by their exposure to emerging market economies.
Fund Manager Comment
US equities are supported by improving corporate cash flow into 2010 on the back of strict cost control but the upside is limited by the consumer debt and housing market overhangs restraining domestic demand.
US equities are supported by improving corporate cash flow into 2010 on the back of strict cost control but the upside is limited by the consumer debt and housing market overhangs restraining domestic demand.
Fund Manager Comment
Helpful exposure to the Asian and US economies is offset by weak domestic dynamics and tighter fiscal policy; government action has so far been unsuccessful in stimulating consumer spending or ending deflation.
Helpful exposure to the Asian and US economies is offset by weak domestic dynamics and tighter fiscal policy; government action has so far been unsuccessful in stimulating consumer spending or ending deflation.
Fund Manager Comment
We are cautiously selective on Asian economies benefiting from strong Chinese growth but wary of inflation pressures building in some countries unless central banks take firm action to dampen liquidity.
We are cautiously selective on Asian economies benefiting from strong Chinese growth but wary of inflation pressures building in some countries unless central banks take firm action to dampen liquidity.
Fund Manager Comment
Some markets are benefiting from the upturn in commodity demand and upgrades to sovereign debt ratings. Others still face external financing problems awaiting a strong recovery in export growth.
Some markets are benefiting from the upturn in commodity demand and upgrades to sovereign debt ratings. Others still face external financing problems awaiting a strong recovery in export growth.
Fund Manager Comment
Concerns about the economy’s fiscal position and sizeable gilt supply in the years ahead make us cautious but interest rate increases remain unlikely for some time.
Concerns about the economy’s fiscal position and sizeable gilt supply in the years ahead make us cautious but interest rate increases remain unlikely for some time.
Fund Manager Comment
Spreads over government bonds are still historically wide, although not as attractive as seen last year. Improving corporate cashflow supports a peak in bond default rates.
Spreads over government bonds are still historically wide, although not as attractive as seen last year. Improving corporate cashflow supports a peak in bond default rates.
Fund Manager Comment
We are selectively Heavy with a particular focus on supply-constrained office markets, e.g. London & Paris, and higher-yielding central European logistical property.
We are selectively Heavy with a particular focus on supply-constrained office markets, e.g. London & Paris, and higher-yielding central European logistical property.
Fund Manager Comment
Significant property debt maturities present risks for US commercial property but Canada's lowly-leveraged property markets should fare better. Excessive supply in certain markets in Asia, e.g. China and Singapore, will hold back growth but higher-yielding Australian markets look more attractively priced.
Significant property debt maturities present risks for US commercial property but Canada's lowly-leveraged property markets should fare better. Excessive supply in certain markets in Asia, e.g. China and Singapore, will hold back growth but higher-yielding Australian markets look more attractively priced.
Fund Manager Comment
We are cautiously selective on Asian economies benefiting from strong Chinese growth but wary of inflation pressures building in some countries unless central banks take firm action to dampen liquidity.
We are cautiously selective on Asian economies benefiting from strong Chinese growth but wary of inflation pressures building in some countries unless central banks take firm action to dampen liquidity.
Fund Manager Comment
We are cautiously selective on Asian economies benefiting from strong Chinese growth but wary of inflation pressures building in some countries unless central banks take firm action to dampen liquidity.
We are cautiously selective on Asian economies benefiting from strong Chinese growth but wary of inflation pressures building in some countries unless central banks take firm action to dampen liquidity.
Fund Manager Comment
The austerity measures announced by the government should ensure that the UK retains its coveted AAA credit rating. However, the resulting tax hikes and spending cuts are likely to keep growth below trend for several quarters. This creates a difficult environment for domestic consumer-facing companies, although in many cases this tough outlook is reflected in prices. Overall, UK equities offer good value. The international earnings profile of the market, the weakness of sterling and the open attitude to takeovers are likely to prompt ongoing M&A activity, further supporting prices. Although risk appetite may remain fragile in the short term, we believe that the market can make good medium-term progress.
The austerity measures announced by the government should ensure that the UK retains its coveted AAA credit rating. However, the resulting tax hikes and spending cuts are likely to keep growth below trend for several quarters. This creates a difficult environment for domestic consumer-facing companies, although in many cases this tough outlook is reflected in prices. Overall, UK equities offer good value. The international earnings profile of the market, the weakness of sterling and the open attitude to takeovers are likely to prompt ongoing M&A activity, further supporting prices. Although risk appetite may remain fragile in the short term, we believe that the market can make good medium-term progress.
Fund Manager Comment
The new government is addressing the budget deficit with large spending cuts and more modest tax rises. Economic growth will be low (with a risk of "double dip" recession), constrained by reduced public spending and weak consumer confidence. The recent strength of sterling versus the euro will also not be helpful for exporters. Interest rates seem likely to stay at just 0.5% for some time yet despite stubbornly high retail price inflation. This backdrop may make it difficult for UK smaller companies to continue to outperform given their greater domestic bias. However, Asia (especially China) continues to drive global economic recovery, and overseas-exposed companies are benefiting from this cyclical upturn. Furthermore, in recent months there has been an increase in takeover activity of UK smaller companies by larger UK and overseas competitors. At the very least this will limit the scope for underperformance.
The new government is addressing the budget deficit with large spending cuts and more modest tax rises. Economic growth will be low (with a risk of "double dip" recession), constrained by reduced public spending and weak consumer confidence. The recent strength of sterling versus the euro will also not be helpful for exporters. Interest rates seem likely to stay at just 0.5% for some time yet despite stubbornly high retail price inflation. This backdrop may make it difficult for UK smaller companies to continue to outperform given their greater domestic bias. However, Asia (especially China) continues to drive global economic recovery, and overseas-exposed companies are benefiting from this cyclical upturn. Furthermore, in recent months there has been an increase in takeover activity of UK smaller companies by larger UK and overseas competitors. At the very least this will limit the scope for underperformance.
Fund Manager Comment
Peripheral Europe is in economic disarray – Spain and other countries are suffering from deflation, weak real estate prices and savage public expenditure cuts. Against this backdrop, the outlook for the financial and consumer sectors is negative. Conversely the weakness of the euro, together with encouraging data from emerging markets, means that certain exporters are in a strong position. We remain cautiously optimistic. Analysts have revised up their estimates for profits in 2010, but there are question marks over the growth in GDP and corporate profits over the longer term; sovereign risk may also continue to provide shocks to financial markets.
Peripheral Europe is in economic disarray – Spain and other countries are suffering from deflation, weak real estate prices and savage public expenditure cuts. Against this backdrop, the outlook for the financial and consumer sectors is negative. Conversely the weakness of the euro, together with encouraging data from emerging markets, means that certain exporters are in a strong position. We remain cautiously optimistic. Analysts have revised up their estimates for profits in 2010, but there are question marks over the growth in GDP and corporate profits over the longer term; sovereign risk may also continue to provide shocks to financial markets.
Fund Manager Comment
Despite the modest outlook for economic growth, particularly in light of high unemployment and a weak housing market, we remain optimistic about the prospects for US equities. The average equity represents much better quality now than at any time in the past 20 years, while valuations are the most attractive they have been since the early 1990s. Furthermore, corporate cash flow, debt to equity and capital allocation measures are all better than they were then. Meanwhile, many US companies are well positioned to benefit from rising economic activity when it comes, having shown themselves capable of rapidly adjusting their cost bases during the downturn.
Despite the modest outlook for economic growth, particularly in light of high unemployment and a weak housing market, we remain optimistic about the prospects for US equities. The average equity represents much better quality now than at any time in the past 20 years, while valuations are the most attractive they have been since the early 1990s. Furthermore, corporate cash flow, debt to equity and capital allocation measures are all better than they were then. Meanwhile, many US companies are well positioned to benefit from rising economic activity when it comes, having shown themselves capable of rapidly adjusting their cost bases during the downturn.
Fund Manager Comment
The outlook for the Japanese equity market continues to be dominated by global factors. Recent market weakness has been a result of a negative reassessment of global growth and particular concerns regarding US macro data. In addition there have been some worries regarding how much the Chinese economy, which now absorbs some 25% of Japan's exports, will slow. Valuations and company contacts remain supportive of a positive view on Japanese equities, and companies in areas such as capital goods involved in China are actually seeing business accelerate. Indeed, in a wide number of sectors Japan's relationship with growing Asian economies continues to deepen. Some resolution of global macro concerns is a prerequisite for the Japanese equity market to recover and, in the meantime, there is likely to be ongoing volatility.
The outlook for the Japanese equity market continues to be dominated by global factors. Recent market weakness has been a result of a negative reassessment of global growth and particular concerns regarding US macro data. In addition there have been some worries regarding how much the Chinese economy, which now absorbs some 25% of Japan's exports, will slow. Valuations and company contacts remain supportive of a positive view on Japanese equities, and companies in areas such as capital goods involved in China are actually seeing business accelerate. Indeed, in a wide number of sectors Japan's relationship with growing Asian economies continues to deepen. Some resolution of global macro concerns is a prerequisite for the Japanese equity market to recover and, in the meantime, there is likely to be ongoing volatility.
Fund Manager Comment
As the global backdrop turns more challenging, leading economic indicators in Asia are pointing to a slower, but nevertheless still relatively robust, economic outlook underpinned by the strength of domestic demand. Against a backdrop of robust growth and a return to positive inflation, central banks across the region will continue to normalise interest rates from exceptionally low levels. The earnings outlook remains positive and Asian stock market valuations are undemanding, but the headwinds associated with global credit stresses and the slowing momentum of the global economy may continue to depress performance. The key to performance remains global risk appetite. Any reduction in macro policy uncertainty in China as it becomes apparent that the economy has achieved a soft landing would be taken positively by investors.
As the global backdrop turns more challenging, leading economic indicators in Asia are pointing to a slower, but nevertheless still relatively robust, economic outlook underpinned by the strength of domestic demand. Against a backdrop of robust growth and a return to positive inflation, central banks across the region will continue to normalise interest rates from exceptionally low levels. The earnings outlook remains positive and Asian stock market valuations are undemanding, but the headwinds associated with global credit stresses and the slowing momentum of the global economy may continue to depress performance. The key to performance remains global risk appetite. Any reduction in macro policy uncertainty in China as it becomes apparent that the economy has achieved a soft landing would be taken positively by investors.
Fund Manager Comment
We remain optimistic on the outlook for emerging market equities. Earnings growth of more than 30% this year puts the asset class on a price to earnings multiple of 12x, with around 18% growth in earnings expected for 2011. While a slowdown in global growth is a concern for the commodity markets, financials is now the largest sector in emerging markets and we believe that the credit cycle will remain very supportive for growth in the developing world. As earnings growth comes through we expect the premium relative to developed markets to expand.
We remain optimistic on the outlook for emerging market equities. Earnings growth of more than 30% this year puts the asset class on a price to earnings multiple of 12x, with around 18% growth in earnings expected for 2011. While a slowdown in global growth is a concern for the commodity markets, financials is now the largest sector in emerging markets and we believe that the credit cycle will remain very supportive for growth in the developing world. As earnings growth comes through we expect the premium relative to developed markets to expand.
Fund Manager Comment
The events of Q2 were definitely positive for gilts but, with yields now close to multi-decade lows, the outlook is less certain. The perception of the UK government’s ability to deliver on fiscal plans, a reduction in headline inflation and the development of the global economy will be critical. Differentials between yields at the short and long-dated ends of the market are at interesting levels: this presents an investment opportunity notwithstanding the direction of the market overall.
The events of Q2 were definitely positive for gilts but, with yields now close to multi-decade lows, the outlook is less certain. The perception of the UK government’s ability to deliver on fiscal plans, a reduction in headline inflation and the development of the global economy will be critical. Differentials between yields at the short and long-dated ends of the market are at interesting levels: this presents an investment opportunity notwithstanding the direction of the market overall.
Fund Manager Comment
Excess yields over gilts are still wider than the usual range for corporate bond yields relative to government bonds before the credit crunch. Despite the recovery, the market is still overcompensating investors for the likelihood of defaults. We retain a favourable view on corporate bonds relative to gilts. The past year’s strong performance, however, means that correlation with government bonds is moving nearer normal levels. Re-regulation of banks is likely to leave them better capitalised and less leveraged; as a result, financials should outperform non-financials. The impact of problems in peripheral European markets on companies domiciled in those countries is an ongoing issue. There are signs of M&A in several sectors, but corporate behaviour remains generally supportive for the continued performance of the market.
Excess yields over gilts are still wider than the usual range for corporate bond yields relative to government bonds before the credit crunch. Despite the recovery, the market is still overcompensating investors for the likelihood of defaults. We retain a favourable view on corporate bonds relative to gilts. The past year’s strong performance, however, means that correlation with government bonds is moving nearer normal levels. Re-regulation of banks is likely to leave them better capitalised and less leveraged; as a result, financials should outperform non-financials. The impact of problems in peripheral European markets on companies domiciled in those countries is an ongoing issue. There are signs of M&A in several sectors, but corporate behaviour remains generally supportive for the continued performance of the market.
Fund Manager Comment
There is evidence that some parts of the occupational market have already reached the bottom of the rental cycle, with tenant inducements being reduced as a consequence of recovering occupational demand. Unleveraged institutional property funds continue to be the most active UK property investors, with the sustained capital value recovery in the market causing cash holdings to be a drag on performance. Institutional investor appetite is likely to support property pricing for the balance of 2010. However, as property pricing recovers fair value, future returns will be principally driven by rental income receipts, with asset management initiatives driving modest capital growth.
There is evidence that some parts of the occupational market have already reached the bottom of the rental cycle, with tenant inducements being reduced as a consequence of recovering occupational demand. Unleveraged institutional property funds continue to be the most active UK property investors, with the sustained capital value recovery in the market causing cash holdings to be a drag on performance. Institutional investor appetite is likely to support property pricing for the balance of 2010. However, as property pricing recovers fair value, future returns will be principally driven by rental income receipts, with asset management initiatives driving modest capital growth.
Fund Manager Comment
We do not offer any funds investing in global property.
We do not offer any funds investing in global property.
Fund Manager Comment
As the global backdrop turns more challenging, leading economic indicators in Asia are pointing to a slower, but nevertheless still relatively robust, economic outlook underpinned by the strength of domestic demand. Against a backdrop of robust growth and a return to positive inflation, central banks across the region will continue to normalise interest rates from exceptionally low levels. The earnings outlook remains positive and Asian stock market valuations are undemanding, but the headwinds associated with global credit stresses and the slowing momentum of the global economy may continue to depress performance. The key to performance remains global risk appetite. Any reduction in macro policy uncertainty in China as it becomes apparent that the economy has achieved a soft landing would be taken positively by investors.
As the global backdrop turns more challenging, leading economic indicators in Asia are pointing to a slower, but nevertheless still relatively robust, economic outlook underpinned by the strength of domestic demand. Against a backdrop of robust growth and a return to positive inflation, central banks across the region will continue to normalise interest rates from exceptionally low levels. The earnings outlook remains positive and Asian stock market valuations are undemanding, but the headwinds associated with global credit stresses and the slowing momentum of the global economy may continue to depress performance. The key to performance remains global risk appetite. Any reduction in macro policy uncertainty in China as it becomes apparent that the economy has achieved a soft landing would be taken positively by investors.
Fund Manager Comment
As the global backdrop turns more challenging, leading economic indicators in Asia are pointing to a slower, but nevertheless still relatively robust, economic outlook underpinned by the strength of domestic demand. Against a backdrop of robust growth and a return to positive inflation, central banks across the region will continue to normalise interest rates from exceptionally low levels. The earnings outlook remains positive and Asian stock market valuations are undemanding, but the headwinds associated with global credit stresses and the slowing momentum of the global economy may continue to depress performance. The key to performance remains global risk appetite. Any reduction in macro policy uncertainty in China as it becomes apparent that the economy has achieved a soft landing would be taken positively by investors.
As the global backdrop turns more challenging, leading economic indicators in Asia are pointing to a slower, but nevertheless still relatively robust, economic outlook underpinned by the strength of domestic demand. Against a backdrop of robust growth and a return to positive inflation, central banks across the region will continue to normalise interest rates from exceptionally low levels. The earnings outlook remains positive and Asian stock market valuations are undemanding, but the headwinds associated with global credit stresses and the slowing momentum of the global economy may continue to depress performance. The key to performance remains global risk appetite. Any reduction in macro policy uncertainty in China as it becomes apparent that the economy has achieved a soft landing would be taken positively by investors.