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David Cowell: “Fund houses focused on singular strategies are more likely to outperform than more varied firms…”

Commercial Property

Fund houses focused on singular strategies are more likely to outperform than more varied firms, according to research by Northill Capital. However, it is also likely that this applies to discretionary managers. Single strategy houses are likely to be much smaller than others which means that large DMs cannot use them due to capacity. A DM running £5bn and wanting to invest 3% in a fund would be looking at £150m. Most single strategy funds are less than this in total!! Smaller DMs are therefore the only ones who can invest and their clients benefit accordingly. By way of illustration, the performance of our Tactical Growth Portfolio since Brexit:


In an interesting development, Friends Life told an IFA who complained about a five month delay in providing pension information that the delay was due to “a high volume of complaints.” It must be rewarding being a trouble-shooter at Friends Life.

Masai Graham won best Edinburgh Festival joke with the gag: “My dad suggested I register for a donor card, he’s a man after my own heart.”

The FOS say that Tenet must compensate a client after advising a him to transfer his pension into high-risk Arch cru funds that were later suspended. We tried to blow  the whistle to FSA on these funds shortly after inception but their response was that they hadn’t had a complaint! The commission they paid was obscene and it didn’t take a month of due diligence to see through it. There are still ‘too good to be true’ schemes out there. Only yesterday I saw an advert for returns of ‘up to 26%’ on buying and leasing containers. This is a week after Maersk, the biggest transporter of containers, announced that its profits had bombed due to the slackest market for years.

Data on Tuesday showed new US single-family home sales unexpectedly rose in July, reaching their highest level in nearly nine years as demand increased broadly. Does the Fed raise rates now or in November?

Global stockmarkets would suffer and the world could plunge into a recession if Donald Trump is elected as president of the United States, Citigroup has warned. Their Chief Economist (yes, one of them) says that, “a Trump victory in particular could prolong and perhaps exacerbate policy uncertainty and deliver a shock (though perhaps short-lived) to financial markets,” Bloomberg reports. I seem to remember that they were spreading  the same alarm and despondency pre-Brexit. As Pete Seeger sang, when will they ever learn?

If you think that Brexit is a blow to the EU, wait until October. Italy has a referendum in which PM Renzi is saying back me or sack me. If it’s sack me, the backwash from Brexit will look like a mountain stream compared with what is likely to happen in Italy. All it will take is two of the four opposition parties to win the ensuing election and bang goes not only the euro but possibly the EU as it stands. We certainly live in interesting times. If Citi can do it, so can I.

Italy’s old method of making out was to devalue every time there was a crisis. They can’t do that in the euro so what happens?


It is possible that the UK is getting out in the nick of time. There was an interesting proposition from the Belgian province of Flanders on Wednesday. The leader suggested that they, together with the UK, The Netherlands and Scandinavia started their own free trade area. He actually included France as well but I didn’t think that it was a good idea. My suggestion is that we resurrect the Hanseatic League and to hell with the Holy Roman Emperor.

Underlying dividends from UK companies fell 3.3% in the second quarter, according to the Henderson Global Dividend Index, bucking a 1.2% rise across the world. Gross dividends rose due to some hefty specials. In contrast, payouts in the US jumped 4.3%, European dividends rose 4.1% and shareholder payments were up 3.7% in the Asia Pacific ex-Japan region. Ever more reason to be very careful.

August is a time for quiet thought. My thought for the day follows receipt of an email from a car group promoting people carriers: Isn’t every car a people carrier?

Have a good long weekend.

David Cowell, Director, Myddleton Croft Investment Managers

Leeds, 0113 274 7700