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Multi-Asset Blog - Contrarian investing in Eastern Europe

29 September 2017

Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset
Opportunities in Eastern Europe

Contrarian investing is often thought of as being like catching a falling knife: looking for assets that are tumbling and heroically buying into them at the bottom. Like all dangerous games, you can sometimes play and look like a hero, but more often than not you come off worse for wear. Our approach to contrarian investing is not to fight the herd, but rather to look elsewhere for great opportunities that are just off most investors’ radar screens.

One equity market that meets this approach is Eastern Europe, comprising of Poland, Hungary and Czech Republic. Not part of Europe, so ignored by European investors, but not big enough to grab the full attention of many emerging market investors. 

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Emerging Markets Viewpoints - September

11 September 2017

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

The big shock for most investors this year has been the weakness of the U.S. dollar. It had become consensus that the U.S. Federal Reserve would begin the process of shrinking its balance sheet and increasing interest rates in a more aggressive fashion in reaction to an expanding economy and aggressive fiscal spending by the Trump administration. 

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Multi-Asset Blog - UK Paycuts

18 August 2017

Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset
UK Paycuts – Thanks for your hard work, here's a pay cut

Imagine walking into your manager’s office at the end of a good year and your boss smiles and awards you a pay cut. This is exactly what has happened to workers in the UK this year. Whilst wages have risen 2.1%, inflation is running at 3.6% so in real terms, the average worker is 1.5% poorer than they were last year. Prior to 2008, workers’ pay exceeded inflation by 2.5%, so every year people ended the year better off than they started it. Since then real wage growth has been negative, so on average, after inflation, UK workers are earning less than they were nearly 10 years ago. 
 

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Emerging Markets Viewpoints - August

14 August 2017

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

We occasionally get asked to summarize our core investment principles.

As we have previously written, we believe that in Emerging Markets active management has a significant opportunity to outperform the index. This is because our markets are less efficient than developed markets.

In order to take advantage of this, we have to find ways of determining the inefficiencies and exploiting them for the benefit of our investors.
In summary, we invest according to three major Investment Principles:  

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Multi-Asset Blog - The 3-6-3 Rule

11 July 2017

Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset
The 3-6-3 Rule

Bank managers used to operate on the 3-6-3 rule: borrow at 3%, lend at 6% and be on the golf course by 3pm. Ultra-low interest rates and QE has pushed down the spread between the cost of borrowing and lending which has had a detrimental effect on their net interest margins. Rising bond yields relieve this pressure, and this combined with far fewer fines, an easing of the regulatory environment and cost cutting means that earnings are growing again. 

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Emerging Markets Viewpoints - July

10 July 2017

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

Are commodity prices less relevant for our asset class? Over the past ten years the weighting of energy, oil and gas and mining has fallen by more than 50% to less than 15.0% of our index. At the same time technology, including internet stocks, has more than doubled to where it accounts to close to a quarter of our index.   

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Multi-Asset Blog - Mayday UK Election

09 July 2017

Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset
Mayday

Politics has not lost its power to bamboozle pollsters and surprise markets. What was meant to be an opportunity to secure a strong conservative majority, now looks like a seriously rash move. Theresa May’s conservative government has been forced to attempt to form a coalition with the Democratic Unionist Party to secure a parliamentary majority. If they fail to reach an agreement, there is every possibility that the UK voters will be back at the polling stations later in the summer. 

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Emerging Markets Viewpoints - June

12 June 2017

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

The recent search for yield on the part of investors has seen a remarkable compression in spreads over the past year. Highly leveraged Chinese property companies have been amongst the chief beneficiaries of this euphoria, with a gross issuance of more than $14 billion in debt this year. 

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PAM becomes a partner in emerging markets equities manager North of South Capital

18 May 2017

Pacific Asset Management has become a partner in the boutique emerging markets equities manager, North of South Capital, founded by emerging market veteran investor Matt Linsey in 2004. Sir John Beckwith’s global diversified investment group Pacific Investments has considerable experience in emerging markets, having successfully founded Thames River Capital with its flagship emerging market fund Thames River Nevsky, which later became Nevsky Capital. 

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Multi-Asset Blog - America Last?

11 May 2017

Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset
America Last?

US investors could be forgiven for putting America first in their asset allocation over the last seven years. US stocks gained over 130% from the end of 2009 to the end of 2016, whilst the rest of the developed world rose less than 30% and emerging markets only managed to return 6% in dollar terms.

American equities have had a lot going for them: a hugely supportive central bank, the strongest recovery of the large developed economies, high and growing margins and a vast buyer of equities – the companies themselves - issuing debt to buy back shares. These elements have all contributed to stronger earnings growth than was available elsewhere. In addition, global investors have been willing to attribute higher valuations to capture these earnings, further boosting share prices. 

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