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EQUITY MARKETS SHOW STRONG END OF YEAR PERFORMANCE IN CAMRADATA’S Q4 2017 INVESTMENT RESEARCH REPORTS

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EQUITY MARKETS SHOW STRONG END OF YEAR PERFORMANCE IN CAMRADATA’S Q4 2017 INVESTMENT RESEARCH REPORTS

CAMRADATA, a leading provider of data and analysis for institutional investors, has published its investment research reports for Q4 2017, charting the performance of investments and asset managers across five asset classes – Global Equity, Diversified Growth Funds, Multi Sector Fixed Income, Emerging Markets Equity and Emerging Markets Debt.

Over three years’ worth of data from CAMRADATA Live (its online manager research platform) at 31 December 2017 was analysed to produce the five reports and key investments trends emerged.

Equity markets continued to rally over the quarter with Japan and Asia ex-Japan stocks leading the charge. Stocks also rose in India, as the government announced plans to recapitalise the state banks.

In the USA Q4 saw the passing of long awaited business-friendly tax reforms and the S&P 500 ended the year with a strong fourth quarter gain as markets rallied on the news. Corporate earnings also finished the year strongly, with large cap stocks outperforming small cap.

In Europe, positive economic momentum continued, though equity markets lagged as investors looked to take profits after the year’s gains. In the UK, the Bank of England monetary policy committee raised interest rates by 0.25% – the first increase in a decade.

Sean Thompson, Managing Director, CAMRADATA said, “The year ended positively for the equity markets, especially in Japan, Asia ex-Japan and India. The USA had a strong economic performance and in Europe there were signs that the uncertainties surrounding Brexit may be easing as an agreement was struck in December to move talks to future trade agreements.

“In fixed income markets, the European Central Bank (‘ECB’) announced the reduction of asset purchases, but extended the programme, which provided a significant boost to bond yields.”

“In emerging markets South Africa was the best performing country, with India and South Korea also generating strong returns over the period. In fixed income, appetite for emerging market debt remains strong as China, Indonesia, Nigeria and Pakistan all issued bonds”, adds Mr Thompson.

Global Equities

Assets under management (AuM), in these Global Equity products, totalled just under $762.6bn at the end of Q4 2017, which is $11.5bn more than it was at Q3 2017

The Global Equity universe continued to see investors reducing their allocation in Q4 2017, which saw outflows totalling -$7.8m. This universe has not seen any positive inflows since Q3 2016.

Despite this loss, some managers are still seeing positive inflows into their products. In Q4 2017, Old Mutual Global Investors (UK) Ltd was ranked as number one in the asset manager inflows table with $2,591m added to their AuM, followed by MFG Asset Management in second place with $1,272m. T Rowe Price Group, Capital Group and AXA Investment Management took the next three spots in this table.

In Q4 2017 nearly 100% of managers produced a breakeven or positive return, which followed the trend in returns from the rest of 2017. The lowest return produced was

-6.71% and the best performing product achieved is 14.61%, giving a spread of 21.32% between the top and bottom performer in just three months.

Likewise, looking at the three-year period, just over 99% of managers achieved a breakeven or positive annualised return, with the range of annualised returns starting from -3.69% and the best performing product achieved 25.83%, giving a spread of 29.52% between the top and bottom performer.

Emerging Markets Equity

Assets under management (AuM), in these Emerging Market Equity products, total just over $553.2bn as at the end of Q4 2017. This is an increase of just over $30.8bn assets from Q3 2017.

In Q4 2017 100% of managers achieved positive returns in the Emerging Market Equity universe. The lowest return produced is 1.05% and the best performing product achieved 12.74%, giving a spread of over 11.69% between the top and bottom performer in just one quarter.

Moreover, over a three-year period, again 100% of managers achieved a breakeven or positive return in this asset class. The lowest annualised return achieved was 2.03% and the highest was 19.42%.

According to the CAMRADATA IQ quant screens for the 3 years to 31 December 2017, the top ranked manager, within the All Cap universe with a style bias of Core, is Artisan Partners Limited Partnership, with an IQ Score of 0.91, for their Artisan Emerging Markets Composite. Other stand out Core products are from Hermes, BlackRock and Principal Global Investors.

Diversified Growth Funds

Assets under management have increased by just under £1.6bn since Q3 2017 and now total £188.7bn as at 31st December 2017. This means the DGF universe has seen a continual growth of the total assets for the past 36 months.

Q4 2017 continued to see an increase in positive performance outcomes within the DGF universe, with 95.7% of products achieving a breakeven or positive return. The lowest quarterly return produced is -1 % and the best performing product achieved 6.29%, giving a spread of 7.29%pa between the top and bottom performer.

Looking at the three-year spread of annualised returns; once again all products achieved a breakeven or positive return. The lowest annualised return produced is 0.65% and the best performing product achieved 14.41%, giving a spread of around 13.76%pa between the top and bottom performer.

According to the CAMRADATA IQ quant screens for the 3 years to 31st December 2017, in the universe of products with an objective of cash plus three to five percent, Threadneedle’s Global Multi Asset Income Fund (T9GMAI) achieved the top position again with an IQ score of 0.85%. Other stand out products came from AB (AllianceBernstein), Aberdeen and Legal & General.

Multi Sector Fixed Income

The Assets under Management (‘AuM’) in the MSFI Absolute Return universe sits at just over £80bn as at 31st December 2017. This is an increase by just under £3.9bn since Q3 2017.

In Q4 2017 MSFI Absolute Return products achieved positive inflows of just under £3.8bn across the universe. This continues the positive trend for inflows with this asset class receiving positive inflows for the last 7 quarters.

T Rowe Price had the largest asset inflows totalling £1,892m, in converted sterling, during Q4 2017. They were followed by Western Asset Management, BlackRock, TCW and Payden & Rygel.

In the MSFI market, just fewer than 66% of products achieved a breakeven or positive return in Q4, compared to 91% of products which achieved a breakeven or positive returns in Q3 2017. The range of quarterly returns in Q4 2017 in GBP products is –1% to 1.93%. For EUR it is -0.97% to 1.94% and for USD it is -2.39% to 1.8%.

Emerging Market Debt

The Assets under Management (‘AuM’) in the EMD universe sits at $250.7bn as at 31 December 2017. This means the EMD universe has seen its assets increase by almost $12.3bn since Q3 2017.

The EMD products continued to see net inflows of just over $11bn across the universe within Q4 2017. Ashmore Group had the largest asset inflows totalling $2,298m during the quarter. They were followed by Investec Asset Management, BlackRock, Franklin Templeton Investments and GAM.

Just over 92% of products achieved a breakeven or positive return in the EMD universe this quarter, which was a drop from Q3 2017 when 100% of managers achieve a breakeven or positive return. This is compared to just fewer than 100% of products achieved a breakeven or positive return over a three-year period.

The lowest return reached in Q4 2017 was -1.56% and the best performing product achieved 3.12%, giving a spread of 4.68% between the top and bottom performer.

The range of annualised returns for the 3 years to 31 December 2017 in USD EMD is -1.23% to 12.87%, giving a spread of 14.1% between the top and bottom performer.

Overall, EMD products in USD have been far less volatile in their distribution of returns than the JPM GBI-EM Global DIV Composite ($) – Total Return Index over the last 3 years. For instance, the EMD Median has achieved monthly median returns in the range of -5% to 5%, whilst the benchmark has ranged from -8% to +10%. This has seen no change from the previous quarter.

Sean Thompson concluded, “Our latest quarterly investment reports paint a largely positive picture for the end of 2017, with equity markets performing well outside Europe and stronger than predicted economic activity in the USA, following the approval of the long awaited tax bill.”

“While in Europe stocks lagged other markets in Q4, economic data remains strong and signs of improving economic growth boosted cyclical stocks. In the UK the FTSE All-Share index rose 5.0% over the quarter, with energy stocks generating the biggest gains.

“However, ongoing Brexit negotiations, the political concerns in Germany after the coalition talks collapsed and concerns over the uncertain political future of Catalonia in Spain will continue to impact the markets in 2018.”

“Investors can keep abreast of issues that are likely to affect the markets using CAMRADATA Live. This tool monitors the strategies of asset managers, keeping investors up to date on what’s happening across hundreds of asset classes and helping ensure they make informed investment decisions,” he added.

Investing

Is It The Right Time To Invest In Gold?

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Is It The Right Time To Invest In Gold? 1

By Zoe Lyons, Hatton Garden Metals

The current climate is one of uncertainty, so it can be difficult to know what to do with your money, particularly investments. When faced with the decision on what to do with your savings, there are a number of options, but one investment which many have opted for over the years is gold buying.

Purchasing gold can be a great investment. Although the price of which can fluctuate just like anything else, the value of gold has generally tended to increase at a good rate and many prefer it over other saving options. With bank interest rates currently at a low and discussions of negative interest rates, many are opting to purchase gold as a way to earn money on their savings.

So is gold buying right for you? We take a look at some commonly asked questions when it comes to purchasing gold.

Why Should I Buy Gold?

Buying gold is often seen as a good investment due to value increases, so you may be able to make a profit from selling it on if the price of gold increases after you have purchased. The price can fluctuate, so profit is not guaranteed and is based on a number of factors. Looking back over previous years since the 1970s, the value of gold has prospered compared to other investment types, albeit with some dips in value at certain points over the past 50 years.

Buying gold also allows you full control as you are the owner. So you can choose if and when you want to sell.

Buying Gold Vs ETFs

When looking at investment opportunities, you may consider ETFs. An ETF is an Exchange Rated Fund, which when purchased is similar to buying stocks and shares. They can be a good investment, but is it more beneficial than purchasing gold?

When purchasing physical gold you will need to consider where to store it. This can incur charges, whereas with an ETF there is no need for storage, but an ETF can come with admin charges and investment management costs. When you choose to sell an ETF, you may also be required to pay a commission, which are often small amounts, but can add up if you are an active trader. There is also less control with an ETF as the price of which can change and is based on the company’s actions.

Gold Bars Vs Gold Coins

If you do choose to purchase gold, you will be faced with the option of whether to buy gold coins or gold bars. Although similar, they have varying benefits.

  • Gold Coins

The purchase of gold coins are often favoured by those who appreciate the historic value of the coin. Many people collect coins, so an investor may be inclined to pay more if they are a keen collector of such. Many may also pay more for gold coins based on their rarity. These factors can affect the price you pay or sell at, meaning the value of gold coins is not solely deemed by the live price of gold, so you may receive a higher price, dependent on the investor. This allows the price of gold coins to be more fluid than gold bars.

  • Gold Bars
Zoe Lyons

Zoe Lyons

Gold bars are not seen as a collectors item and don’t tend to have historical attachments. Because of this, the price is not influenced by these factors and is based on the weight, purity and the live price of gold at the time of selling or purchasing. This allows for a more accurate estimate of the price of your gold bars.

Where Should I Store Gold?

One of the most frequently asked questions when it comes to gold buying is storage. If you do choose to purchase gold, you will need to consider storage. Just like anything else of a high value, it needs to be stored securely. Simply keeping gold stored at home could be risky. When kept in your property, if not stored in the correct conditions, it is more susceptible to damp and corroding. There is also the possibility that your home insurance does not cover your gold, so if you are burgled, you could lose your investment. Because of this, it is wise to protect your gold with proper secure storage. Look for companies that offer storage abilities that are covered by insurance and be sure to do your research on pricing and look for cost effective storage as the fees incurred can soon add up. You may also want to look for a company that allows you quick and easy access to your gold to ensure you can buy and sell with ease.

Should I Invest In Silver Too?

Although gold is often a more popular investment option, many choose to purchase silver alongside it. The price of silver tends to be much more volatile than the price of gold, for this reason, many see gold as a safer choice. The price of silver will still have an intrinsic value but may be more worthwhile for those looking into long term investment options due to its VAT charges.

Negative Interest Rates

Although it is not a current practice, there has been recent talk of banks in the UK potentially introducing negative interest rates. If a savings account has a negative interest rate, this could mean you are charged for keeping money in the bank. If introduced, this could mean savers lose out. Instead of receiving interest on your savings, you may be charged a rate for keeping your money in the bank.

Could purchasing gold be a better option for your savings? Possibly, but this will depend on how much you have saved and the rates of the negative interest (if they are introduced). They may be minimal, but if you have a large amount in a savings account, this could add up to an expensive charge. If you choose to use your savings to buy gold, you may make a profit upon selling, but you will need to consider costs of storage as well as the chances of the price decreasing in the future.

So, is it the right time to invest in gold? It’s a very popular question. Hopefully the above will give you a bit more insight into gold investing and how it may work for you, but with any investment, there is never a guarantee that it will generate profit, so take careful considerations when diversifying your portfolio.

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Private public investment is more inter-dependant than ever

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Private public investment is more inter-dependant than ever 2

By Konstantin Sidorov, CEO and Founder of London Technology Club

Today, one thing unites the majority of governments around the world: their fiscal position is destitute. COVID 19 has seen an extraordinary, forced expansion in public sector expenditure, which has come just as the world was getting back on its feet following the Global Financial Crisis. The financial strains are already showing and will become more apparent as we move through the pandemic into social and economic recovery.

If you want to understand the impact that the re-focusing of public sector spending is having, then there is no better example than the space economy. In the US and Europe, we are becoming increasingly reliant on the space rockets and space launch companies pioneered by private investors and entrepreneurs.

NASA, that powerhouse and flag bearer for American national pride, is having to partner with the private sector in order to fulfil their missions. Private investors, the likes of Elon Musk, and Jeff Bezos alongside smart use of new technologies have brought the economics of space down and the excitement around what’s possible up. With it comes a whole satellite manufacturing, launch and servicing industry growing to $271bn in revenues in 2019. Of the total revenues in the space economy ($366bn in 2019), government space budgets made up $95bn of that.

Commercial entities, being patiently built and backed by private capital willing to dig deep and progress their own missions has helped fuel the space economy. Many are realising now just how crucial space is for the future of a country’s protection, position in the world and prosperity. In China, India and Russia we still see significant public sector expenditure in space projects as an agent for military and economic expansion. The role of private investors in plugging major gaps in public sector funds and national pride in Western economies is therefore increasingly important.

Private and public investment must be seen as a partnership. We should not forget that Elon Musk’s SpaceX survived from the brink of collapse only because of a ten-figure NASA contract awarded at the last minute. Musk, since then, has looked for public infrastructure contracts to fuel his companies, the likes of The Boring Company winning the contract to build a downtown-to-airport loop, a  government program for high-speed transport in Chicago. Musk proves his products and services work and then secures lucrative government contracts in order to quickly scale which in turn leads to transforming whole industries.

It’s not just space infrastructure where we see this redefinition of the role of public and private finance. The Chinese have invested at least US$160 billion in infrastructure projects as part of the Belt and Road Initiative, creating roads, ports, energy infrastructure and providing aid to foreign governments to create the most ambitious infrastructure project the world has yet seen.

Konstantin Sidorov

Konstantin Sidorov

For Western countries, access to that scale of public finance is not fiscally-possible, a new solution is needed and just as the space race has been redefined by private capital, so will the development of new industries, infrastructure and the reinvigorating of economies facing structural change that has been accelerated by COVID.

Private capital has the huge advantage of being driven by conviction and competence. It can cost-effectively be deployed, fast and targeted with a laser-like focus by entrepreneurs who know exactly what they want to achieve. Private capital, currently, is also in abundance.

In a world which is providing slim returns across multiple traditional asset classes, private capital is being stockpiled and is waiting for the opportunity to be invested for growth. We need private investors to have the confidence to deploy their capital to fuel the system once again.

This new world, post COVID, won’t see public capital replaced. Its role is likely to focus more heavily on health, welfare and critical infrastructure. However private investors will step in where gaps appear. Ten years ago, the scale and ambition of private space companies would have been greeted with snorts of derision and looks of disbelief. Today governments embrace the private capital, and regard the companies that have deployed it as systemically important national assets.

As we look to the future, huge macro trends emerge that demand significant investment: the aging population, the threat of pandemic, the drive to create a sustainable economy and lifestyle, the need to decarbonise, the digital revolution. The list goes on.

Public finance cannot hope to provide the finance and pioneer the bold thinking and accept the risks required to find new solutions that drive us forward in a world of change. That role goes to the private investor and private capital.

For the investors themselves the opportunities are immense, and for society as a whole they are just as big. As we look forward public and private sector needs to embrace private capital. Rather than fearing private investors as locusts who strip organisations and opportunities of profit then fly away, a narrative that gained traction after the last great economic crash. This time we need to see private capital as agents for positive transformation. Private-public partnerships fuelling each other.

Private money is already building rockets that send people and payloads into space, but that isn’t the final frontier for entrepreneurial investors or the societies and economies that benefit from their boldness.

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What should I invest and How do I invest

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What should I invest and How do I invest 3

By Imogen Clarke, The Fry Group

With all the uncertainty that has arisen from 2020, with lockdown threatening businesses and the warning of a second wave, the topic of investments has taken on new meaning. Nowadays, more people are concerned with what makes for a good investment, or, if you’re a novice, how to best invest.

For instance, you might be unsure about the reliability of the company you’re looking to invest in, as well as the long-term prospects of your investment.

If you are unsure of your investments, then it is best to seek advice from financial experts like The Fry Group, who deal with tax, wealth and estate planning. They will see that you have a strong financial plan in place to help meet your objectives. They will develop a strategy that is built around your needs and asses any risks that could hinder your plans.

There are some things you’ll need to consider for your strategy; for instance, are you looking to make investments that are more of a risk and will take longer to come to fruition? Or, alternatively, are you wanting a faster approach that will result in a steady income? Whether or not you decide to play it safe all depends on your current financial situation and whether you have the means to take more of a risk. Do you have any other debts that take precedence over your future plans? Is your investment strategy realistic?

With the aid of a specialist – or investment manager – you can design an investment concept that works for you and your goals, and start to build a regular income from your investments. There are four main areas when it comes to assets (groups of investments) that you can consider:

  • Equities
  • Bonds
  • Alternatives
  • Cash

Your investment manager will test the risks associated with your investment, and if it proves to be a positive investment choice, then you will be able to invest more over time.

So, how do you decide where to invest?

According to The Fry Group, ESG investing (Environmental, Social and Governance) is a good option for investors looking to support businesses that meet their similar ethics.

The main areas of ESG investing include:

  • Environmental challenges (climate change, pollution, etc)
  • Social issues (human rights, labour standards, child labour, etc)
  • Governance considerations relating to company management

According to The Fry Group, “Many investors choose to consider ESG investing in order to ensure any investment decisions reflect personal beliefs and values. As a result, they choose to support companies who are making informed, responsible decisions which take into account their wider societal and global impact. In this way investors can achieve peace of mind that their investments are creating a positive effect.”

ESG investing is also more relevant now than ever, as more businesses are looking to present themselves as an environmentally conscious corporation that recognises the values of their consumers.

As The Fry Group puts it, “In the past, ESG investing has been seen as a niche investment approach, for a relatively small number of people with specific requirements. This has changed significantly in recent years, with a growing awareness of environmental issues such as climate change and an increasing understanding of social issues and human rights. As a result, many people are increasingly interested in reflecting their opinions and lifestyle choices through the way they invest.”

So, if you want your investments to pave the way for your personal values and reflect your own morals, then this is the route to go down. But how does it all work?

There are four areas of ESG investing:

  • Responsible ownership and engagement: when companies are encouraged to make necessary improvements.
  • Avoidance or negative screening: whereby businesses are ‘graded’ based on how ethical their business practices are and are avoided altogether if their methods are not approved.
  • Positive screening strategies:when companies meet the ESG goals and are approved for investments.
  • Impact investment strategies: the purpose of this is to use investment capital for positive social results such as renewable energy.

You will need to take into account your own personal objectives as well as the objectives that meet the ESG investment criteria. And, in terms of financial performance, ESG investing can be hugely beneficial. Those who opt for ESG investing perform a more in-depth analysis into long-term and future trends that affect industries, meaning that they are better prepared for changes in consumer values when they arise. And, with all the unpredictability that this year has offered us so far, isn’t it better to do the research and have all angles covered?

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