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Wealth manager outlook: welcome to the 20mph recovery
by David Campbell on Sep 26, 2013 at 14:00
‘Purely on income, equities look to me a nil sum game assuming markets move higher; quoted yields may look attractive but ultimately unsustainable over the next five years. The question remains, are we ready to put aside our liquidity worries in property?’
Others were more willing to make a case. ‘We like UK commercial property and Reits as a proxy against government bonds given the attractive yields on offer,’
‘Commercial property looks interesting from a total return viewpoint’, added Investec Wealth & Investment head of fixed income Darren Ruane.
An end to QE
On macro concerns for the year ahead, 60% named the withdrawal of quantitative easing or some of its first-derivative consequences related to long-term rates as their single largest source of sleepless nights, although a significant minority referenced the potential repercussions of a western attack on Syria.
STanhope Capital's Bell was an exception in having more specific concerns. ‘Two long-term risks remain: how will profit margins fair when employee costs increase and how will emerging markets react if oil prices and US interest rates rise at the same time?’ he asked.
While he was the only respondent to specifically name the level of corporate profitability, a level of anxiety was more generally evident, with 68.4% saying that they expected overall profitability to fall, a substantial increase from the previous quarter’s 4.8%.
The number expecting profits to rise fell from 28.6% to 10.5%, while the number expecting them to change little fell from 66.7% to 21%.
‘While valuations in some areas are becoming enticing, investors are likely to remain nervous, given that it is unlikely that major issues over-hanging markets will be resolved quickly,’ said Scott.
In line with lower expectations of growth and activity, and an expectation of tighter monetary policy, overall inflationary expectations fell back to a year low, and for the first time in the history of the survey, no managers reported expectations it would rise, versus 38.1% in June.
The number expecting it to change little rose by 50% over the three months from 42.9% to 63.2%, while the number anticipating a fall rose from 19.1% to 36.8%.
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by Alex Steger on Dec 11, 2013 at 10:19