Kydd Boyle

Hello everyone. Hope your week has started well. I just wanted to highlight some excellent reporting from Jamie Colvin in Citywire - see article in first link below. Tom Poynton has also had the ingenious idea to create a "forum" to garner an understanding of retail investors' understanding of the many issues facing the investment companies sector (the link is in the article). Our campaign has often highlighted how new well-intended Consumer Duty regulations have turbo-charged the negative impact of IC "cost" disclosures. Recent attention has rightly been given to one aspect of this turbo-charging: retail platforms wrongly interpreting "value" and "cost" and not only misinforming consumers, but now banning them from investing in investment companies based on utterly floored logic. Do these platforms have the expertise to be making these judgements? Where they do not and they outsource, has there been proper due diligence on third parties used to make assessments of value? https://lnkd.in/eA4SHXjW We will not rest. Have a good week. Ben https://lnkd.in/eh9G9NWM

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Our just-released survey of 100 UK asset owners* explores views on the current opportunity in fixed income markets, the value of active management, preferred credit sectors for the year ahead, and the growing role of emerging market debt. For the full survey see: https://lnkd.in/eDX2h9br For professional investors only. *Views of 100 UK based institutional fixed income professionals, canvassed during February and March 2024. #CapitalGroup #FixedIncome #Investing #Bonds

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We’re thrilled to share that the IFSL Blackfinch NextGen Infrastructure Fund has been recognised in Morningstar's latest report for August 2024. It ranked as the #1 best performing equity infrastructure fund and overall, the 5th best-performing fund in the UK out of 3,039 funds across all asset classes. Thank you to both Blackfinch Group and Marlborough teams for their ongoing support. At Blackfinch, we are choosing to do something different than our infrastructure sector peers, so there is no reason to expect results that align with the indices. At times we may underperform, and at times we may outperform, but at all times we will do our best to think and act independently. Over longer periods, we believe we will be rewarded for taking an unconventional approach to infrastructure investing and separating ourselves from the herd. We continue to believe that the companies we hold (such as the publicly disclosed positions GFL Environmental Inc., Clean Harbors, Grenergy Renovables, TransAlta, Macquarie Technology Group, Rai Way S.p.A., American Healthcare REIT) have better business models, more properly incentivised management partners, and greater future earnings potential than the average infrastructure company. Our strategy centres on buying high quality specialist infrastructure companies prioritising capital appreciation over income, supported by ‘next generation’ growth themes – such as the energy transition, digitalisation and sustainable urbanisation – that are trading at reasonable valuations and led by well-incentivised management teams. If our analysis is sound, with time we should benefit from the dual forces of improving business fundamentals and improving sentiment, which could help the fund achieve its return objective. Disclaimer: Capital at risk. Past performance not indicative of future results. This post does not constitute any form of solicitation to buy or sell units in the fund or the companies mentioned. For UK investors only. 

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4 minutes on the latest UK macro data, where head of macro John Butler challenges the widely held view that rates are tight and the labour market is loosening, and discusses the raised probability of a stagflationary environment for next year. https://lnkd.in/gjcvwbfD For professional investors only. Capital at risk.

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A great flow chart from the UK Investment Association for those who want to understand which fund share class to select as 'primary'. In contrast to how some data providers default to the oldest, legacy share class, it seems very clear that one should perhaps choose a share class that is 'unbundled', and 'freely available to all investors... '. For the Marlborough Multi Cap Income Fund, this is the 'P' share class! This also covers c.99% of all fund units in issue so most representative of the returns delivered to the wider investor base.

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An interesting article in Citywire this morning by Henry Cobbe, CFA (see below). https://lnkd.in/einXyGNY It would be remiss of me not to make the following points: 1) Public markets 'discount' (take into account) known recurring expenses. Take two listed closed-ended investment companies ('investment trusts'): A and B. Both Boards employ investment advisers who invest the trust's capital in identical cash deposits bearing 0% interest. Let's assume a 5 year management contract. A's adviser charges 1%, B's 2%. Will the share prices be the same? Of course not. B's share price, all other things equal, will be c. 5% lower to account for higher fees over the life of the management contract. Investors invest in the share price NOT the NAV. Expenses are a drag on the NAV NOT the share price. It has to be so otherwise there would be a risk-free arbitrage to short B and long A. It is inappropriate to treat these expenses in the same way we do the ongoing charges of open-ended funds and aggregate them in total cost figures (whether that's a fund of funds or a wealth management portfolio). Platforms should also not disclosure the figure to retail investors in this misleading way. Look what happened when BH Macro upped fees by 1% - the shares fell by c. 10% to discount the increased drag on NAV. I went into more detail on these issues in the below blog, and show why it is appropriate to aggregate ongoing charges of open-ended funds, but not expenses of investment trusts: https://lnkd.in/eSiyEMn5 2) Mr Cobbe has deployed a straw man. I am not aware of anyone campaigning for no disclosure. First, there is and always has been, as much disclosure for investment trusts as there is for other listed corporate entities via UK Listing rules (the reports and accounts). Second, we have been campaigning for additional disclosure via our "Statement of Operating Expenses". This would surface operating expenses in an appropriate way, express them as a percentage of NAV (for use alongside other relevant information such as premium / discount) to enable cross-comparison with open-ended funds and other investment trusts. We recognise that investment trusts share characteristics with open-ended funds, and we need disclosures that recognise that. But some trusts resemble operating companies (and compete with them) more than collective investment schemes. Crucially, the listing on a public market is a key differentiating feature and matters hugely for how expenses are disclosed. Disclose. Don't Double Count.

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What’s the outlook for #equities in 2025? Portfolio Manager Arancha Cano is positive on the asset class, especially in the US. However, #currency volatility — as we've recently seen in the UK — and #interestrate moves are likely to have a far greater impact on equities in 2025 than they did in 2024. Watch Arancha and me discuss the reasons why. https://lnkd.in/eU2iJgje For professional investors only. Capital at risk.

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Long/Short Equity has been a core approach since the start of the hedge fund industry. Where are the opportunities today and how can you identify the right managers to capture them? Join us for tomorrow's webinar to hear thoughts on this from a panel of experienced and distinguished investors.

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Interesting findings from Research Affiliates' Rob Arnott on the outperformance of index deletions. This highlights one of the hidden costs of indexing - the arbitrage activity around index changes. Index providers announce changes before they are executed, which results in an opportunity for active market participants to legally front-run the trades. Any arbitrage gain must be counterbalanced by a loss of value to the index. As discussed in the article, the effect is exacerbated by the momentum effect surrounding index additions and deletions. One solution to this is a light-touch active approach to index reconstitution trades, such as we see from Dimensional Fund Advisors. Fortunately, Brandeis University has estimated that the scale of this cost to indexers is immaterial in the long term. https://lnkd.in/eGMUkvcn https://lnkd.in/ecpksiuk #evidenceinvesting Sparrows Capital Limited

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Resurgence of the multi asset fund! The right product for the current backdrop! Flexibility is key. That doesn’t signal the end of MPS, multi asset can and should be considered as a component of MPS which has its own advantages.

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*********** READING WITH IMPACT ************ After nearly 16 years with Orbis I'm lucky enough to be taking a bit of an extended break this summer to regroup and recharge ahead of getting stuck into some of the exciting opportunities ahead. I want to use some of this time to review some of the most impactful material I've come across AND to seek out the best of what others have found impactful. By impactful I mean books/articles/essays that have meaningfully changed the way you think/act/behave. Lots of content is interesting, or provides a different perspective, but, in my experience, it's rare to find those gems which REALLY shift your lens, the mental models you use, or how you show up for family, friends and colleagues. I've included some of my all-time top hits below, and would like to tap into the enormous wisdom of my LinkedIn network to source other ideas. Please add your unique suggestions in the comments below. As an incentive, I'll compile the final list and circulate it to everyone who gets involved. Thanks - I'm excited for the journey this could take me on. Superforecasting - Tetlock The Upside of Stress - McGonigal Bounce - Syed Mindset - Dweck The Creative Act - Rubin Clear Thinking - Parish (summarises a lot of the best of others' work)

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I often refer to select specific investment options as “assets and earnings” plays where one gains exposure to tangible assets and growing profits at the same time. Whitbread (in the FTSE 100) ticks this box for me. The shares have retreated significantly from previous highs and thus have not been part of the increased buoyancy we have witnessed in the blue chip index in the recent past. This is Premier Inns in disguise with most of the business in the UK. Capital growth potential with a growing dividend not to mention always a possibly of takeover interest, an interesting opportunity perhaps. This is not investment advice and everyone must do their own research in determining suitability.

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📣 Check out Schroders latest article, where our US Multi-Sector Fixed Income team delves into the recent market volatility and discusses whether a soft landing is still a possibility. With the Fed's anticipated rate cutting, there is hope that the US economy can steer clear of a recession. Click to read more: https://okt.to/1KkyX3 #MarketViews #FixedIncome

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Culture is hard to measure but it is important when assessing a business or a fund management group. Poor culture often leads to failure. ACT helps provide a framework for fund selectors to compare.

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Our head of Macro Strategy, John Butler, is sitting down in two weeks' time to cover our views for the year ahead, particularly on UK fiscal, the Bank of England reaction function and the implications for gilt yields, the health of the European economy, and the implications of US policy - expected to challenge some current thinking on the macro backdrop. Register here: https://lnkd.in/ewQXsCAr #macro #economics #wellingtonmanagement #outlook #fixedincome #wealthmanagement #assetmanagement

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A recent report by Schroders on CEO compensation in the UK vs. the US. The full version is available to download at the very bottom of the article. An important topic and well worth a read. #schroders #wealthmanagement

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