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A global tour with John Chatfeild-Roberts
by Dylan Lobo on Jan 07, 2014 at 13:59
Jupiter’s chief investment officer John Chatfeild-Roberts has offered an insight into his asset allocation thinking in his first update of 2014.
Chatfeild-Roberts accepted that in the medium term the investment world will be heavily influenced by the actions of central banks.
‘[Central banker’s] policy decisions, particularly those of the US Federal Reserve, will continue to affect significantly the future direction of equity and bond markets,’ he explains.
‘Despite the US central bank’s decision to cut back marginally on its massive bond-buying programme, known as quantitative easing (QE), from $85 billion to $75 billion per month, it is important to hold in the back of one’s mind that we are in the midst of a huge monetary experiment, the results of which are uncertain. Few, if any, understand the long-term implications of QE.’
Against this uncertain backdrop Chatfeild-Roberts said companies need to the ‘up their game’.
He highlighted the fact that most of the strong rise in equity markets last year was due to multiple expansion. This has seen investors happy to pay a higher multiple of current or future expected earnings in order to gain access to the potential for dividend and earnings growth.
‘This pattern cannot go on forever even if it proved a lucrative driver of returns over the last 12 months,' Chatfield-Roberts stressed. ‘Growth in corporate profits would have to materialise in 2014 on the back of stronger global growth to justify those higher multiples.’
Chatfeild-Roberts put a microscope on some of the key markets, which he believed will drive the world economy in 2014 and present a range of challenges and opportunities.
US: boost from falling raw material, energy costs
‘[The] US economy is benefiting from a slowdown in Asia, more specifically China. Raw material costs have dropped for US manufacturers. This has also coincided with falling energy prices through the availability of cheap oil and natural gas, as a result of the development of fracking technologies, which is enabling US energy producers to tap into huge reserves at low cost.
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Ian McVeigh and Steve Davies, managers of Jupiter's UK Growth fund, talk about their predictions for the UK equity space. Click here to watch a series of sponsored interviews with Jupiter's fund managers on the UK equity market.