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From PWM Research / Sub-Advisory March 1, 2009

Credit offers compelling value

Risk premiums on corporate credit entered 2009 at near-record levels and show little sign of a reversal in the near term. These risk premiums certainly appear attractive, although the outlook is clouded by a bleak economic backdrop, rising defaults and a global financial system in the throes of recapitalisation. The question of whether now is the time to raise allocations to credit versus other asset classes is certainly pre-occupying many investors. After all, the historically high risk premiums, and relatively ‘cheap’ price of securities are clearly a reflection of a high-risk environment.

From PWM Research / Sub-Advisory December 1, 2008

The next step for equities

The events of the past several months have been unsettling for investors. With mounting concerns about a global recession and a near shutdown of the capital markets, the FTSE 100 has delivered its worst YTD return since 1931. The market has been characterised by fear, panic and forced selling, as mutual funds and levered hedge funds face record redemptions. For those that remain in equities, the top objective has been safety, as cash-rich companies have outperformed those with arguably better growth prospects.

From PWM Research / Sub-Advisory November 1, 2008

Are hedge funds to blame for the financial crisis?

In the past fortnight hedge funds have been tarnished with a critical brush by investors and the media. On the one hand due to “disappointing returns” and also the downward spiral in equity prices as well as commodity speculation. These wide sweeping statements are not completely accurate and the activities of a few should not unjustly implicate the industry as a whole.

From PWM Research / Sub-Advisory September 1, 2008

The fall-out from subprime – challenge or opportunity?

A year on from the credit crunch it is time to evaluate where portfolios are standing. At first glance it certainly appears to be a gloomy picture. We believe tighter credit conditions, increased defaults on loans and mortgages by consumers and bank write-downs will continue to create a challenging environment in the year ahead.

From PWM Research / Sub-Advisory July 1, 2008

Is the party over for private equity managers?

Through the latter part of 2006 and the beginning of 2007, the UK press was full of reports about the good returns enjoyed by what were termed ‘the barbarians at the gate’ – private equity managers. By taking advantage of freely available and modestly priced lending over the past few years, deals became increasingly leveraged and the market witnessed a wealth of large public-to-private transactions.

From PWM Research / Sub-Advisory June 1, 2008

Capitalising on credit risk

The global fixed income markets have seldom offered more attractive opportunities than investors will find in today’s environment. Since the summer of 2007, trading activity has been far from normal in many fixed income sectors as concerns about the US housing market and economy set off a widespread flight from almost every form of credit risk.

From PWM Research / Sub-Advisory May 1, 2008

Assets we can all relate to

In last month’s column, we spoke about diversifying your portfolio to protect it from recent high levels of volatility in the market. This month we focus on one of the most liquid and inefficient markets which can be central to that diversification strategy – currency.

From PWM Research / Sub-Advisory May 1, 2008

Benefits of diversification

When constructing a portfolio, two main challenges present themselves – picking the right asset classes and then picking the best managers to run those assets. Choosing an asset allocation strategy can help protect you from downside risk as well as helping to ensure that you maximise the benefit from potential upside. Interestingly, diversification is one of the few elements in a portfolio that is also free.

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From PWM Research / Sub-Advisory March 1, 2008

Exposing the closet indexers

The traditional way of analysing managers has been to measure their tracking error by looking at the volatility of the difference between a portfolio return and its benchmark index return. This works with managers who take a thematic approach to their fund. But a fund which is a pure stock picker and looks for a good company will be quite diversified by industry. In this case, their tracking error may be quite low and lead us to (wrongly) assume that they aren’t taking much active risk.

From PWM Research / Sub-Advisory February 1, 2008

Return to market volatility

Having experienced a positive market environment for both the economy and equities for some years now, the climate is starting to change. Among the biggest changes is that earnings growth is ­decelerating and financial companies are suffering the consequences. There are ­indications of a re-pricing of risk, while volatility has returned to its old levels, much more in line with long-term averages. And since not all stocks will do well, investors will seek out stock pickers who can make a difference.

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