Assets in wonderland
All fund managers will tell you that now is the best time
to invest in their asset class, but who do you believe?
These days it is rare to see
a fund manager presentation
without a slide showing
a timeline representing
the different stages of
the economic cycle. Being
fund managers, of course,
it seems we are always at
the perfect time to buy
into whichever asset class
they specialise in.
Okay, enough of the
cynicism, but it does raise
an interesting point. How
can you be sure you have
chosen the right time to
enter into an asset classes
and, in the current environment,
do all the major
asset classes not actually
offer value, perhaps with
the exception of gilts?
Fixed interest, and the
vast spectrum of corporate
and emerging market
debt, is the flavour of the
day with strategic bond
funds, which have taken
42-43
Asset allocator:
Armstrong Investment
Managers
Patrick and Ana Cukic Armstrong
have run multi-asset portfolios inhouse
for a number of institutions,
most recently at Insight Investment,
before setting up their own venture
last year. Having launched their first
funds in January this year, they talk to
Gary Shepherd about their investment
process and their rationale behind
how they create their portfolios
Asset Classes
46-47
Contrarian:
Value investing
Value managers – with Anthony
Bolton arguably as their talisman –
have not been in vogue for a number
of years. Neal Underwood asks
whether the return to fundamental
investing means that this style is
now more likely to come back
into favour
up the mantle from last
year’s favourite sector,
sterling corporate bond.
Property too is back in
vogue, while, a year into
the rally, equity managers
will tell you that valuations
still look attractive at
home and internationally.
As long as it all goes up
who cares, right? Perhaps
the biggest threat to investors
now is neither inflation,
nor public sector
debt or corporate health,
but rather our own enthusiasm
for recovery. Senior
commentators are already
warning of the next asset
class bubble and the candidates
are numerous,
from China to resources
and gold.
In an article in the
Financial Times in April,
Harvard Professor Kenneth
Rogoff advises investors to
look particularly for situ-
49-51
Equities: Europe
David Burrows asks whether it is
right for investors to look at Europe as
a single region given it is effectively
split into three different economic and
market blocs – developed, developing
and struggling. Opinion may be
divided but one thing for certain is
that investors need to check carefully
exactly where their money is going
52-53
Fixed income:
Strategic bond funds
If corporate bonds were undoubtedly
the winning fixed income sector of
2009, strategic bonds have taken
their place in 2010. They give the
fund managers and the end investors
greater flexibility in switching between
the various sub-asset classes given
the uncertainty prevailing right now.
Bambos Hambi looks at how strategic
bond funds are being used in a client
portfolio, and asks whether they
have their own worth or are simply
a way of outsourcing the asset
allocation decision
ations with “large rapid
surges in leverage and
asset prices, surges that
can suddenly implode if
confidence fades”.
Food for thought
though, as a footnote, it
is worth noting that the
MSCI Emerging Market
Index has underperformed
the MSCI World since the
turn of the year, up 2.69%
compared to 4.94% for
developed markets, to 19
April. MSCI Latin America
(a big play on natural
resources) and MSCI EM
Asia have performed even
worse, despite still being
in positive territory. Are we
seeing any evidence of a
surge in asset prices or are
we are already at the cusp
of a downturn? I will leave
that for you to decide.
Gary Shepherd
Deputy editor
Statistics
55-62
PA Quality Funds
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
63
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 12 months
showing how they have fared in
a negative market environment
Portfolio Adviser Investment Panel
FUND SELECTION
ECONOMICS
HEDGE FUNDS
NEW PA WEBSITE
ASSET ALLOCATION
Matthew Butcher
divisional director,
Brewin Dolphin
Mark Rushton
director,
BNP Paribas Wealth
Management
Gavin Haynes
investment
director,
Whitechurch
Securities
PORTFOLIO CONSTRUCTION
Tim Cockerill
head of research,
Ashcourt Rowan
Nigel Cuming
chief investment
officer, Collins
Stewart
Peter Bickley
consultant
economist
Brendan Campbell
vice president,
hedge fund
research,
Cheyne Capital
FEEDBACK
Portfolio Adviser has launched
a brand new website, designed
around the needs of wealth
managers and IFAs, both
discretionary and advisory.
Visit www.portfolio-adviser.com
Nick Sketch
senior investment
director, Rensburg
Sheppards
STRUCTURED PRODUCTS
Clive Moore
managing director,
Investment Design
and Distribution
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
Lee Robertson
CEO, Investment
Quorum
Simon Gibson
Director, Atkinson
Bolton
Rick Eling
investment solutions
manager, Buckles
Investment Services
William Forsyth
CEO and head
of investment,
Charlotte Square
Simon Ward
chief economist,
Henderson Global
Investors
MAY 2010 [www.portfolio-adviser.com] PORTFOLIO ADVISER
5
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