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GLOBAL GROWTH SET TO BE POSITIVE AS CENTRAL BANKS ADOPT A MORE BALANCED TONE AND INFLATION RISKS REMAIN SHORT-LIVED

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GLOBAL GROWTH SET TO BE POSITIVE AS CENTRAL BANKS ADOPT A MORE BALANCED TONE AND INFLATION RISKS REMAIN SHORT-LIVED

By Michael Stanes, Investment Director at Heartwood Investment Management

The global growth impulse continues to be positive, with survey data remaining at elevated levels and consumer confidence well supported by improving labour markets. Central bank thinking has evolved to a more balanced tone, following a prolonged period of accommodation, and there is a sense of more concern around price developments as we move through the year, particularly in the UK. Nonetheless, while inflation risks are rising we expect this trend to be transitory due to the distortion of energy price effects.

Equity and corporate credit markets have performed well since the US election, but we are now in the “show me” phase for markets. In other words, expectations of improved US fundamentals need to be backed up by actual policies. Corporate tax reform is likely to be implemented over the medium term, with the support of a Republican Congress, and there has been some movement on proposals to deregulate parts of financial services and energy. However, plans for major infrastructure spending have yet to be fully articulated and there appears to be more focus on the politics of trade and US protectionism, which has been a disappointment.

In consequence, it would not be unreasonable to expect a further pause in equity markets, although not serious enough to cause us to de-risk portfolios. We made no changes to current positioning, retaining our modest overweight to equities, select positions in credit and short duration position in government bond markets. Our view of stronger global growth, slow normalisation of interest rates and gradual reflation remains intact. That said, we acknowledge that regional risks will be at the forefront of global investors concerns. Europe’s electoral cycle is likely to continue to create headline noise, but overall recent economic improvements, which should help to ameliorate populist forces, and light investor positioning reinforce our more positive view of this region. Elsewhere, we maintain our view that China will achieve a soft-landing, but recognise the authorities are facing greater challenges this year as the effects of previous stimulus measures fade, added to the need to address high corporate debt levels. We are not inclined to add to our emerging market assets, equity or debt, at this point, although retain a positive longer-term view.

  • Equities: We made no changes to current positioning. We believe we are now in the “show me” phase for US equities and that confidence in the US will lead equity returns elsewhere for now. We retain our positive view on US equities beyond the immediate future, maintaining our slant to cyclical stocks. However, we accept that in the very short term that the Trump pro-growth view might be questioned, particularly if political rhetoric continues to focus on protectionism rather than US growth-friendly policies. Elsewhere, we feel it is too early to shift back into the UK, although we might find the opportunity around the time Article 50 is triggered and would potentially look to invest in UK smaller companies. We remain overweight in Europe and Japan. In Europe, we feel that investors are overly negative on growth as the fundamentals improve and while politics seems like a big threat, we not convinced that politics will derail our positive view. We expect Japanese equities to benefit from improvements at the micro level, as corporates focus on boosting profitability. In emerging markets, we maintain our overweight position but would not add to it at this point, given the near-term headwinds of further US dollar strength and risks around China policy.
  • Bonds: Despite the pullback in yields, the trend in 2017 remains one of higher yields due to stronger growth and rising inflation expectations. In this environment, credit markets are benefitting from the more positive backdrop and we have select exposures to shorter-dated investment grade corporate bonds, specialist lenders and emerging market sovereign debt. In the conventional government sector, we are maintaining our long-standing short duration position, given a modestly higher inflation trajectory and limits to central bank tolerance levels if inflation overshoots targets set by policymakers.
  • Property: UK property developers have been weak and in the near term it is hard to see a catalyst in their favour. Our underweight in UK commercial property remains intact based on the supply outlook, especially in the South East, and uncertainties around Brexit. Our portfolios are invested in diversified and select parts of the market. Across sectors, we continue to seek income opportunities in industrials and offices. On a regional basis, we are invested in cities outside of London, which are less exposed to the ‘Brexit’ fallout. Outside of the UK, we are also looking at opportunities in the US REIT (real estate investment trust) market, where valuations have cheapened but are not yet compelling.
  • Commodities: An improving global economic environment, reflation and a tighter supply/demand balance leads us to hold a more positive view on commodities in 2017, particularly for oil and base metals. That said, the oil price continues to trade in a tight range and industrial metals’ strength has plateaued in recent weeks, given questions around China and that makes us more cautious. Direct access to this market is through owning futures contracts rather than the physical assets and while the risk/return profiles are looking more attractive across some parts of the complex, they are not yet at levels where we are ready to invest. We have, though, a position gold in some strategies for diversification.
  • Hedge funds: While we have held a limited allocation to hedge funds in recent years on concerns around performance, we believe that a more differentiated environment across major economies should create more opportunities going forward. Our preference remains for macro/CTA strategies, but we are also taking a more positive view on equity hedge strategies, given the greater likelihood of increased stock dispersion (i.e. between winners and losers), as well as credit long/short strategies.
  • Cash: We have reasonable levels of liquidity across our portfolios both in cash and short-dated bonds, which we are ready to invest as and when we see specific opportunities.

Investing

What is the procedure for proving a missing or lost Will?

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Intermediaries will be key to Investment Houses navigating the Covid19 crisis

By Alexa Payet, Partner at Bolt Burdon and listed specialist in the Certainty

Contentious Probate Hub & Area

Initial steps

When an individual dies it is necessary to search their paperwork to establish whether they made a Will and gather information regarding their estate. This is important because the personal representatives of the estate have a legal duty to distribute the estate correctly and could be held financially responsible for any mistakes made through any breach of duty.

Where a Will cannot be found but is believed to exist there are a number of steps that can be taken to help confirm its existence, including (but not limited to) the following:

  • making enquiries of the deceased’s family and friends;
  • making enquiries with the deceased’s professional advisors;
  • instructing The National Will Register to undertake a Certainty Will Search.

Presumption of revocation

Where the original Will is known to have been in the testator’s possession before their death and cannot be located afterwards, there is a rebuttable presumption that the Will was destroyed by the testator with the intention of revoking it. If an order for the proof of a copy is to be obtained then this presumption must be rebutted.

Procedure for proving a copy Will

The procedure for proving a copy Will is set out in Rule 54 of the Non-Contentious Probate Rules 1987 (‘NCPR’).

The application is made to the Probate Registry at which the application for the grant will be made and the order can be made by a district judge or registrar.

The application must be supported by evidence in the form of an affidavit (although during the global pandemic the rules have been amended by the Non-Contentious Probate (Amendment) Rules 2020, SI 2020/1059, to provide for the use of witness statements as an alternative to affidavits).

The evidence must set out the grounds of the application and any available evidence that the applicant can adduce as to the Will’s existence after the death of the testator or, where there is no such evidence, the facts on which the applicant relies to rebut the presumption that the Will was destroyed by the testator during his/her life.

The applicant must ensure that the Court has the best available evidence of what happened to the testator’s Will in order that effect may be given to his/her testamentary wishes.

It is important to understand that the applicant does not need to demonstrate that the Will has been lost (it is the fact of its loss which gives rise to the presumption of revocation). Instead, the applicant must establish, by evidence, that the Will was not in fact revoked.

What is a Certainty Will Search and why is it necessary?

A Certainty Will Search searches for Wills that have been registered on The National Will Register (circa 8.7 million Will registrations in the system) and for Wills that have not yet been registered in geographically targeted areas where the deceased used to live and/or work. A Certainty Will Search is extremely important as it will be necessary to notify the probate registry of any persons who would be prejudiced by the grant if the copy Will is proved. If no such person exists then the registrar is more likely to grant the application. Alternatively, if such a person does exist then you should seek to obtain their written consent to the application. The written consents can then be lodged with (or following) your application.

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Oil prices rise as investors look to higher demand seen in second half

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Oil prices rise as investors look to higher demand seen in second half 1

By Shadia Nasralla

LONDON (Reuters) – Oil prices climbed on Tuesday as optimism that government stimulus will eventually lift global economic growth and oil demand trumped concerns that renewed COVID-19 pandemic lockdowns globally are cooling fuel consumption.

Brent crude futures for March rose 72 cents to $55.47 a barrel by 1152 GMT after slipping 35 cents in the previous session.

“The perception that any retracement will be quick as confidence in economic and oil demand recovery is unlikely to fade away,” said PVM analysts in a note.

U.S. West Texas Intermediate crude was at $52.65 a barrel, up 29 cents. There was no settlement on Monday as U.S. markets were closed for a public holiday. Front-month February WTI futures expire on Wednesday.

Investors are upbeat about demand in China, the world’s top crude oil importer, after data released on Monday showed its refinery output rose 3% to a new record in 2020.

China also avoided an economic contraction last year.

Investors are watching out for U.S. oil inventory data from the industry association API, due on Wednesday, the same day U.S. President-elect Biden’s inauguration speech will likely give details on the country’s $1.9 trillion aid package.

The International Energy Agency cut its outlook for oil demand in 2021, but pointed to a recovery in demand in the second half of the year to an annual average of 96.6 million barrels per day.

“Border closures, social distancing measures and shutdowns…will continue to constrain fuel demand until vaccines are more widely distributed, most likely only by the second half of the year,” it said in its monthly report.

(Additional reporting by Florence Tan, editing by Louise Heavens)

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Investing

Can Thematic Investing provide investors with growth opportunities in uncertain times?

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The impact of COVID-19 on the investment market

New whitepaper from CAMRADATA explores

CAMRADATA’s latest whitepaper on Thematic Investing, considers the role this type of investing can play in asset management and explores trends that can permeate society and traverse sectors. The whitepaper includes insights from guests who attended a virtual roundtable on Thematic Investing hosted by CAMRADATA in November, including representatives from CPR Asset Management, Sarasin & Partners, Impact Investing Institute, PwC, Quilter Cheviot, Scottish Widows and Stonehage Fleming.

Sean Thompson, Managing Director, CAMRADATA said, “In these seminal times, thematic investing has the potential to shape how the future unfolds. Yet running a successful thematic fund is no easy feat – it is a bit like navigating unchartered waters trying to identify the trends and the long-term opportunities.

“Trends such as AI and biotechnology are still in their relative early days, for example, and global economies are undergoing dramatic changes. But mapping out certain trends, identifying potential sustainable returns through a unifying thread that spans multiple sectors, could help future-proof investments. “Our roundtable guests considered current key themes, which themes worked well, and which have not and how thematic investors could identify trends with the potential to offer future growth.”

The guests named themes they currently like which included artificial intelligence, China, climate change, clean energy, automation, evolving consumption, ageing, digitalisation, water, waste management, biodiversity, and board diversity.

After discussing themes that have worked or not, the guests looked at total allocation to themed funds, and whether clients might be blinded by themes to the overall risk exposure in their portfolios.

Key takeaway points were:

  • Themes have a habit of coming and going. One guest recognised that automation and robotics, for example, were cyclical, which means that investors will have to think carefully about entry-points.
  • It was agreed that the commodities ‘super cycle’ of the 2000s came about with the economic development of China. Many commodities-based products found their way into mainstream investing, but this is unlikely to happen again.
  • One guest was surprised by some of the themes that interested their customers; with their research showing that Board Diversity was almost the lowest-ranking concern among the ESG choices they listed.
  • There was correlation between environmental impact and social benefits to investing. The theme that concerns the Impact Investing Institute, which is less than two years old, is improved measurement of such relationships.
  • In terms of successful themes, one clear winner due to COVID had been digitalisation.
  • One theme that has not done so well is the Ageing theme focused on older people travelling and enjoying experiences abroad later in life.
  • One guest said their firm used themes for ideas generation, not as a shortcut for portfolio construction. They said themes lead to good ideas, but they then spend at least three months researching a stock, so that the best themes are represented by the best investments.
  • The final point was that there are sensitivities for any global investor in allocating to themes, even the biggest one of all, Climate Change.
  • But on a positive note, one guest added if all stakeholders can resolve their differences on definitions such as impact and ethical investing, then more capital will be readily transferred into opportunities.

The whitepaper also features two articles from the sponsors offering valuable additional insight. These are:

  • CPR Asset Management: ‘Central Banks: leading the path towards Impact Investing’
  • Sarasin & Partners: ‘Theme or fad? How to invest for the long term’

To download the Thematic Investing whitepaper, click here

For more information on CAMRADATA visit www.camradata.com

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