appointing “risk mitigator”
category, to the highest
risk, “aggressive asset allocator”
segment.
John Croft, head of offshore
sales, HSBC Global Asset
Management (UK)
Croft said it can be easy
for investors to forget the
importance of taking a
long-term view, particularly
when markets are in
meltdown. He added that
there was a strong instinct
among many investors to
“chase the dream”, which
advisers should help their
clients to overcome.
“Most asset classes
should deliver positive
returns over the long term,
but over the short term
markets can fall significantly,”
he said. “Market timing
is notoriously difficult and
in 25 years I have yet to
meet anyone who can do
it perfectly.”
Simon Ward, chief economist
and strategist, New Star
Asset Management
When New Star’s Ward
speaks, listeners can almost
see the bullet points accompanying
such comments
as “global slowdown continuing”,
“Q4 cycle trough
possible”, and “rise in US
interest rates needed for
sustained dollar recovery”.
He said things were
“less bleak” in some
respects than many people
think. But he added that
it was imperative for US
lawmakers to approve the
proposed $700bn financial
rescue package, or “we
could be in dire straits”.
Although he thought the
US is probably in recession
now, he noted that stock
prices there are extremely
low by historical standards,
and that the US could
emerge from its recession
within six months, depending
on how the rescue plan
is structured.
John Lester, head of third
party distribution at Neptune
Investment Management
One of the main factors
behind the rise and rise
of the investment boutique
over the past few years
has been the embracing
of the concept of open
architecture by advisers,
according to Lester, whose
London-based investment
house has been among the
boutiques to benefit.
Another driver of the
boutique trend, he noted,
has been the fact that where
a company is based, always
a function of its history,
has become “pretty much
irrelevant” as to where it
now seeks to raise money.
He explained that this has
opened up the world for
investment by fund managers
in a way that was not
possible before.
According to Lester,
the four key ingredients
needed for launching and
maintaining a successful
investment boutique are
ownership, size, performance
and flexibility.
l Investment stream
James Tothill, director, international
partnerships, New
Star Asset Management
Tothill described how the
financial sector – although
stung heavily in recent
months by the credit crunch
Performance of individual asset classes
%
60
40
20
0
and the banking crisis –
contained defensive stocks.
He said that while the
sector or index as a whole
had dropped significantly,
individual stocks could be
found that had not.
This, Tothill said, demonstrated
the importance
of active management and
stockpicking, highlighting
the likes of the Man Group
and interbroker dealer
ICAP as weathering the
downturn relatively successfully.
But he conceded
that now was probably not
the best time to invest in
the sector, although he
also highlighted the difficulty
of market timing and
knowing when the market
had reached its lows.
Chris Taylor, investment
director and head of
research, Neptune Investment
Management
The advent of newer powerhouse
economies in
emerging markets means
the world is no longer
dependent on the US for
economic growth, Taylor
told delegates. He said
Neptune’s business sector
analysis, which ignores geographic
regions, had found
that growth is being driven
by non-OECD countries.
Taylor outlined the different
characteristics of
non-OECD economies
compared with their more
Emg mkt
-20
Glbl govt bonds bonds Property
Nov ’06 Feb ’07 May Aug Nov
Feb ’07 May
20 Nov ’06 – 1 Apr ’08. Source: Lipper, HSBC Global Asset Mgt
Emerging mkt eqs
Glbl equities
Glbl high
yield bonds 3-mth Libor
Commodities
OCTOBER 2008 [www.international-adviser.com] INTERNATIONAL ADVISER
FEATURE FUND LINKS FORUM 2008
developed counterparts.
These included that 60% to
70% of the source of economic
growth in OECD
countries was driven by
the consumer, while outside
the OECD the figure
was 30% to 40%, meaning
that issues such as the
credit crunch, inflation and
their effect on spending
were less of an issue in
these countries.
Wouter Weijand, CIO high
income equity group, Fortis
Investments
Weijand outlined Fortis’s
approach to high income
equity investing, highlighting,
for example, that the
bespoke index created for
Fortis to benchmark its high
income equity fund against
had outperformed the MSCI
World Index by nearly 400%
in the past decade.
He said the firm’s
system of excluding any
share from its universe that
yielded less than 3% had
the additional benefit of
avoiding bubbles. He cited
the tech bubble which
burst in early 2000, noting
that his fund held no such
stocks because they had all
become expensive and so
had very low or no yields.
But Weijand also cautioned
against falling into
so-called ‘value traps’, cautioning
that some stocks
that appeared to be on
track to pay high dividends
might not actually be able
to pay them at all.
Andrew Cole, director, Baring
Multi-Asset Group, Baring
Asset Management
Cole looked at the merits
of thematic investment,
and how such strategies
could be applied to client
portfolios.
He highlighted the longterm
inflation-adjusted
returns of equities, gilts
and cash, as being 5.3%,
1.1% and 1% respectively,
“
Most asset
classes should
deliver positive
returns over the
long term, but over
the short term
markets can fall
significantly. Market
timing is notoriously
difficult and in 25
years I have yet to
meet anyone who
can do it perfectly
”
John Croft, head of offshore
sales, HSBC Global Asset
Management (UK)
37
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