Fund Spotlight Issue 3 - winter 2019

Fund Spotlight Issue 3 - winter 2019

ISSUE 3

INSIDE THIS ISSUE: BLACKROCK Bonds as ballast

Times change.

TRIPLE POINT Putting your eggs in the right basket SCHRODERS Some inconvenient truths about income M&G Democratising sustainable investing

KUBER Pay less tax?

Now that’s a relief! Plus much more...

In a world that’s ever-changing, we shouldn’t lose sight of what got us here. We believe success lies in marrying trusted techniques with the latest advances in tech. Let’s define the future of investing together. Join us at invesco.com/change

This ad is for Professional Clients only.

Defining the future of investing together Always progressive, Invesco is committed to marrying the best of our heritage and tradition with a forward-facing plan. That’s why we collaborate with clients and partners to ensure we reinvest in the industry, and in a better future.

Let’s combine our strengths

See how we can work together for a better future at invesco.com/change

– We’re driven by the impact our work creates for others, which is why we have a pure focus on investing

– We embrace advances in technology to give us and you a clearer view of the investment landscape

– By sharing these insights and our breadth of knowledge with you, we can define the future of investing together

Capital at risk

ISSUE 3

INSIDE THIS ISSUE: BLACKROCK Bonds as ballast

TRIPLE POINT Putting your eggs in the right basket SCHRODERS Some inconvenient truths about income M&G Democratising sustainable investing

KUBER Pay less tax?

Now that’s a relief! Plus much more...

Quality shines out when you know what you’re looking for. When you seek the best, you need to know what to look for. The ASI Europe ex UK Equity Fund uses our global resources, analysis and experience to identify exceptional European companies with the potential to deliver faster growth and higher returns than the market as a whole. We call it quality investing. The value of investments, and the income from them, can go down as well as up and an

investor may get back less than the amounted invested. Find out more at aberdeenstandard.com/europeanequities

31/07/2018 to 31/07/2019

31/07/2017 to 31/07/2018

31/07/2016 to 31/07/2017

31/07/2015 to 31/07/2016

31/07/2014 to 31/07/2015

ASI Europe ex UK Equity I Acc in GB

10.38

15.44

19.67 24.63 23.84

11.97

4.99 9.61

Index : FTSE World Europe ex UK TR in GB Sector : IA Europe Excluding UK TR in GB

4.74 1.72

5.79 5.09

7.06 8.05

10.36

Source: Financial Express Analytics; discrete annual performance as at 31/07/2019; I Acc share class in GBP; net of charges.

Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments. This content is available in the following countries/regions and issued by the respective entities detailed below: United Kingdom (UK): Aberdeen Asset Managers Limited, registered in Scotland (SC108419) at 10 Queen’s Terrace, Aberdeen, AB10 1XL. Standard Life Investments Limited registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Both companies are authorised and regulated in the UK by the Financial Conduct Authority.

GB-011019-100365-2 121039471

FUND SPOTLIGHT – 3

WE L C OM E . . . ...TO THE THIRD EDITION OF FUND SPOTLIGHT.

investing could be a good option for those investors who are currently uncertain where to invest. In their article ‘While you wait’ he highlights that there are three certainties in life: death, taxes and uncertainty, and how should you invest if you’re uncertain? Puma investments are offering Tenet clients a special deal on Puma Alpha VCT. Invest before 20th December 2019 and you’ll benefit from an initial fee of 1%, reduced from 3%. Find out more about the offer on page 11. Triple Point’s article ‘Putting your eggs in the right basket’ looks at how investors naturally seek the best of both worlds: a high, predictable return on their money, combined with minimal downside risk. We all know this is difficult to achieve and rare to find, Triple Point highlight Direct lending as a market that has evolved over the last decade, with a growing number of investment opportunities and they outline the characteristics of direct lending on page 17. Plus there are plenty more articles in this issue from other fund specialists including Architas, Tatton Investment Management, Kuber, M&G and Bordier UK, so we hope you find this supplement an interesting read and useful for keeping up to date with the current funds in the market place.

Our dedicated supplement for Fund Managers to showcase their products and services and to ensure you are up to date with all the latest news and information in the fund management sector. We open up this issue with an article from Blackrock, ‘Bonds as ballast’. Building portfolio resilience is crucial at a time of elevated macro uncertainty. Relatively muted cross-asset volatility suggests markets are not fully pricing in heightened geopolitical risks that threaten to weaken economic activity. Blackrock believe central banks’ dovish pivot is buying investors time to add resilience to portfolios – with government bonds playing an important role in providing ballast. Read the full article on page 4. ALSO IN THIS ISSUE Financial advisers are increasingly looking at venture capital trusts (VCTs) for clients who, not so long ago, they probably wouldn’t have. But not all advisers are tapping into VCTs full potential. This could be a mistake. While it’s true that VCTs won’t be right for every client, it’s also true that for many clients they can help solve increasingly common problems. On page 7 Paul Latham, Managing Director of Octopus discusses the pros and cons of VCTs and takes a look at why they have become so popular.

On page 10 Simon Evan-Cook, Senior Investment Manager for Premier Miton’s multi-manager funds, explains why income

Fund Spotlight is for internal purposes only and is not intended as an advertisement. As a result this should not be issued in any form to clients. Not all the products in this feature are the responsibility of the Tenet Group Limited. Terms and Conditions. Although every effort has been made to ensure the accuracy of the information contained in this publication, The Tenet Group cannot accept responsibility for any errors it may contain. The Tenet Group cannot be held responsible for the loss or damage of any material, solicited or unsolicited. No reproduction of any part of this publication, in any form or by any means, without prior written consent from The Tenet Group. The views expressed in this publication do not necessarily reflect those of the advertisers or the publishers.

4 – FUND SPOTLIGHT

BUILDING PORTFOLIO RESILIENCE IS CRUCIAL AT A TIME OF ELEVATED MACRO UNCERTAINTY. RELATIVELY MUTED CROSS-ASSET VOLATILITY SUGGESTS MARKETS ARE NOT FULLY PRICING IN HEIGHTENED GEOPOLITICAL RISKS THAT THREATEN TO WEAKEN ECONOMIC ACTIVITY. We believe central banks’ dovish pivot is buying investors’ time to add resilience to portfolios – with government bonds playing an important role in providing ballast. BONDS AS BALLAST

for this role due to their negative correlation with equity returns. See the Euro area chart below left. European bonds may be less effective shock absorbers as euro area rates approach a lower bound. Yet, we also note that the cost of this diversification is higher, and the risk/reward trade-off is different on a near-term horizon. On a tactical basis, we prefer euro area bonds over US Treasuries. CENTRAL BANKS Policy rates at major central banks are falling again, backing away from neutral rates. We see the Federal Reserve cutting rates further, but not by as much as what markets are pricing in. And it’s far from certain that the Fed will try to respond to the trade war fallout with meaningfully looser monetary policy. Supply chain disruptions could deliver a hit to productive capacity that fosters mildly higher inflation, even as growth slows. This complicates the case for further policy easing. Elsewhere, the ECB materially exceeded market expectations on stimulus, launching open-ended asset purchases, cutting rates and strengthening its forward guidance. GROWTH AND INFLATION Persistent uncertainty from protectionist policies is denting corporate confidence and slowing business spending. We see little near-term risk of recession, thanks to dovish central banks and a still-robust US consumer. We see policy easing helping sustain the economic expansion, but the road to recovery could be a bumpy one in the near term. Easier financial conditions are being offset by the negative impact of a protectionist push – and have not yet filtered through to the broader economy. Yet we see growth troughing over the next six to 12 months as easier financial conditions filter through to the broader economy. Unless otherwise stated, all >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28

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