Avast behind, says David Cowell of Myddleton Croft Investment Managers. If it isn’t a Caribbean caliphate?


Turkish Prime Minister Recep TArabic-shipayyip Erdogan has proclaimed that Muslims discovered America three centuries before Columbus. He bases this on an entry in Columbus’s log stating that he had seen something like a mosque. I saw something the other day that appeared to be the leader of the Labour Party…. When writing this, the spell-checker came up with endogamy as an alternative. Perhaps this is part of Erdogan’s problem?


myddleton croft


Fresh from his triumph in reducing (not) the UK’s extra payment to the EU, purely by sleight of hand, George Osborne on Thursday night abandoned his bid to overturn the EU banker bonus cap, saying he would focus on reforming global rules on pay rather than wasting more money on a hopeless lawsuit.


If this is victory, I would hate to see what defeat looks like. This morning we hear that the houses of Parliament are in terminal decay after years of poor maintenance. Perhaps we ought to lock the Tories and Labour in there, as it appears to be the most suitable place.

Alibaba sold equal $2.25bn offers of five- and 10-year notes, according to Bloomberg. The 2.5% 5-year notes sold at a yield of 95 basis points above similar-maturity treasuries, and the 3.6% 10-year securities sold at a relative yield of 128 basis points. The bond issue was hugely oversubscribed, with $57bn worth of orders from investors. They raised $8Bn. No fears of rising rates in the US bond market then.

As it seems to be an age since I last blew Myddleton Croft’s trumpet, the chart below may raise a few eyebrows. Tactical Growth is our ‘go anywhere, do anything’ portfolio. Apart from offering substantial protection between July 2011 and January 2013, it’s done better than both the All Share and All Stocks indices as well as IMA 40-85% and Flexible. In other words, it has produced equity performance with near bond volatility:


Myddleton chart

Nigel Spears, head of distribution at Sanlam Wealth Management, admits that the firm operates a restricted model, but had a policy of not forcing newly-acquired clients into own-brand products. For how long?

Japan’s Prime Minister Shinzo Abe has called an early election as he seeks public support for reforms. Japan’s economy produced a shock in the last quarter, receding by 0.4%. Now the country is in recession it has delayed Abe’s planned second sales tax increase that was due October 2015. Last month the Bank of Japan announced a further boost to its already monumental stimulus efforts as it reaches a “critical moment” in its escape from deflation. It is now buying 80trn yen (£440bn) annually, up from the 60trn to 70trn yen announced last April. Despite all the handwringing and soul-searching, Japan has grown as quickly as the US over the last ten years. Not a lot of people know that.

Monday’s launch of the Shanghai-Hong Kong Stock Connect, which allows investors in each centre direct access to the other’s stock market, is one of the most significant openings of China’s capital account in a decade; Chinese investors can now start trading hundreds of stocks in Hong Kong, including international companies. It’s a pity that the timing isn’t that good, but it may give a fillip to the market.

M&G Bond Vigilantes reckon that emerging market debt issued in hard currencies is attractive:

emerging corps chart

According to Henderson, US dividends jumped 11.4 per cent to $87.4bn compared with a year earlier; 29 of 33 sectors have reported dividend growth. The nation’s financials have now recovered from the credit crunch and are making strong payouts, the report shows. The UK’s recovery has not translated into sterling dividend growth. The third quarter – incorporating a large portion of UK companies’ payouts – brought just 1.8 per cent more dividends than a year earlier, the smallest growth of the major economies. Despite the continent’s economic woes, European companies managed to boost dividends by 14.4 per cent on the same time last year.

In 2013, Warren Buffett suggested in a letter to shareholders that a large number of investors might be better off abandoning active management and instead investing “10 per cent of the cash in short-term government bonds and 90 per cent in a very low-cost S&P 500 index”. Analysis from Arc has shown that such a portfolio would have outperformed the majority of discretionary portfolios in the five years to the end of September 2014, substantially outperforming the average return from all four Arc multi-asset sectors, though with higher volatility.

Arc said the outperformance of the Buffett strategy in the past five years has been the result of the equity bull market, but it warned that investors should not presume that such a strategy would always outperform. In fact, the same portfolio was shown to have underperformed every Arc sector in the five years to the end of September 2009; even the defensive Arc Cautious sector. In other words, in a rising market a bonobo monkey can make a profit, but it takes at least two, or a professional active manager, in all other situations.

Police cordoned off Liverpool City Centre this morning when a suspicious object was discovered in a car. It later turned out to be a tax disc.


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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