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Performance review: Investment Quorum's 2014 'conundrum'

by Elsa Buchanan on Feb 04, 2014 at 14:14

Performance review: Investment Quorum's 2014 'conundrum'

Peter Lowman, Investment Quorum’s chief investment officer, is maintaining his exposure to the US, but warns earnings growth will have to come through if the market is to continue its rally. In the firm’s IQ Balanced Solution portfolio, he has a 14% allocation to the region but is unlikely to add to this.

‘2014 is a bit of a conundrum,’ he said. ‘We might see the US markets continuing to rise but softer-looking corporate earnings could be the call for the rest of the year.

‘We have to be careful that the US has not run ahead of itself. We are at a crossroads where we just have to wait and see how the first quarter pans out.’

While Lowman believes the US should do ‘OK’ in 2014, he says the 25% to 30% returns seen in 2013 will not be repeated.

Despite branding Europe a ‘total mess’, he maintains a positive outlook on it,  with a 9% allocation.

‘Given that Europe is at an early stage of its economic recovery, and is probably 18 to 24 months behind the economies of the US and UK, it seems logical that further investment opportunities will present themselves,’ he said. ‘Numerous European markets have already delivered excellent returns last year, but further investment returns are most likely over the coming years.’

He favours the JP Morgan Europe Dynamic ex UK fund managed by Citywire AA-rated duo John Baker and Jonathan Ingram.

Over the last six months, Lowman has doubled his allocation to Japan to 6%. While a ‘tricky period’, including the consumption tax rate rise in April could ‘take a little of the shine off the market’, he said: ‘The upper and lower house are backing Abenomics, so if we get over that hurdle, there will probably be more juice in the market.’

In the UK, where he holds 36%, he points to the Lindsell Train UK Equity fund, managed by AAA-rated Nick Train, as one to hold.

But he recommends selling A-rated Neil Woodford‘s Invesco Perpetual High Income fund, in light of the manager’s pending departure. ‘It may be time to exit this fund in favour of other funds within the UK equity income sector, given that there are a number of very well managed funds to choose from,’ he said.

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  • JPM Europe Dynamic ex-UK A Acc
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  • CF Lindsell Train UK Equity Acc
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  • Invesco Perpetual High Income Inc
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  • Cazenove UK Equity Income B Inc
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  • JOHCM UK Equity Income A Acc
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  • JPMorgan Europe Dynamic A Dis EUR
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Look up the fund managers

  • John Baker
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  • Jonathan Ingram
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  • Nick Train
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  • Neil Woodford
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  • Matthew Hudson
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  • Clive Beagles
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  • James Lowen
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