Ted Alexander, Neptune Global Long/ Short Sector Fund
Sectors tend to provide long periods of outperformance or underperformance, making it relatively easy to identify a trend. They also have lower volatility than individual stocks. The new Neptune fund goes long on the sectors that are outperforming, and short of the ones that are expected to underperform (e.g. financials, utilities, healthcare).
Earnings per share were rising in the US in 2011, but not the stockmarket, resulting in falling PE ratios. The earnings yield (inverse of PE) is currently much higher than expected, based on the Fed interest rate. The market appears to be pricing in a 40% fall in earnings this year, which seems very unlikely. Equities are extremely cheap relative to bonds. Expects a good year for equities in 2012.
Michael Ulrich, F&C UK Mid-Cap
Bottom-up stock selection. UK stockmarket is the second largest in the World. Top UK 250 Companies has outperformed large cap and small cap over the last 20 years. Medium size companies more efficient than large ones, and better resourced than small ones.
Examples of companies: SDL – global leader in software for language translation, used for websites. Rotork – electronic actuators, for power generation, nuclear power, oil & gas. Elementis – global leader in rheology, for paint and coatings. Also Croda, Telecity Group, WH Smith, Melrose.
Ian Winship, BlackRock Absolute Return Bond
BlackRock has $1.2 trillion of fixed income funds under management! As a result of fear, yields of gilts and US Treasuries are far too low at the moment. Yields are bound to rise from here, in due course, creating a bear market for bonds.
85% of the fund is in parts of the market where derivatives are available, allowing an absolute return strategy. Focus on top-down alpha strategies.
Likely the Eurozone will get through the current crisis. The US is doing OK, and so is Asia. Curently increasing the allocation to global high yield.
Alastair Reynolds, Martin Currie Global Emerging Markets
China expected to be 18.0% of global GDP in 2030 versus US 10.1% and India 6.3%. Despite rapid GDP growth, the stockmarket in China has underperformed over the last 10 years. Brazil, on the other hand, has massively outperformed.
Overall, emerging markets have outperformed developed markets since 2001 by a factor of 3. Growing middle class consumers in the emerging ecoomies.
Macau has a monopoly on gambling in China. The turnover is twice that of Las Vegas!
Risk warnings
This document has been prepared based on our understanding of current UK law and HM Revenue and Customs practice, both of which may be the subject of change in the future. The opinions expressed herein are those of Cantab Asset Management Ltd and should not be construed as investment advice. Cantab Asset Management Ltd is authorised and regulated by the Financial Conduct Authority. As with all equity-based and bond-based investments, the value and the income therefrom can fall as well as rise and you may not get back all the money that you invested. The value of overseas securities will be influenced by the exchange rate used to convert these to sterling. Investments in stocks and shares should therefore be viewed as a medium to long-term investment. Past performance is not a guide to the future. It is important to note that in selecting ESG investments, a screening out process has taken place which eliminates many investments potentially providing good financial returns. By reducing the universe of possible investments, the investment performance of ESG portfolios might be less than that potentially produced by selecting from the larger unscreened universe.
