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Jupiter's Chatfeild-Roberts: my defensive fund stalwarts
John Chatfeild-Roberts, fund of funds head at Jupiter, shares his views on the best defensive funds to weather the crisis.
Markets
Despite the bleak outlook, with markets weighed down by the painful realisation across Western economies that it's high time to pay back some debt, investors shouldn't give up hope.
That's the message from Jupiter's chief investment officer and Merlin fund of funds head John Chatfeild-Roberts, who said it's important not to get 'too bearish', as opportunities would emerge for patient investors.
Although all Merlin portfolios are positioned to avoid Western sovereign debt, Chatfeild-Roberts said opportunities would arise because of the wave of central bank cash that's being pumped into the global financial system.
However, he also warned that inflation could bite once the liquidity injection was withdrawn, and said the process might not be fast enough to avoid inflation in the short term.
A painful adjustment
Fellow Jupiter Merlin colleague Algy Smith-Maxwell was clear that in his view Europe will remain in serious trouble for some time to come despite the injection of central bank cash: ‘Nothing has changed. We are still going through this period of structural change. Consumers are having to adapt their lifestyles to having less income, and we have a prolonged and painful readjustment in our hands.
However, he went on to caution against blanket pessimism: ‘Don’t get too bearish, because the most important positive here is liquidity. When central banks are in the mood that they are currently in they will continue to surprise us, and the markets at that very time are most fearful.’
Chatfeild-Roberts, meanwhile, said that rising inflation at home and abroad could lead to heightened geo-political risks: ‘Our view is that when you have inflation and income inequality in a deleveraging world, you are going to have a heady cocktail for political instability. We are very mindful that we have the perfect cocktail not just in Europe but also in the Middle East.
‘The huge levels of liquidity that have been pumped into the global system could create an inflation problem. Since 2006 the largest central banks have increased their balance sheets from 5.5 trillion to 15 trillion dollars.
‘When this punchbowl is taken away it will be very painful, and our suspicion is that the politicians won’t allow the central bankers to withdraw the liquidity fast enough for it not to create an inflationary problem.’
Taking a long-term view
On the New Year rally, Algy Smith-Maxwell said: ‘We are participating in the rally we have just had. It may have flattened out for a while, but essentially as investors we have to take the long-term view.
‘Things don’t look remarkably cheap at the moment, but they certainly don’t look wildly expensive. We are only prepared to buy things for the long term, and patience is absolutely crucial.
‘We are structurally defensive and are avoiding sovereign debt. We can get more aggressive should we want to, but [markets] have travelled quite a long way and seasonally, this is the time to mind your eye and be patient.'
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6 comments so far. Why not have your say?
sgjhaghsdg
Apr 24, 2012 at 17:50
As every additional layer of management adds value, I prefer funds of funds of funds of funds, ideally with a fat wodge of currency hedge and absolute return mandate added at every level.
Not.
report thisJohn Osborne
Apr 24, 2012 at 18:08
If they were such experts then they would select at least some equivalent ITs rather than OEICs with some individual shares for income. One could ask if they stay with a high proportion of OEICs or UTs just to increase commission income at expense of unit holders.
Why waste money on Jupiter Income OEIC when they have Nutt's advice free in-house anyway?
Are funds like this run for private investors or the management groups?
report thissgjhaghsdg
Apr 24, 2012 at 19:15
Such funds are run for the widows and orphans, those who need the comfort blanket and many layers of wise advisers.
See Buffett's story of the gotrocks.
report thisNot all ETF's are the same
Apr 24, 2012 at 21:19
If Fund of Fund of Funds doesn't work, and only adds costs why has the team at Jupiter delivered performance over and above the benchmark for such a long time?
Admittedly a fund of funds portfolio might not be suitable for all, but to form part of a core holding of ANY client portfolio that needs some exposure to the stock markets of the world, I honestly think a managed Fund of Funds solution to be an excellent choice. Keep up the good work John, Algy and team.
report thissgjhaghsdg
Apr 24, 2012 at 21:30
Sorry, is that fund of funds, of fund of fund of funds? And can I access the fund of fund of funds via a fund? Is that the same as a managed fund of funds? Over the long term, ditching the whole sorry bunch and going passive has been shown to out perform, big time.
Oh and "client portfolio" is an interesting phrase. Might we have some game keepers creeping into our happy band of poachers?
report thisJohn Osborne
Apr 24, 2012 at 21:46
Despite what I said about the principle, I cannot dispute the figures.
John C-R has done reasonably well the last year in difficult conditions.
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