Oliver Wise

It’s always nice to see lower mid market PE firms successfully raising capital. Yes, fund raising since beginning 2023 has shifted quite strongly into much larger hands making fund raising harder for the smaller funds. However, this news from Apiary Capital LLP shows that the mid market continues to have a compelling investment story to tell and owner-managed companies in this space that are looking for capital to grow should be encouraged. #privateequity #midmarket Stuart Clowser Francesca Merlini https://lnkd.in/ezdjEw3D

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How's the UK equities market sentiment when the Labour Party won in the past? Well, it's a mixed bag. Our analysis of UK election since 1987 shows FTSE 100 index underperformed Stoxx 600 2 out of 3 times in the first 1M, 3M and 6M after a Labour win. During the times the Conservative Party won, however, FTSE 100 outperformed 4 of 5 times in the first month. Check out our UK equities valuation research to see how UK election may impact the market, and what hurdles the FTSE needs to pass for re-rating. https://lnkd.in/eqUbhexT #uk #ftse100 #equities #valuation #market #bloombergintelligence #ukelection #marketsentiment

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We are delighted to see our research into endgame options published by Institutional Asset Manager: https://lnkd.in/e5EreupQ To read the full research paper 'Strategies for winning the endgame' written by Arif Saad CFA and Panashe Bera FIA, visit: https://lnkd.in/erCgshn5 Capital at risk. For professional investors only. #FuduciaryManagement #Endgame #PensionSchemes

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A very insightful piece by Mark Sherlock CFA FCA and his journey investing in the US Small and Mid Cap space. Some key highlights for me were on the focus of eschewing fashionable stocks and preferring to look for below-the-radar, multi-year compounders, often in quite unglamorous parts of the market. 🔍 Put another way, when you look in areas that are overlooked, you may be less likely prone to paying a high multiple. 👀 Add on top of that a steady and sustainable growth profile (one that may be deemed boring and unexciting), the combination is not a bad recipe for long-term compounding returns! 📈 So long as you believe the intrinsic value of a business is growing over time and you avoid paying too high a multiple, this ensures safety of principal and a margin of safety = downside protection! ✅ Inverting this...paying too high a multiple for a business with declining intrinsic value is a sure way for upside destruction! 💥 The other part I found interesting was "the downside of investing in businesses of lesser quality: leveraged, low barriers businesses are cheap for a reason, and many do not last for long!" 📉 What can sometimes happen is that companies that look optically cheap, should actually be much cheaper! ⬇ Over an investment horizon, you are fighting against time. Although you may identify valuation upside to intrinsic value, that upside may shrink over time as some lower quality businesses may have declining intrinsic value.👎 Put another way, for a compounder, time is your friend. For a decliner, time is your enemy. ⏰ Finally, a pertinent reminder on the importance of downside protection: If you lose half your money in a stock, it has to double in order for you to break even. This can seriously affect long-term returns! 💸 link in the comments.

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The inflow of British cash into equity funds last month was the thirteenth highest on record. UK investors shrugged off faltering #equity #markets and the sagging #bond market in April and continued to add strongly to their fund holdings, according to the latest Fund Flow Index from Calastone, the largest global funds network. They added a net £1.93bn to #equityfunds and £422m to #fixedincome funds. Meanwhile, mixed asset funds enjoyed their first month of inflows after eleven consecutive months of net selling. #Indexfunds are the main beneficiary of investor capital at present. Fund flows have strongly favoured them now for 16 consecutive months. Since January 2023, equity index funds (led by North American and Global funds) have taken in £14.92bn of investor cash, while active funds have shed £7.26bn. Money market funds suffered an outflow of £100m in April, the first month this asset class has seen net selling since January 2023. Investors are switching outright from safe-haven money-market funds, despite ongoing high yields, into riskier asset classes. Property funds, which face cyclical and structural problems, saw continued outflows too. Angus Hume Lane Clark Siobhan Whelan Rupert Forrest Angus Hunter Smart Tom Norton Sam Mehew Rupert Clark

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In our analysis of Schroder Income Growth's half-year results, we explain how the trust offers investors income and capital growth and sees valuation opportunities in UK small and mid-caps. Read the full analysis here: https://lnkd.in/dvSfNE6V Capital at risk.

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Yesterday's BRC retail sales data didn't sit well with the FTSE 100 as it slid by another 31 points. Barclays' consumer spending report didn't help either, as headlines of spending hitting a 3-year low spooked investors. That said, the figures don't look as bad as the headlines suggest on a transactional level, which is arguably more accurate, as disinflation artificially lowers spend growth. Thus, there were a couple of factors that weren't discussed nearly enough. For one, bad weather saw spending on bigger outdoor items such as hotels and entertainment pare back, as these normally help to lift overall spend. Secondly, volumes on more discretionary items such as clothing, electronics, and airlines rebounded or continued to remain strong, showing consumer confidence. As such, we hold a slightly more cautiously optimistic view that retail may very well be turning a corner as summer approaches. Bar another wet month ahead (which doesn't look likely if current forecasts are anything to go by), we believe June may be a better indication of the strength of the consumer, with the start of summer giving the industry the boost it's been needing this year. #BRC #Barclays #RetailSales #Retail #UKEconomy

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Ros Altmann: The damaging bias against UK #investment companies. UK listed investment companies are a long-standing British success story, but seem to have come under attack from well-intentioned, but flawed, domestic regulations. Check out Ros Altmann's latest article 👇 https://incm.pub/4bcM0v0 #investing #assetmanagement #wealthmanagement #finance

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The U.K. ISA: an important first step for the U.K. capital markets (and the economy). Make sure and have your say. Perhaps next, we can ditch stamp duty and really get things moving!

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Impact investing network - penny for your thoughts please? 💭 CFA UK have released their first syllabus for a certificate in impact investing. It seems to cover the basics of impact and in a variety of classes but what is the badge's utility? Will it become the next ESG certificate and overnight we'll have thousands of "impact investing specialists"? Or will it be the next CFA passport into any and all impact investing jobs - no certificate, no interview? As someone that works in impact investing and learned 90% of the syllabus in my first grad job, I'm wondering if this is necessary for my career prospects?? It's ~£500 which is a lot for a certificate to validate experiential learning...? Or is it better to get ahead and have the CFA UK stamp to satisfy traditional finance hiring managers? Any thoughts and feelings to share? https://lnkd.in/dAqcnxe6

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How do you manage the balance between fear and greed in a portfolio? Find out @ RSMR Leeds... Here are some of the questions we'll be putting to Duncan MacInnes, Fund Manager at Ruffer: - How do you manage the balance between fear and greed in the portfolio? - Where is that balance skewed today and why? - Ruffer are known for their strong views on inflation, have these views softened as inflation has been falling globally? - What are the best inflation hedges you can own in your portfolio? - Asset allocators have reduced alternatives in favour of short-dated bonds and in some cases even equity, do you think this is a mistake? RSMR Leeds @ The Queens Hotel, Leeds City Centre Wednesday 15th May 2024 @ 11:15 - 18:00 Click to register: https://lnkd.in/egT-GEdS #inflation #assetallocation #portfoliopositioning #ruffer #investmentconference

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The task bestowed on the 9 members of the UK's MPC seems simple enough. To wit; contain growth of a clearly defined weighted average measure of consumer prices, to within the range 1-3%. And at a March print of 3.2%, it would appear the painful drawn-out process of getting inflation back on track, will soon reach a satisfactory conclusion. When headline CPI growth indeed falls to a figure comfortably below 3%, we must surely see the base rate moved down? Well, I would ease-off on expecting easing. My caution is down to the devilish detail underlying the downward trend in the CPI. For if we choose to look close at the 1000 units that makeup the index, we see a bifurcation in inflation like never before. Beneath the headline of 3.2%, the price of goods rose at 0.8%, & so BELOW target. The problem is that service prices continued to rise at 6%; TWICE the tolerable ceiling. Now this dichotomy cannot fail to CONFUSE policy setting. The reality is that with one eye on the 1/2 of the CPI under the heading goods, the MPC should be dovish. The devilish problem is that unless it chooses to close the other hawk-eye, the MPC cannot fail to see lofty service inflation showing little likelihood of falling into line. To be clear, a large part of the service side of the CPI is accounted for by staff costs. As such we must look to the tightness in the labour market (captured best by elevated vacancy levels) as suggesting wage growth will, through the remainder of the year & very likely into next, persist above 4.5%. Another factor that should be playing on the collective minds of the MPC is that capturing growth in "real wages" is not the simple arithmetic it used to be. Given a significant part the CPI reflects staff costs, taking this away from wage growth fails the Keynesian monetary multiplier “test". Imagine if the entire CPI were goods whose pricing reflected higher costs of ingredients. In this case inflation would be a truly sunk-cost. The issue is that now the CPI contains a large service element, our payments get recycled as the wages of those providing us with these. Those we pay transmit in turn their incomes to others, & so on. To those that take issue with my calling this a virtuous inflation cycle, I would merely ask they consider Keyne's Paradox of Thrift. In closing I would like to point to another reason the MPC should be holding-off on a rate cut; the pace at which private sector rent is rising. To be clear this component accounts for 1/20 of the CPI. To be clearer still, whilst the ONS used a rate in March of 7.2%, it openly accepts the 'proper' figure for rent growth (using an improved methodology) was 9.2%. And just as tightness in the labour market will mean wage growth persists, so strong demand over supply in the tenancy market will mean rent growth (even in its understated measure) remains elevated. With the above in mind, if you soon see the MPC voting to cut the base rate, be aware it is seeing UK CPI, wearing an eye patch.

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Only 12% of fund managers globally are female—a statistic that has flat lined for the past 7 years. This morning, a couple of us from abrdn's WIFI (Women in Fixed Income) Network attended the Women in Banking and Finance's Scotland Mini Conference. 💡 Key Takeaways: 🌈 By encouraging diversity of thought, we can avoid groupthink, leading to more innovative solutions and a more inclusive industry. 🔍 Women control the majority of household purchasing decisions but have limited confidence in making investment decisions. 👭 As an advocate for women in investing, my door is always open for a conversation about navigating the financial industry. Let's continue the conversation and work towards a more inclusive future. 💪 #DiversityInFinance #WomenInInvesting #Empowerment #Inclusion #WIBF #SFE

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🤔 Do you ever wonder what Oscar the Grouch 🗑️, recycling ♻️, the weight of a horse 🐴, and Shakespeare 📚 have in common? If not - where have you been? Never fear, all is revealed in the latest thought piece I’m delighted to have collaborated on with Sophie Fisher, Oliver MacArthur, CFA, and Hatty Goodwin. In the paper, we explore the concept of a circular economy - and explain why moving from linear to circular is key to addressing the amount of waste produced. Timed to coincide with Earth Day, we felt this aligned well with this year’s theme of “Planet Versus Plastics”. Link in the comments. I’d love to hear your thoughts on the paper and the topics it covers. Share them in the comments!

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We had the pleasure of sitting down with Iain Pyle CFA, ACA, Portfolio Manager of abrdn Shires Income Trust. In an engaging chat Pyle talked through the trust's objectives, approach and how it's differentiated from other trusts. The fund invests primarily in UK equities but has around 20% of the portfolio in preference shares which deliver a defensive high-yield, as well as 10% overseas equity to provide diversification. Pyle and his colleagues try to remain agnostic in their investment approach as they want income, income growth and capital growth out of the portfolio meaning their approach sees them invest across sectors and market caps. The focus is on company fundamentals with a bias toward high-income and high defensive quality with the aim to grant investors exposure to high-quality companies in the UK that encompass all of the above. Shires Income Trust is currently overweight to UK small and mid-cap equities with the managers believing there to be a lot of great companies within that area of the market. According to Pyle 'It's a great source of income growth over the long-term but currently it's trading at a record valuation discount to world equities.' Will a fall in interest-rates and perhaps a political shift in the UK provide fertile ground for UK smaller companies? #InvestmentTrust #Dividends #IncomeGrowth #CapitalGrowth #InterestRates #UKEquities #UKsmallercompanies #SHRS

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It is unhelpful. Equity returns are a function of valuation and growth. We cannot say that a high valuation means lower returns because growth may be robust. The past is not always a good guide to the future. Have followed people who have talked down US stocks for a decade or more using current valuation-based models. Bogle's formula for stock returns = dividend yield + earnings growth + P/E change. We can break this down into the current valuation (yield and P/E) + growth (earnings). The valuation is known but the growth is unknown. If a 'high valuation' stock market delivers strong growth it may have been cheap to start with. Where does earnings growth come from? Earnings growth = Return on equity * retention ratio. RoE = A function of the return on capital and leverage. High leverage is not desirable. Retention ratio = A function of the scope to reinvest in growth (tailwinds/growth runway). Companies that are high quality and have growth tailwinds can generate long-term earnings growth. This makes a higher P/E justified. What level of P/E ratio is too high and what isn't is not easy to determine. But in recent times, US stocks have justified a valuation premium through strong earnings growth.

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Check out our co-founder Bixuan Xu's latest interview with Bloomberg - you go girl!

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“When small caps recover, they significantly outperform and by a greater amount than they underperformed on the way down.” 💬   Ken Wotton, fund manager of Strategic Equity Capital plc (SEC), speaks to Gavin Lumsden, for The Telegraph’s Questor column, about the attractions of investing in smaller UK-listed companies. After years of being buffeted by economic fears and ignored by investors, are #uksmallercompanies set to rally? https://lnkd.in/euKUSacV #ukequities #publicequity | For professional investors only. Capital at risk. Not an investment recommendation. Past performance is not necessarily a guide to future performance. Opinions are the fund managers own and not necessarily those of Gresham House.

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UK outflow 2nd highest on record - looks very structural to me! Calastone data showing £1.1bn of outflows from UK equity funds in May, which is now 36 consecutive months of outflows. The improvement in the UK market recently has been driven by M&A and share buybacks which have offset the outflows. This is why it is essential to encourage UK investment in UK companies otherwise we will not have a smaller companies sector to the detriment of the UK economy, jobs and tax revenue. Core to necessary changes are UK pensions investing in UK companies, a UK ISA, a national wealth fund and abolishing stamp duty to ensure the UK is competitive. Rt Hon Rachel Reeves Darren Jones Jeremy Hunt Bim Afolami

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