Blogs, News and Thought Pieces

Barely a month goes by without a Monday morning polemic from the self-proclaimed 'Authority of Global Fund Management' FTfm supplement banging on about high fees and in this case, how 'Local pensions waste millions on high fees'. Towards the end of the second column, there is some mention of performance but that comes long after a quote from the professor of pension economics at London's Cass Business School - who knew?! Anyway he described the fees paid as 'shocking.' Of course, fees can be justified if the performance generated compensates for the cost of the investment expertise, but the bulk of the article prefers to focus on the absolute cost of fees mentioning as an aside, the size of the pension fund.

Much conjecture surrounds the timing of the first rate hike in the current economic cycle in the US and the UK. Equity and debt markets have oscillated meaningfully on such speculation. I was at a lunch when a competitor was talking about how it was his focus. The reality is a little different. While short term traders may care about the daily machinations of central bank monetary policy, for longer term investors, it's just noise. We know that barring an unforeseen incident, interest rates are going to normalise on the back of decent economic data in the US and UK as predicted below in the interest rate futures chart below.

Oveurosold - aka is the Euro too cheap? We are told that one of the more crowded trades is investors and speculators being long US dollars and short euros. With negative yields on over a third of outstanding Eurozone government debt and ten year German government bonds yielding a miserly 0.20%, you can see why the interest rate differential (US ten year Treasuries yield 1.95%) would support the US currency. A weaker euro has been welcomed by many Eurozone countries and sustained by the start of the European Central Bank's (ECB) quantitative easing (QE) programme - more euros in circulation.

Following on from our last blog on Active Share ('Hyper-Active Share'), another two word, although not new, phrase has received a fair amount of media attention recently; 'Target Date'. This refers to funds that typically have an end date year that corresponds to your expected year of retirement; that year being the target date.

In one of our recent blogs ('Francly Speaking' 3rd Feb 2015), we may have been a little hard on the Germans in suggesting they need to better embrace the European ideal when dealing with the Greeks post their election and Alex Tsipras's victory. However we have also kept an eye on German wage settlements as an indicator of German willingness to move toward a better balance for European labour costs. This is key as the pre-Euro solution of currency devaluation doesn't exist nor does too lax credit to fund inefficient projects.

One of the features of an interesting and volatile start to 2015 has been the increasing number of references to 'Active Share'. The asset management business loves an acronym or a two word phrase, last year 'Smart Beta' was on our screens on a regular basis although as we wrote in a previous blog ('Smart Active') on October 1 2014, we prefer active asset allocation and active managers. Index investing is after all, like driving a car only looking in your rear-view mirror.

The start of 2015 has all been about Europe viz. the ECB, Swiss National Bank and the Greek election and their repercussions.  Even the oil price has been relegated to the shadows of European headlines.  Japan, which spent much of 2014 at the forefront of investors’ minds has been pushed towards the back of investors’ […]

Your Rope (Eur-ope) Definition - a collection of differing economies with Germany at the helm. If you don't tow their line, you can have your rope and hang yourself economically or threaten to leave the Euro.

Often at the start of a year an almanac is published listing the key dates of the forthcoming year. It may also contain some predictions. Now that the long list of prognostications of what's going to happen in 2015 and what happened at the end of last year that inundated your inbox have begun to abate, we thought it worth focusing on some market and/or media misinterpretations that have occurred.