“In investing, what is comfortable is rarely profitable” – Robert Arnott, American entrepreneur, investor and writer If that statement is even half-true, then the UK stock market should be at the centre of any investor’s radar. As we will set out below, the UK is far from dead and its stock market is astonishingly cheap.
Regardless of asset class, a common request from investors looking for income-generating funds is the ability to produce a sustainable income with a low volatility profile. An area we believe can deliver this is short duration investment grade credit. By undertaking fundamental credit analysis and identifying companies with attractive spreads – but with ironclad balance sheets that can withstand any downturn – we are able to construct a portfolio that can deliver a sustainable income stream with limited fluctuation in capital values.
Let’s just assume some passing fairy waved her magic wand one morning as you stumbled out of bed cursing that blasted alarm. Rather than the usual bleary-eyed commute, this fairy has the power to transform you, body and soul into the Eurozone economy. Once you had recovered from this interesting turn of events, what would the different parts of your body stand in for? Let’s say the brain would stand in for the government, the limbs for all those factories and offices keeping you constantly on the move, whilst all the veins stood in for the banking system irrigating the whole body with money being pumped round. In this analogy, the blood would be the money and the heart that regulates it all would be the central bank.
As manager of the Sterling Liquidity Fund, I always keep my eyes out for gilt-edged investment opportunities to help preserve capital. In fact, with UK Treasury Bills yielding as much as A rated bank CDs of late, we have been adding these lower-risk gilt-edged bonds to the portfolio to the extent that at both the 31st of August and the 30th of September, Her Majesty’s Government was the Fund’s largest counterparty exposure.
While rapid urbanisation has created greater wealth and economic output, it also has exerted severe pressure on the environment and public health. According to the United Nations, currently 75% of the world’s carbon emissions and 50% of waste come from cities, with at least 40% of the former from properties. As more than half of the world’s human population already lives in urban areas, demand for sustainable housing and work spaces in cities has reached a crucial point. This is not only because of greenhouse gases and how city buildings and their occupiers deal with hotter weather and more frequent natural disasters, but also due to growing social inequality and a massive ageing population.