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OakTree Wealth’s Brady: the party is over
by Elsa Buchanan on Jan 10, 2014 at 13:07
Over the last year the portfolio has returned 20.87%, outperforming its IMA 40%-85% Equity and APCIMS Balanced composite benchmark, which rose 16.97% over the same period.
Over three years the model is up 26.22% against its benchmark’s 22.41% rise.
Alongside his play on the Japanese rally, Brady said his early exit from Asia helped performance. He cites Neptune Japan Opportunities, JO Hambro UK Equity Income and Invesco Perpetual European Equity Income funds as key drivers of profit.
‘The latter really embraced a turnaround in peripheral Europe, where the team bought good companies in bad markets,’ he added.
Conversely, Capital International Emerging Markets and + rated Richard Sennitt and Thomas See’s Schroder Asian Income Maximiser funds haven’t displayed the relative defensiveness they have in the past.
‘They underperformed because a lot of their defensives have become expensive, and they have moved a bit more cyclical to get more value on the portfolio.’
Brady is more bearish about the next 12 months, describing 2014 as the ‘end of the party’, and believes performance will be harder to come by this year.
‘Any rise in 2014 will not be as high as the past two years,’ he warned. ‘Valuations are no longer there but momentum has improved– and anything could happen.’
Performance will remain sluggish until Europe shows a move towards a firmer banking structure, Brady said, as well as profit growth coming through.
Likewise, he points to an end of the easy gains in Japan, a ‘lack of confidence’ in Bank of England governor Carney and weak currency and inflation issues in emerging markets as further hindrances to performance.
More positively, he believes that Japan’s ‘deferred’ reforms could push markets to new highs if they are finally delivered. ‘It could go through 18,000 if economic reforms go through in 2014.’
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- Invesco Perpetual European Equity Income Acc
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