Wealth Management & Investment Insights - October 2016

How markets have performed

Emerging market equities have been the strongest performers this year, led by Brazil and Russia. Corporate bonds have continued to rally as spreads tightened and government rates have plunged to record lows. In currencies, the Yen has strengthened and sterling has weakened. Iron ore, Gold and Oil have all had very strong years so far.

What we are thinking

We are living in a world of low growth, low inflation, low interest rates, weak productivity growth and disappointing global trade – with ever more extraordinary monetary policy actions having little impact upon the situation. We think that monetary policy is reaching the limits of its powers, with a need for fiscal policies to be enacted in tandem to change the course of the global economy. This will increase the influence of politics upon the economy and markets.

With elections on both sides of the Atlantic in the next 12 months, we are focussed on the potential for political risk to impact our client portfolios. With this in mind we are exploring assets which may provide diversification and protection for clients, and we are exploring whether gold may offer some value as part of a balanced portfolio.

Our latest asset allocation positioning:

Insights from some of our managers

A global growth manager reported a significant rotation in their investment strategy. They are replacing the sectors recently synonymous with growth investing (Biotech, Technology and Internet related companies), fearing that their lofty valuations will not be supported by the corporate earnings potential. Instead they have turned their attention to companies who have latent growth potential in their businesses which can be unlocked through internal change, rather than relying on external factors.

One of our Asian equity managers has applied a similar change to their strategy, turning their back on quality growth companies in the region (deemed to be fairly priced) and buying out of favour cyclical businesses which they believe offer an attractive asymmetry and potential for greater profits given their cheap valuations.

Other news

The first presidential debate of 2016 was watched by 80 million viewers. Did you know that Hillary was refused a step stool to make up for her 5’4” versus Trump’s 6’2”? Instead, the debate commission scaled down the size of her podium to fit her smaller relative stature. Although the news providers couldn’t agree on who was the winner, the markets indicated their view by boosting the Mexican Peso – a clear sign that Trump didn’t fare as well as Clinton.

About Wren Investment Office

We take a bird’s eye view of a client’s assets, create a comprehensive wealth map and advise on a solution to help meet our client’s expectation. We work with our clients to understand what they want to accomplish and craft a financial plan to achieve their goals. The freedom of being a firm professionally owned and managed affords us the opportunity to source, assess and assemble the finest providers from the financial sector. We believe this helps us provide a robust structure for the management of family wealth.

We are part of a global alliance of independent multi-family offices, with MdF Family Partners in Continental Europe and WE Family Offices in the US, that shares the same investment philosophy and the same commitment to providing unconflicted advice, a simple fee structure and adherence to putting clients’ interests first.