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Global Matters - Weekly

 

Steering Clear of Losses

Lorenzo La Posta - 18 May 2020

Financial losses come in many shapes and forms and investors rightly spend a considerable amount of time worrying about them but managing loss aversion poorly can make the long-term outcome even worse. It is important to pick the right battles, to trade off cost of protection with loss severity and to not lose sight of the ultimate investment goals.

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Size Matters

James Klempster, CFA - 11 May 2020

There’s no two ways about it: size matters.  We live in a society that admires big - The Angel of the North, the Great Wall - yet we also revere the precision of small - the microprocessor, automatic watches.  When it comes to disadvantages, both large and small also can be found wanting.  Needless to say, in the world of fund management things are equally nuanced.

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Risks & opportunities in fixed income

Andrew Hardy, CFA - 04 May 2020

Bonds, issued by both governments and corporates, will always have a significant role to play in multi-asset portfolios due to their inherent stability and reliable cash flows, which provide much needed balance for other riskier positions.  However, recent developments spurred on by the COVID-19 crisis should prompt investors to consider deemphasising the focus on government bonds from this point and increasing allocations to corporate credit.

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COVID-catalysed structural changes in global real estate?

David Lashbrook, CA (SA), CFA- 27 April 2020

As a landlord and investor in real estate, I am closely watching how the world adapts to the global lock down.  In our case at Momentum Global Investment Management, the transition from office to homebound working has been seamless.  I wonder if this is going to cause a structural change in the demand for office space over the medium term as companies renew their current lease commitments and review their ongoing office accommodation requirements.

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Drop the top

Richard Stutley, CFA - 20 April 2020

A lot has changed and at the same time many aspects of our lives and work go on much as before. We met last week for our regular round of asset allocation meetings just like we always do, only this time via video link rather than all sat around the desk. One area that looks interesting to us currently is convertible bonds, which in many cases are trading cheap relative to their component parts: the straight bond and the equity option. While convertible cars, or drop-tops, tend to dominate the drawdown phase of most people’s lives, convertible bonds have something to offer in the earlier accumulation phase.

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Some things never change

Michael Clough - 06 April 2020

In many ways, life has changed so much in recent weeks. Our usual routines suddenly seem distant memories. In other ways though, some practices haven’t changed at all. The ongoing management of our portfolios and two key components which underpin this, asset allocation and manager research, have continued uninterrupted. Of course, the way we carry them out has changed.

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China's Recovery

Stephen Nguyen, CFA - 30 March 2020

We are living in unprecedented times, with much of the world under lockdown due to COVID-19. There are a multitude of potential outcomes resulting from the increasingly extreme global measures being taken to prevent its spread and of course many unanswered questions regarding the lockdown exit strategy or how it all ends.

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(il) Liquidity of Property

Jackson Franks - 23 March 2020

As we temporarily enter a new way of living, I spent Wednesday night giving my grandparents a step by step guide on creating a Skype account. After a good 45 minutes (which felt like weeks) and a lot of patience we managed to complete the process. They couldn’t quite believe that they could see me and me them as we sat down to eat dinner together via Skype. With my Grandpa’s interest in the financial markets, especially the real estate sector, we had a lot to talk about.

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The Bear Necessities

Robert White, CFA - 16 March 2020

“There are decades where nothing happens; and there are weeks where decades happen”. After the longest bull market on record finally came to an end last week, Lenin’s famous quote concisely sums up the current mood among investors.

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Tipping Point

Alex Harvey, CFA - 09 March 2020

When the seeds of the Arab Spring were sown in 2010 in a market in Tunisia, few would have foreseen the chain of events that followed.  The resulting wave of civil protest and unrest that rippled across north Africa led to the collapse of regimes and leaders that had been in place for many decades, most notably Muammar Gaddafi. 

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Breathe, think, act

Lorenzo La Posta - 02 March 2020

When markets panic, the only investment mantra I believe in is “breathe, think, act”. Sell-offs can provide fantastic buying opportunities, but elevated risks often accompany them. After last week’s sharp drop in global equities, is this now a good entry point or is this a falling knife we do not want to catch?

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The dangers of DIY

James Klempster, CFA - 24 February 2020

Thanks to our global client base we have the opportunity to meet advisers and institutional investors with a very varied mix of underlying client types.  Some live in countries that have a very well-established investment culture and others are more nascent. Regardless of which environment our end users are used to, the allure of investing on your own, without professional help, is always present.

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Who cares wins

Andrew Hardy, CFA - 17 February 2020

Nobody could have missed the global awakening to the debate on climate change over the past year.  The greater frequency of extreme events – fires, storms, flooding – as well as the increased visibility of movements like Extinction Rebellion have been key driving forces behind this, although the heightened attention is long overdue.

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Opportunities to leapfrog in Emerging Markets

David Lashbrook, CFA - 10 February 2020

Having personally experienced how the mobile telephone has transformed communications and enabled business in Africa, I wonder if the combination of poor existing infrastructure and technological advancement could transform the retail sector in emerging markets.  Just as Kenya-based Safaricom has led the world in mobile money transfers, I wonder if there is an opportunity for Africa to pioneer retail delivery via drone.

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Unknown unknowns: the coronavirus

Michael Clough - 3 February 2020

When we talk about risks to our investment outlook, we always warn of the threat of ‘unknown unknowns’, events that come seemingly out of nowhere that can’t be predicted or planned for. All we know is at some point they will arise. 

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