Investment based on geography is outdated - T.Bailey's Askew Investment based on geography is outdated, themes are the key

In selecting funds for their ISA investment this year, investors are at risk of focusing too heavily on a country’s economic output, or allocating to individual countries or geographical regions, according to Peter Askew, CEO of T. Bailey Asset Management and co-Manager of the top-performing T. Bailey Dynamic Fund.

 fixation

"Remove the needs of large investors and you remove the crutch of the index," says peter Askew.

Peter Askew believes investors would do well to focus instead on some of today’s big investment themes, which seem set to deliver ‘multi-year growth’.  

Those who opt to invest in the developed economies – and choose, for example, a UK, European or US fund – will be tapping GDP growth of between 2 per cent and 3.5 per cent, and, whilst many of the emerging economies offer greater growth potential,  Askew views investing in funds based on geography as a dated approach.  

He argues that a portfolio of stocks invested across some of today’s big themes – robotics, automation and artificial intelligence included – is likely to deliver a return which is greater and more durable than funds investing in the developed markets.

“We want to invest where demand is robust and likely to exceed supply for the foreseeable future”, says Askew.  “Our approach dispenses with the conventional asset management industry template, where asset allocation is based on geography and forecast GDP, in favour of global growth themes.  The geographic diversification of our own multi-asset Dynamic Fund is a bi-product of our approach, not a driver of it.  We invest with managers who have conviction in their ideas and in funds which are agnostic to market indices.”

10 themes powering T. Bailey’s asset allocation decisions and portfolio construction

  • Living longer: bar the US (where obesity rates continue to rise), we are seeing increases in life expectancy in both developed and emerging economies, powered by breakthrough medical advances and improved diets;
  • Materials: industry is benefiting from the use of increasingly lightweight materials and compounds (no more so than in areas like battery storage), and industrial applications such as fibre lasers;
  • Robotics: the application of robotics in industry and other walks of life is accelerating, with automation, artificial intelligence and machine-learning continuing to change the world we live in;
  • Security: cyber-attacks are a modern-day phenomenon and pose a threat in all walks of life, but the theme manifests itself in other guises too, secure food supplies and drinking water included;
  • Political reform: the benefits that accrue to domestic companies when their previously moribund economies are galvanised through strong political leadership can be substantial.  The change programme under Abe and Modi make Japan and India key reform plays;
  • Environment: the ongoing transition to clean energy, allied to growing awareness of the environmental challenges facing the World and the pressure being brought to bear on political leaderships to clean up their act, makes this one of the most sustainable themes;
  • Infrastructure: the need to invest in infrastructure – in schools, toll roads, railways and otherwise – has become a necessity in the developed economies after many years of under-investment, and is a powerful driver of economic activity in the emerging markets;
  • Consumer Aspirations: with higher incomes for those living in countries which are emerging, or have emerged, comes the desire to enjoy the trappings of a Western lifestyle, benefiting companies not simply in the domestic economy but on the global stage;
  • Disruptive Influences: the advance of technology, be that the impact of online shopping on the high street or the impact of hybrid technology in the automotive industry, makes disruptive technologies one of the most powerful engines of growth in the global economy today;
  • Not investing: some of the best calls an investment manager makes are the ones not to invest.  Investing with a relevant investment objective above inflation and avoiding the debate prevalent among traditional asset managers pursuing a balanced bond/equity mandate is helpful.  Why invest in something that has a yield below your investment objective?  Bonds are cheaper than they were a few weeks ago, but they’re “still not cheap enough”, says Askew.  “The tax-free aspect of an ISA doesn’t make them any more attractive – if they’re the wrong price, avoid them!”

The T. Bailey Dynamic Fund

The T. Bailey Dynamic Fund invests on a global basis, in a broad range of assets, and provides those seeking an actively managed one-stop investment solution with a highly attractive investment proposition.  The fund has reported  annualised performance of 8.19 per cent over the past three years and is available for lump sum ISA investments with a minimum initial investment of £1,000; it also and offers a regular savings scheme from £50 pcm.

FE Crown Fund Ratings enable investors to identify funds which are strongly outperforming their benchmark.  The top 10% of funds evaluated are awarded five FE Crowns, the next 15% receiving four Crowns, with each of the remaining three quartiles given three, two and one Crown(s) respectively.  Rebalanced twice a year, in January and July, the Ratings attempt to highlight the more valuable performance drivers by focusing on superior performance in terms of stock picking, consistency of outperformance against a credible benchmark and risk control over recent years.

*Disclaimer:

Every effort is taken to ensure the accuracy of the data in this document, but no warranties are given.  All sources are from T. Bailey Asset Management Limited unless otherwise stated.  This document has been produced for information purposes only and represents the views of T. Bailey Asset Management Limited at the time of writing.  It should not be construed as investment advice, and no investment decision should be made without first seeking advice.

Comments (0)

}