Richard Marwood, Senior Fund Manager at Royal London Asset Management, discusses the prospects for UK equities in 2022, reflects on an eventful 2021 and shares his longer-term views on dividends.
Peter Rutter, Head of Equities at Royal London Asset Management, discusses his market views for the year ahead, what themes we can expect to emerge and assesses the market performance of 2021.
It is said that happiness is a consequence of expectations versus outcomes. Anyone expecting to live a life without setbacks, unexpected events and challenges, relative to the outcome, is likely to be disappointed.
Do we get the leaders we deserve? In many ways we do – as people who rise to the top have a habit of reflecting the mood at that point in time.
My inbox was full of emails last week from strategists pushing up their US treasury yield forecasts for 2022 and 2023. I guess that is not surprising given the Consumer Price Index (CPI) print, which showed US inflation at 7%, and a more hawkish message from the US Federal Reserve.
In time honoured tradition I thought I would have a quick look back at key themes of 2021 and set out some thoughts for 2022.
I was up early on Saturday morning to play real tennis – I game I really love. For those not familiar it is a strange mixture of lawn tennis and squash, played on an indoor court with a kink in one of the walls. Although similar to lawn tennis’s point scoring system, players only serve from one end of the court and points are not automatically lost if you can’t return the ball from the serving end.
November proved to be a tricky month for credit markets. The cause was concern about Covid mutations and the potential impact on economic activity. If we look at the sterling investment grade credit market there are several striking features over the month.
I had my third (booster) jab this week – which was timely given the news about a new Covid variant. This impacted financial markets pretty severely on Friday. In the UK 50-year rates dropped towards 0.75%, close to the year lows. In the US 30-year rates closed in on 1.8% and German long-dated bonds flirted with zero rates.
As a Northerner who has lived most of my life in the South, I am amazed at the shift in political allegiances I have seen in recent years. My wife comes from Hartlepool, a place I have visited often.
What will the world look like in 2100? It sounds an awfully long way away – but then again, our credit portfolios hold bonds that mature after that date. I ask the question in light of COP26 and the challenges societies face in limiting temperature rises over the long term.
After a miserable 2020 in which dividends declined by 44% to £61.9bn, the lowest annual total since 2011, pay-outs have bounced back strongly. Many companies have reinstated and increased their dividend distributions, or paid special dividends.
Are you a journalist or a fund manager?
One of our favourite investment adages is that if you want to be a successful journalist, be a pessimist; if you want to be a successful investor, be an optimist. For anyone wondering why the balance between happy and sad news is so in favour of the latter, the former doesn’t sell.
In the UK, the Budget was at the forefront of domestic financial news last week. The Chancellor had one card up his sleeve: the Office for Budget Responsibility (OBR) now sees less economic ‘scarring’ from the pandemic than previously expected.
Can the UK be at the forefront of the technological revolution required to transition to green? Finance will help but there are no quick fixes and our recent record of harvesting long-term gains from innovation is not great. Let’s hope that our rhetoric is met with action.
The transport sector is a significant contributor to the UK’s carbon footprint. In 2020, transport accounted for almost 30% of total carbon dioxide emissions.
In recent years, social housing has become an increasingly important component of our sustainable funds. However, it is crucial to find the right way to invest in the sector, in a manner which respects the strong social benefits that it provides.
The effective integration of ESG factors in government bond markets is still in its infancy relative to other fixed income markets. A ‘green bond’ market is starting to develop in government bonds, which is likely to become more prevalent.
The recent spike in gas prices has focused attention on how we are to transition to a low carbon economy and who will bear the costs. The money involved is huge and consumers will want sheltering from the impact: so, government, or more correctly, taxpayers will pick up some of the bill.But we also need to look at how we tax.
There is clearly a difference of view about the 1970s. It was the decade of surging oil prices and power cuts, trade union militancy, complacent companies, funny clothes, and stagflation – that intriguing mixture of low growth and high inflation.