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Stephen Bailey, Macro-Thematic: Budgeting for growth

Our conviction in the asset managers macro theme has strengthened in the wake of the UK Budget. We have continued to add to our asset management exposure, and now also have appetite to own wealth management firms within the Funds.

Chancellor Osborne’s decision to increase pension flexibility – removing the compulsion for SIPP holders to purchase an annuity by the age of 75 – is at the same time a boon to the investment industry and a source of concern for the insurance sector. As a consequence, we believe that insurance groups will look to forge closer links with asset managers in order to develop more flexible product offerings and offset the projected decline in their annuity revenues. Mergers or acquisitions may be seen as the most efficient way to pursue this goal, with the £390m paid by Standard Life to acquire Ignis Asset Management potentially a sign of things to come.

James Inglis-Jones, Cashflow Solution: What next for markets - sentiment or fundamentals?

Valuation spreads have collapsed worldwide, meaning that the opportunity for contrarian value investments styles to perform well – as they did in 2013 – should have receded. While we would be cautious in stating that the sentiment-driven environment has been replaced by one based on fundamentals that is more supportive of our Cashflow Solution investment process, we saw some encouraging signs during the 2013 results reporting season in the UK and Europe to suggest that companies are being rewarded for evidence of good cash flow management and other indicators of quality.

However, the US market seems to have decoupled slightly from other developed world stockmarkets this year, perhaps showing that some of the bullish sentiment of the QE-led rally has carried over to its tapering phase.


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