Stirring Up The Europudding

by | Jan 23, 2015

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Yes, they’re still at it, says David Cowell of Myddleton Croft Investment Managers . What’s next, then? A German revolt in the kitchen? All the Greek waiters out on strike? 


myddleton croft



The ECB will inject at least €1.1 trillion (£834bn) into the ailing eurozone economy. It will buy €60bn bonds each month from banks until the end of September 2016, or even longer, in what is their version of QE. The news sent the euro to an 11-year low against the against the US dollar. As we are short the euro versus the greenback, we ain’t complaining.

Then we have the Greek election on Sunday, with a far-left party looking favourite. If they lead a coalition it will be very interesting to see what the EU does when they default on their debt, or threaten to. Doubtless more kicking the can down the road.


The CAPE crusader. (Sorry, couldn’t resist – the local sandwich van has just gone past and it’s called ‘The Bap Van’.) Cyclically adjusted price/earnings ratio is a better yardstick than just using the current figures, as it averages over ten years and is adjusted for inflation. The table below gives you an indication of what market looks good value and what’s not and compares it to a year ago. It represents a good place to start but that’s all.

cape chart 2

There is a new kid on the block in the fund analysis camp. Currently all major fund ratings services are paid predominantly by fund houses, which either buy ratings for their funds or pay to promote the ratings after they are awarded. This obviously can lead to a situation in which negative ratings for funds are rare. The new company, Fundhouse, has entered the fray charging IFAs for what they consider to be more impartial opinions, good or bad. It will be interesting to see what the take-up is like.


Advisers could lose thousands of pounds in probate fees as platform funds are being converted to clean share classes, which don’t support ongoing trail payments upon client death. An adviser discovered that Cofunds cut off adviser fees on the death of a client and had no process in place to allow fees to continue until probate was granted. Seemingly, platforms are converting share classes in bulk in preparation for the April 2016 sunset clause, so that advisers, unlike the platform, will lose income upon the death of a client but the rules stipulate that platforms will need to arrange charges with investors directly and convert all legacy business to clean share classes by April 2016. It won’t happen with us.

Incidentally, my spellchecker has suggested ‘confounds’ for Cofunds….

Last Thursday I became a grandfather again to a little girl in Melbourne, Australia. I am now grandfather and step-grandfather to children whose ages range from 1 week up to 18 years. Despite giving the impression that I am positively ancient, that is not the case. The best explanation of ‘old’ I have recently seen is when you are in the front garden and a nubile young thing walks by……and your pacemaker opens the garage door.


Have a good weekend.


David Cowell



For and on behalf of Myddleton Croft Investment Managers

1 Woodside Mews


Clayton Wood Close


LS16 6QE

Tel:        0113 274 7700

Fax:       0113 274 7711

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