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David Cowell: ”The majority of investment advisers now outsource portfolio management…”

The majority of investment advisers now outsource portfolio management, according to the latest Schroders Adviser Survey. Findings from the Q4 research, which contacted 252 investment advisers, show the total number of advisers outsourcing portfolio management has risen above 50 per cent for the first time while the proportion of advisers who choose not to outsource has dropped to 48 per cent. Contact Julie jones who will explain why the outsourcing should be to us. See the charts below.


European regulators have fined three banks including HSBC a total €485 million (£412 million) over their collusion in manipulating the benchmark Euribor. The fine on HSBC, JP Morgan and Credit Agricole was the culmination of a five year investigation. The banks were not part of a previous settlement with the regulator in 2013. JP Morgan was the main perpetrator and was fined €337 million, while Credit Agricole was fined €114 million and HSBC €33 million in proportion to the extent of their involvement.


Still in Europe, the ECB has announced it will cut the pace of bond buying from €80bn a month to €60bn from March 2017. It has said it will extend the programme to December 2017. The parameters of quantitative easing are to  change but interest rates are unchanged and the ECB said it expects them to remain at current levels or lower “well past the horizon of asset purchases”, so into 2018?


Standard Life’s O’Dwyer does not believe trends in distribution towards acquisition and the building of restricted or tied advice businesses by providers will lessen the level of choice for clients. I wonder why? He has told one of the newsletters: “If you take 1825, obviously it’s restricted but its restricted in that we use the Standard Life Wrap. Going back 10 years if you were restricting to a single set of products from a single company that would feel like one hell of a restriction. But now on the wrap you can choose from thousands of products. The nature of restriction has changed massively.” Presumably the platform charge makes up for the loss of management fees on the part of the portfolio which doesn’t go into SLI funds. What about those advisers who only use one platform? Is that not restricted under the same criteria?


Talking of Standard Life, it appears that there are numerous users of their My Folio funds. The managers have been quoted this week as getting out of government bonds. We did this ages ago so I had a quick look and what I saw on comparison of performance was interesting:

davidcowell91220161

I have tried to match equity exposure between the three funds quoted and our equivalent. Their Managed lll being roughly equivalent in the flexible sector to our Tactical Growth; Managed ll to our growth Moderate, and so on.

Since Brexit the difference has been marked:

davidcowell91220016-2

Q E D

Advanced economies must redistribute income if globalisation is to be a success, Bank of England governor Mark Carney has said. In a speech at Liverpool John Moores University, Carney calls on governments to target “inclusive growth” that would see more people benefit from globalisation. “To address the deeper causes of weak growth, higher inequality and rising insecurity requires a globalisation that works for all. For the societies of free-trading, networked countries to prosper, they must first redistribute some of the gains from trade and technology, and then re-skill and reconnect all of their citizens. By doing so, they can put individuals back in control.” Methinks that he is a bit late to the party. What’s his game? Is he running for Chancellor of the Exchequer? Oh, I forgot, he’s an economist so he probably thinks that he can do both jobs at once.


In this period of Advent, I give you a suitable prayer: O Lord, give me coffee to change the things I can change and wine to accept the things I can’t.

Have a good weekend.

David Cowell, Director

For and on behalf of Myddleton Croft Investment Managers

Leeds, 0113 274 7700

www.mcim.co.uk

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