Asset Classes
All that glistens is gilt
With a quick glance over the best performing funds
of 2011, you might be surprised to find that six out of
the top ten are actually gilt funds. Surprising perhaps
because, over the past 12 months, this is arguably the
asset class that has taken the most flak in the press
from professional investors. Yet, as Gavin Haynes argues
in this month’s Contrarian article, gilt demand has risen
to the extent that investors are prepared to accept just
over a 2% yield on ten-year gilts, which translates to
a -3% return once inflation is taken into account. Will
gilt funds be among the best performers again in 2012?
I think we are all united in hoping that is not the case
and those who have persevered with risk assets might
just be in the best possible position right now.
� No equity market was in positive territory in 2011;
the top developed market was the US (-4.58%)
� The top emerging markets were Indonesia (-0.71%),
Philippines (-2.47%) and Thailand (-4.44%)
� The S&P GSCI ended 15 Dec with a year-to-date loss
of 5.27% led lower by industrial metals (-24.97%).
Conversely, precious metals saw a year-to-date gain
of 7.91%.
Source: S&P Indices, data to 15 Dec, 2011
In this section…
Contrarian
RISK ASSETS 34-35
“Volatility will persist but this
will provide the best
opportunities for those with a
long-term perspective who can
take heed of Warren Buffet’s
words to ‘be greedy when
others are fearful’” Whitechurch
Securities’ Gavin Haynes argues
investors should be taking
advantage of a mis-pricing in
risk assets
Alternatives
MONEY MARKET
FUNDS 38-39
“If an investor believes in the
doomsday scenario, the
distinction between short-dated
and ordinary money market
funds is meaningful. Shortdated
funds will have a narrow
range of investments so should
be safer” Cherry Reynard dissects
the new IMA Short-Term Money
Market sector and discovers that
while it does give investors greater
options, many remain wary of the
benefits of cash as an asset class
Equities
LATIN AMERICA 36-37
“Brazil is viewed as one of the
deepest and most liquid markets
in Latin America and, since the
creation of the Novo Mercado
in 2000, has led the way in
requiring higher corporate
governance standards”
While Brazil still dominates in Latin
America, and China in Asia, Esther
Armstrong argues that stock pickers
are best placed to outperform in
both regions
JANUARY 2012 [www.portfolio-adviser.com] PORTFOLIO ADVISER
33
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