GAM considers the markets and the relationship with deVere Group
In this new three-part series, I have asked three of the major institutions with which deVere Group has robust, long-term, established alliances, for their retrospective on 2013, their outlook for 2014, their cautionary advice for the year ahead, and for their take on the relationship between deVere and their organisation.
Here, in the first part of the series, we hear from GAM.
In general terms, how would you review, and put into context, the markets over the last 12 months?
For the most part, 2013 has been another strong year for equities, at least in the developed world, despite a sizable correction over the summer. Analysis reveals monetary policy is at the root of both gains and sell-offs, which highlights a major trend of recent years. In short, quantitative easing (QE) – and more recently, the prospect of its slowing and eventual end –means political concerns have superseded fundamentals in driving markets up as well as down.
So, whilst the corporate backdrop has been strong and most of the world is now on a slow-growth path to economic recovery, this has been largely irrelevant in the face of monetary policy and politics.
How will what has taken place in 2013 affect what is likely to happen in 2014? What will be the standout differences between this year and next?
Looking into 2014, we expect a slight change of emphasis and see political factors becoming less dominant, particularly as the QE exit strategy is clarified. With Janet Yellen most likely to take over as chair of the Federal Reserve in January after more than eight years of Bernanke at the helm, we feel this could be a positive development. She has a ‘dovish’ reputation and many market watchers hope the first part of her eventual legacy will be a slow and considered unwinding of QE; we anticipate that when clarity over this issue does finally emerge, the cloud over markets should lift, allowing plenty of positives to manifest.
The US remains on the path to steady recovery, as does the UK, where rising house prices continue to boost consumer sentiment, which should feed into consumer spending.
Elsewhere, Japan proved the surprise story of 2013, with Prime Minister Shinzo Abe’s wide-reaching ‘Abenomics’ policies leading many to believe the country will finally break out of a two-decade deflationary spiral. Next year should see many of Abe’s reforms come to fruition, including the gigantic injection of money into the system, and the world will be watching with interest.
Europe has also started to show signs of recovery this year and many of the factors keeping investors away since the credit crunch are finally starting to dissipate, with structural improvements in the periphery having been key on this front.
What would be your overriding cautionary advice or ‘word of warning’ for the year ahead?
It’s clear that politics have been a dominant force over markets in 2013. As we have said, tapering and its aftermath remains the major unknown and uncertainty will continue to weigh on markets until this is resolved. Once it is, however, plenty of opportunities should arise as the economic recovery continues, although no one should discount the possibility of another taper tantrum.
Can you outline why the working relationship with deVere has proven to be mutually beneficial and how it works on a practical, functional level to achieve results?
GAM’s has a long history of working with some of the world’s largest institutional investors, deVere’s size and scale means we view working with you as we would with an institution. This means deVere, and their clients, can benefit from our economies of scale. Equally GAM can leverage off deVere’s extensive distribution network and brand recognition in the wider market place.
Can you explain how your product range benefits deVere advisers and, in turn, our clients?
GAM’s range of portfolios invest across multiple asset classes targeting various volatilities, offering a range of solutions from those looking to grow their wealth over the long-term to those who are more focused on preserving capital. As, of course, a diversified portfolio is vital to balancing risk and return, given the huge variation in how different investment instruments perform year-on-year.
The GAM range of portfolios target differing risk/return profiles offering solutions for varying investor needs. By targeting specific volatilities, these portfolios can provide a degree of predictability not often associated with financial products, helping advisers manage clients’ expectations and investors to plan for the future with more accuracy.
Source: GAM unless otherwise stated. This material is confidential and is intended solely for the use of the person or persons to whom it is given or sent and may not be reproduced, copied or given, in whole or in part, to any other person. It is aimed at sophisticated, professional, eligible, institutional and/or qualified investors who have the knowledge and financial sophistication to understand and bear the risks associated with the investments described herein. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be solely relied on in making an investment or other decision. It is not an invitation to subscribe and is by way of information only. The views expressed herein are those of the Manager at the time and are subject to change. The price of Shares may go down as well as up and the price will depend on fluctuations in financial markets outside GAM’s control, as a result an investor may not get back the amount invested. Past performance is not indicative of future performance and reference to a security is not a recommendation to buy or sell that security. In the United Kingdom, this material has been issued and approved by GAM London Ltd, 12 St James’s Place, London SW1A 1NX, authorised and regulated by the Financial Conduct Authority.