Ringing in the changes
From RDR to risk, 2012 is set to challenge the mettle
of many in the UK’s wealth management industry
January equates to a new
start for many, but for
financial services 2012 is
more about finishing off
what has already begun
– a different kind of New
Year’s resolution.
RDR has already caused
a few headaches for intermediaries
and asset managers
alike but, with less
than 12 months until the
new regime comes into
place, expect things to
become even more frantic
as fund groups queue up
to tell us about their new
share classes, new products
and new strategies.
RDR is not the only
acronym that demands our
attention this year with
MiFID 2, FATCA, KIIDs
and PRIPs also promising
to keep compliance
departments busy.
Beyond regulation,
hope for a swift end to the
Asset Classes
34-35
Contrarian: Risk assets
In line with much of 2011, Gavin
Haynes of Whitechurch Securities
sees next year as a good one for
contrarian investors who are happy
to keep their risk budget in play.
They will still face volatility across
the asset classes but he explains
why he is cautiously optimistic, and
how investors can take advantage of
the mis-pricing that will be evident
36-37
Equities: Latin America
China and Brazil may be the
dominant countries in their respective
Asian and Latin American regions
but, as Esther Armstrong discovers,
the macro environment means that
looking ahead, investors should see
past the economics and focus instead
on bottom-up stock selection. One
complication in such a top-down
view is that markets may be viewed
as cheap, but taking a bottom-up
approach could tell a different story
eurozone crisis appears
to have been overly optimistic
and debt contagion
is likely to keep markets
volatile for the foreseeable
future. In the US, presidential
elections could see
a new name in charge
in Washington; another
recipe for market volatility.
And what of emerging
markets? A poor 2011 and
potential problems with
China’s property market
and shadow banking system
– which existed long
before last year – became
big talking points. Are we
headed for a real crisis or
will risk appetite return?
As discussed in this
month’s Contrarian (pages
34-35), the time may be
right to return to risk assets
and certainly it is hard to
see how 2011’s top performers,
gilt funds, will
be able to deliver genuine
38-39
Alternatives:
Money market funds
Cherry Reynard explains the rationale
behind the IMA’s introduction of
a new short-term money market
sector at a time when investors are
still nervous about asset-backed
and floating rate note providers. She
also considers the options for those
who, in less inflationary times, would
have actively used cash to generate
positive real returns
real returns in the long
term, given the sustained
threat of inflation. Indeed,
with the exception of high
yield and perhaps selected
strategic bonds funds, the
whole fixed interest spectrum
has much to do to
win favour with investors
fed up with treading water.
It is fitting that in a
year when wealth managers
and IFAs will be
required to make wholesale
changes to their business
pre-RDR – if they
have not already – fund
managers too will have to
work harder to justify their
roles. The real alpha-generators
will be celebrated,
but it could be the end of
the line for many that fail
to beat their benchmark.
Gary Shepherd, Editor
www.twitter.com/
garyshepherd
Statistics
40-46
PA Quality 250
This is a selection of some of the
top-tier funds available to high-end
UK-based investors. It includes on-
and offshore funds, passed through
a qualitative filter and a three-year
performance and volatility quantitative
filter. The funds that make it through
this process, which was designed in
conjunction with Morningstar, are put
into categories used by advisers to
create their fund shortlists
47
PA Quality Funds
of Hedge Funds
This is a list of the top 30 funds of
hedge funds, split by three different
quantitative processes. The three
categories are those with an equity net
long exposure, multi-strategy funds of
hedge funds and global macro funds.
They show their relative correlation
to equities and bonds as well as their
performance over the past three years,
which has seen the credit crisis and
subsequent market recovery
Portfolio Adviser Investment Panel
FUND SELECTION
ECONOMICS
REGULATION
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Matthew Butcher
divisional director,
Brewin Dolphin
Meera Patel
senior analyst,
Hargreaves
Lansdown
Nick Sketch
senior investment
director, Rensburg
Sheppards
PORTFOLIO CONSTRUCTION
Tim Cockerill
head of collectives
research,
Rowan Dartington
Nigel Cuming
chief investment
officer, Collins
Stewart
Tom Elliott
global strategist,
JPMorgan Asset
Management
Nick Cann
chief executive,
Institute of Financial
Planning
FEEDBACK
ASSET ALLOCATION
STRUCTURED PRODUCTS
Clive Moore
partner, Protean
Investments
We are always looking to improve the magazine so if
you have any comments on what you have read, any
suggestions for new topics to be covered, or anything
you would like our investment panel to investigate for
you, please e-mail gary.corcoran@lastwordmedia.com
Please include your name, job title and company name.
We really appreciate any feedback
Simon Gibson
director, Atkinson
Bolton
Gavin Haynes
investment
director,
Whitechurch
Securities
Lee Robertson
CEO, Investment
Quorum
Rick Eling
head of UK
investment
solutions,
Sanlam UK
William Forsyth
CEO and head
of investment,
Charlotte Square
Simon Ward
chief economist,
Henderson Global
Investors
JANUARY 2012 [www.portfolio-adviser.com] PORTFOLIO ADVISER
3
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