EVENT ROUND-UP EXPERT INVESTOR FORUM
Stephen Adams, Aegon Asset
Management
Loic Cadiou, Amundi
Sisouphan Tran, BNP Paribas
Tackling the big issues
At the recent Portfolio Adviser Expert Investor Forum held in London,
leading fund and wealth managers discussed investment topics ranging
from long-only UK equity to multi-asset hedging strategies
BY GARY CORCORAN
AND GARY SHEPHERD
Stephen Adams, head of
UK equities, Aegon Asset
Management
Adams’ presentation focused
on the domestic market,
where he says the UK equities
are seeing the greatest
acceleration in upgrades.
“Many markets are seeing
earnings upgrades but
the UK is at the front of
that, even more so than
some of the cyclical economies
such as Japan,” he
said. “There is a weakening
currency, overseas
earnings are being translated
that much better, and
you also have to take into
account the big emerging
markets exposure.”
Eight or nine months in
to the recovery, Adams
pointed out that consensus
earnings per share growth
expectations were now at
30%, though this has been
driven by resources and
financials. The market is
on a PE of around 13x
earnings, meaning it is
normal or fair value.
Adams’ UK Equity Fund
is overweight resources,
industrials and consumer
goods and services, and
underweight financials and
defensive stocks. Since the
end of 2009, he has sought
secular growth stocks.
“2009 was about a turn
in expectations, while 2010
is about delivering on those
expectations. It will be
much more differentiated
between what is the normal
cyclical recovery and what
is going to be a secular
growth story that will
endure for the next 12 to
18 months,” he said.
Loic Cadiou, head of global
bond, absolute return and currency
management, Amundi
Amundi believes we have
moved into a fertile phase
for alpha generation as,
prior to the sub-prime
crisis, there was much less
volatility in investment
markets and less available
opportunities.
“To generate alpha you
must have low correlation,
opportunities which come
frequently and to be in a
situation where other
people are not participating
too much,” he explained.
He pointed out that
there are now far fewer
alpha players hunting for
opportunities today compared
to pre-crisis. Absolute
return funds lost in excess
of 80% of their assets
during the crisis; hedge
funds lost around 50% of
their assets while banks
have closed trading desks
and risk models have been
adjusted to the upside.
Given how long it takes
for companies to address
these shortfalls, Cadiou
believes this current alpha
opportunity can last another
two to three years. The
first phase has been coming
out of crisis with a normalisation
of risk premium,
return to liquidity and very
cheap investment comes
back to more normal valuations.
The next phase will
be where some assets are
getting expensive, some
are still cheap and, at the
same time, correlation will
remain low.
“We have in front of us
a few years of reasonably
steady framework in terms
of how the financial markets
should behave for
alpha generation.”
Sisouphan Tran, head of
Harewood Solutions &
Privalto UK, BNP Paribas
Tran spoke about covered
call strategies – buying the
market as a long position
and selling call options on
that underlying position to
generate premiums.
14 PORTFOLIO ADVISER [www.portfolio-adviser.com] MAY 2010
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