The underlying economic environment influences us all on a daily basis, whether we like it or not. Our personal finances are affected by interest rates, job prospects by economic growth and how much we can spend by inflation. The ‘real economy’ therefore has an undeniable impact on the stocks in which we invest. Understanding that impact, and positioning the CF Canlife Global Equity Fund to benefit from changes in the macro outlook, is crucial.
We have often talked about the extraordinary bull market we have witnessed in bonds in recent history, with 10-year UK gilt yields falling from 15% in 1974 to just 1% today. However, the long-term data shows that – although 2016 and 2017 have seen the lowest yields in the history of the UK gilt market – they are not that anomalous. Indeed, the incredibly high yields of the 1970s and 1980s look to be the anomalies in this context.
Retail sales growth has cooled over the last month, with the year-on-year (YoY) increase falling from 4.1% to 2.6% in March. With prospects for higher inflation coming through in 2017, much newsflow is centred around the prospect for weaker overall spending this year and the impact this will have on various industries and business segments. How do we maintain exposure to the domestic economy, whilst still protecting the portfolio from downside risk?
Loosely translated, ‘Malaysia Boleh’ stands for ‘Malaysians can do it!’. This phrase is now more apt than ever as the development scandal that engulfed Prime Minister Najib Razak in 2015 has left Malaysian equities unloved and under-owned ever since. This situation was exacerbated by the plunge in the oil price – even though crude and related goods account for just 10% of exports.