There has been a strong revival in occupier and investor activity in the major UK regional office markets recently, reversing the trend seen since the Global Financial Crisis and confounding the current slowdown seen in regional retail markets. The question is what is driving this increased demand and how sustainable is it?
Much is written about the ‘FANG’ stocks (Facebook, Amazon, Netflix & Google) but it is actually Apple, Alphabet (Google’s parent company), Amazon, Facebook and Microsoft that are amongst the largest 10 stocks in the benchmark. These companies are investor favourites and, in aggregate, they are holding up the US equity market in 2017. This is because underneath the 16.9% total return figure, the market is more in turmoil than many investors think.
Many of today’s younger fund managers – for example those who started their careers in 2007 or later – have only known an environment in which growth equities have outperformed value equities. Indeed, many industry discussions at conferences we attend discuss the view that growth is the only way forward, particularly in the United States. Many analysts in particular are unable to fathom why anyone would adopt a value bias, in any circumstance!
In 2016, we timed the portfolio shifts of the CF Canlife Global Equity and CF Canlife North American funds very well, rotating our overweights into the more value areas of the market as economic indicators – such as the Citigroup Economic Surprise Index – began to suggest that consensus views were too bearish.