September 2021
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Let's talk about volatility
Did it happen? Didn’t it? Are we still waiting for it? These are Questions we have asked ourselves about the “re-opening trade” and recovery of the UK stock market in 2021, specifically the Small and Mid-cap sectors. Our view, pre-pandemic, was that the UK was trading at a discount to global markets. This opportunity was then exacerbated by a slower acceleration off the March 2020 lows, meaning the UK looked very much like the laggard in the developed markets. With Brexit in the rear view mirror and the UK consumer looking set to open their wallets in 2021, it looked...
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September 2021
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A Game of Three Halves
As I sit at my desk postulating on our clients’ investment positioning, it dawned on me that many fund managers have never lived through an inflationary market cycle. Many managers have instead lived through a market almost entirely tilted to expensive fixed income, negative value, and long growth stocks. Unsurprising then, that much of this cohort are still firmly sat in the growth camp when it comes to investment positioning and remain reluctant to embrace the recovery of value. This chronic “group think” is not that hard to excuse when one considers the notion of value investing has been largely...
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June 2021
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What’s your tipple? It’s on the Central Bank
Many have said central banks are the punch bowl for markets. Loosely speaking this means central banks have been pumping money into markets in such volume that the equity rally is almost entirely propped up by that cash injection and, much like a huge bowl of punch at a party, it is the key factor in keeping the party going. This narrative has amusingly twisted of late to reflect that central banks are no longer seen as the punch bowl of the party (AKA the equity rally), they are now the bartender of the party. This alludes to the fact...
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April 2021
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Climate Summit
Last week the US hosted 40 world leaders for a two-day virtual summit on climate change, with newly elected President, Joe Biden, making it clear that climate is indeed a key focus for his administration. Having only recently re-joined the Paris Climate Agreement, the US took centre stage at the conference to demonstrate their commitment to tackling this existential threat to our planet, emphasising the need for collective action from nations across the world, many of whom joined the US in setting higher climate ambitions. As this conference has drawn to a close, we reflect on some of the key...
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April 2021
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Taking a look under the hood of active management
Model Portfolios are specialised investment vehicles designed to deliver a wide range of financial goals, at pre-agreed risk tolerances”. Sounds good doesn’t it? I often like to remind clients that a good model portfolio can consist in excess of 350 underlying companies. In this respect it can, on occasion, seem a little curt to validate a portfolio of businesses against a single benchmark over a six or twelve-month period. Make no mistake, having a short-term comparator is very important, but over the long term, it’s active management in fantastic business opportunities which is going to be the driver of strong...
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March 2021
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Cryptocurrencies
Bitcoin, Dogecoin, Wowcoin – just what is all this about anyway? Far be it from us to try and make digital currencies seem straightforward, but like many investment professionals, TAM are watching closely and learning about these new innovations and debating whether they could benefit our clients’ portfolios. Whilst not exactly news, the emergence of so-called ‘cryptocurrencies’ has been a hot topic throughout the global pandemic, not least because of their headline grabbing gains in 2020 and into this year. Although not the first time we have seen cryptocurrencies soar in price and in the consciousness of global markets, this...
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March 2021
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ESG: Playing the long game
It’s fair to say that it has been a challenging start to the year for ESG investments, coming off from the high of 2020 which saw strong performance and rapid inflows, into what has been one of the most powerful market rotations in recent history. Whilst any amount of underperformance is never desirable, when the potential for future gains is as high as it is for ESG investments, short-term setbacks such as these can be embraced, as we look ahead to the possibility of future rewards. The market rotation we have described, began towards the end of 2020 following the...
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March 2021
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A Tale of Two Budgets
Sky News viewers were left perplexed last week as the Chancellor’s briefcase mysteriously changed colour from red to green in front of their eyes. A camera trick? Certainly. Symbolic? Curiously. The headline from Rishi Sunak’s budget is that of a vast and immediate relief in the form of £65 billion in support this year and next on top of the current £270 bn. The continuation of Furlough until September will be critical in meeting the Office of Budget Responsibility’s (OBR) unemployment forecasts peaking at 6.5%. After the deepest recession in history, this would be an impressive feat. Further measures include...
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February 2021
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Is the UK economy rising from the ashes?
The UK economy has been one of the hardest hit by the COVID-19 pandemic, highlighted recently by data showing that output fell by 9.9% for the year 2020, which is the fastest drop in 300 years. Navigating through Brexit, at the same time as trying to contain a global pandemic would have been a tough year for any economy. However, the UK’s heavy bias to the service sectors, which includes some of the areas most affected by the lockdowns, such as hospitality, leisure, airlines and energy, meant that the UK was fending off punches from all angles. Unfortunately, this only...
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February 2021
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GameStop: It’s not just a game
As I am sure most of you will have seen in the news, just as the pro Trump assault on the US capital abates we see another assault on a different US institution, this time it’s Wall Street. For the first time in history, and only possible through the connectivity of the internet, a group of retail investors with trading accounts at a small online brokerage firm called “Robin Hood” have banded together to buy the equity of a company called “GameStop”. GameStop is a little known company in the US which sells video games (akin to Blockbuster). The only...
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February 2021
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Inflation is like toothpaste - once it’s out, it’s difficult to put back in!
Watching Trump take off from the White House in Marine 1, peacefully I might add, has gotten me musing about the notion of the changing of the guard. I, for one, am going to welcome the return of policy coming from the Oval Office rather than Twitter and eternally grateful not to have a president using 1.00am tweets to influence the direction of the stock market. Like the White House, I think this market is, ironically, in the middle of a similar changing of the guard. Specifically, from stocks geared towards lockdown’s austerity, to those exposed to the likely exuberant...
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January 2021
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The Value in Diversification
Markets never cease to amaze, and as COVID ravages the world on its second coming, we also have the US democracy under pressure from Trump supporters as they created mayhem in the city of Washington and forced impeachment proceedings. Markets appear unperturbed and indeed the UK has begun with its best investment returns in the first week or so ever recorded. This is in an environment in which the UK is still disentangling from the EU as Brexit is finally implemented. Clarity is often all markets need and Brexit, good or bad, is here, so let’s move on. The US...
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December 2020
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What Lies Beneath
Looking back on this year, professionally and personally, I think few would say it’s been a forgettable one. The herculean strength in the stock market couldn’t stand in greater contrast to the very real pain being seen in households. In one part, myself and TAM are elated to have been able, for almost all clients, to make back 100% of the losses sustained after that record breaking sell off in Q1. But also, in the last couple of months, see clients posting gains for the year. Whilst this is a wonderful scenario to be in and one which I don’t...
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December 2020
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The Battle for the Senate in 2021: It’s a Peach
Investor or not, everyone outside of small villages in the middle of the Amazon knows we now have a viable vaccine inbound into our local GP any day now. What most will also know was this news lit a fuse under markets and pushed them higher in November, so high in fact that it broke all records for a one month rally. Unfortunately the problem with record highs is it's a lonely place to be with a lot of potential downside. I want to draw your attention to something which I feel will move markets in the not too distant...
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November 2020
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ESG funds in TAM portfolios win again.
The Investment Week Sustainable & ESG Investment Awards ceremony took to the virtual stage this year in honour of the fund providers, research and ratings teams who have contributed to the significant progress that has been made this year in driving the growth towards ESG investing. Interest in ethical and sustainable investments has risen dramatically this year, as individuals and institutions have recognised the need to take sustainability risks more seriously in order to protect capital during difficult market conditions, but also to help deliver alpha, by aligning investments to key growth areas which will drive future investment returns, including...
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November 2020
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A generational opportunity for commodities?
News of vaccines coming in will likely prompt other big pharma companies to announce their successes as we move towards Christmas. Whilst that’s going to be a big boost to newspaper headlines for households across the world, I think on Wall Street, each new entrant announcing their success will lose a little market elasticity in terms of reaction size as investors move to a more pragmatic and measured approach to buying into the COVID relief rally. Whilst a more measured response is not as exciting as markets ripping higher, it’s exactly this measured tone of investor reaction which we want....
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November 2020
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(Vaccine) Trials and Tribulations
Yesterday an understandable sense of euphoria swept equity markets only a week after most of Europe was plunged into a second lock-down. Positive vaccine developments and the near certainty of a Democrat in the White House resulted in the best daily stock market performance since March. Sectors that had been effectively written off in the new COVID world roared back to life; travel related companies such as airlines, cruise ship operators, aeroplane engine manufactures, even cinema groups rallied over 30%! Simultaneously companies that have been the biggest beneficiaries of the pandemic lost some of their lustre as investors rotated into...
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October 2020
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The rise of passives in ESG investing... It's risky business
We have long been advocates of active investing over the alternative of investing passively into the market via an exchange-traded fund (ETF) or index fund. The recent rise in demand for investments that contribute towards positive Environmental, Social and Governance (ESG) factors has been met by a rapid increase in supply of both active and passive investment options. For us, there is a clear danger in going passive in a market which relies on the integrity of the companies it invests in to keep driving change. What’s more, the traditional benefits of holding passive over active investments are not as...
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August 2020
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US Elections; A Game of Thrones
Make no mistake, the stakes are even higher this time around because Trump is already the sitting president so he’s moved from underdog to top dog and with that voters are going to expect him to up the stakes on the campaign trail. Normally raising the stakes like this might be exciting but with Trump’s behaviour polarising the US voter base like no other President in history, I think it's safe to say this 2020 presidential election will likely go down in history. Now, it wholly depends on your leaning towards Trump which varies from person to person but consensus...
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July 2020
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Q2 in Review; One half, two very different stories.
Q2 has been to the bull market what Q1 was to the bear market. The first quarter saw the MSCI World down 20% in record time (a little over 5 weeks) propelled lower by COVID-19 and a synchronised oil market crash. Inversely, Q2 has turned into one of the best quarters on record for global stock markets with the MSCI World recovering strongly back to pre COVID levels. Irony abounds in this Q2 rally as history will likely show us the second quarter of 2020 was the quarter when the world entered a global recession, not to mention the large...
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July 2020
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Brexit: High Noon at the Last Chance Saloon
It’s strange to be writing once again about Brexit and I suppose that’s indicative of the relapse in new UK COVID-19 cases which is a golden lining to what could rapidly see the resurgence of Brexit volatility coming roaring back. From where I am sitting, with EU / UK trade talks reaching a crunch point in the next couple of weeks. The prospect of a Brexit trade deal is well and truly having a drink at the Last Chance Saloon. What makes the trade deal so interesting is the survival of the UK equity market, fixed income market and the...
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June 2020
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NEW NORMAL – Our Complete COVID-19 Investment Guide
Welcome to our complete investment guide to helping you and your clients navigate through an evolving financial landscape during a pandemic. The coronavirus continues to affect our day-to-day lives and we want to share the ways in which we are adapting to this new reality in order to protect clients’ assets, and our strategy for taking advantage of the inevitable market recovery. Our investment management and operations teams have decades of industry experience, having survived a number of market falls in their lifetime. This has provided them with the depth of knowledge and understanding to manage different market cycles and...
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