Beaufort Investment duo shortlisted for prestigious awards
Emma Clarke, Senior Investment Analyst at Beaufort Investment Management, has been shortlisted in the Wealth Manager of the Year category at this year's Women in Finance Awards which take place at a black tie dinner at London's Royal Lancaster Hotel on the 27th June. In addition, Emma's colleague, Shane Balkham, Head of Portfolio Construction, has also been shortlisted in the Leadership Advocate of the Year category.
The awards recognise and celebrate the individuals and organisations in that lead change, break down barriers and create new possibilities for equal representation in the world of finance.
Executive Chairman Simon Goldthorpe said: "It is fabulous that Shane and Emma have been shortlisted and it is testament to the high esteem in which they are held by their peers in the industry".
Beaufort Investment appoints new Chief Executive
Derrick Dunne has been appointed Chief Executive of Beaufort Investment (subject to FCA approval).
Derrick has extensive experience of the financial services sector. Most recently he was Chief Executive of Sanlam FOUR which he founded in 2006. Derrick began his career at Russell Investments in 1990, moving to Stamford Associates in 1994 and then Mercer in 1998. He subsequently went on to build Attica MM from 2000 which was acquired by American Express, before founding FOUR Capital Partners which was later acquired by Sanlam.
Derrick possesses an in-depth understanding of the asset management industry having worked with operational and governance structures of both large and small companies, successfully navigating them through financial crises and substantial regulatory changes. He was nominated a finalist for CEO of the Year in leading industry awards in 2015 and 2016 (Financial News & Professional Pensions Investment Awards).
Simon Goldthorpe, Executive Chairman of the Beaufort Group said “We are delighted to appoint someone of Derrick’s calibre and experience. Our DFM, Beaufort Investment has grown its funds under management significantly and now has approaching £1 billion in funds under management.”
“We provide financial advisers, both within the Beaufort Group and external IFAs with excellent service and leading-edge investment propositions. We look forward to developing the business with Derrick”.
Derrick Dunne said “The Beaufort Group is a great company with a culture that puts the client first. I look forward to working with my new colleagues and to developing our funds and investment services to the benefit of our partner advisers and their clients. There are many challenges and opportunities ahead for the wealth management industry. We want to be at the forefront of developments. Andrew Bennett and Shane Balkham have established a performance measured and impressive track record and we will build on this. The Group has ambitious growth plans and Beaufort Investment will be a key component in this”.
Quarterly Update from Beaufort Investment
Beaufort Investment’s Head of Portfolio Construction & Research, Shane Balkham provides an update on what’s been happening in the markets over the last quarter, and how they have affected our portfolios.
Beaufort Analysis 278 - Indian Summer
Just over a week ago we experienced low temperatures and monsoon-like weather; fast-forward and the UK experienced the hottest May Bank Holiday on record, with temperatures soaring close to 30C. An Indian Summer is a period of unseasonably warm weather and a reference we feel appropriate to apply to the warming relations between North and South Korea.
Last week, we wrote about North and South Korea who continue to build on their union. Further integration came on Saturday when North Korea moved their clocks forward by 30-minutes to bring them in line with South Korea. Integration also extended on the sporting front, with North and South Korea sending a unified team to the World Table Tennis championships over the weekend. These are small, in the case of Table Tennis, but significant steps, in the case of aligning time zones. Sport has a history of bringing people together and we continue to monitor ongoing negotiations with interest.
Last Tuesday marked the official second longest US economic expansion in history, comprising over 160 years of data and 34 business cycles. If the current momentum continues in to 2019 and passes July, it will mark the longest expansion in US history. Whilst March was a trying month for markets, April was markedly better, with positive earnings data coming from most sectors although technology and financials very much continue to lead the way. Commodities surprised to the upside; wheat was the best performer returning +13%. Brent Crude rose +8.5% and West Texas Intermediate, +5.6% in April, breaching new multi-year highs as the demand/supply dynamics in the oil market approached a more level position.
Brexit negotiations continue to receive push back from the EU regarding the Irish border. The UK’s Brexit Secretary, David Davis, told Parliament that it could take “years” to put practical measures in place to resolve border issues. Despite this, Davis does want “a very substantive” agreement on future relations with the EU by October, leaving him five months to thrash out further detail.
The week ahead is relatively quiet in terms of data releases, however, there will be several addresses from key economic leaders throughout the week.
Beaufort Analysis 277 - The art of the deal
How times change. Six months ago, you may have expected our weekly missive to be focused around Donald Trump and Kim Jong Un, as the two leaders jousted and postured in what seemed an unlikely series of threats. Since then, we have moved away from mutually assured destruction to something that seemed as equally far removed from the probable: the declaration of the end of war between North and South Korea.
On Friday, the North Korean leader Kim Jong Un walked across the military demarcation line which divides the Korean peninsula and was greeted by South Korean president Moon Jae-in. The summit marks the start to the end of the ceasefire that has plagued the two countries since the end of the Korean war in 1953. More importantly, it reaffirms both countries commitment to complete denuclearisation and establish a new peace regime.
Although lacking in any detail, the pledge has already seen North Korea promising to close its nuclear test site next month and permit foreign inspections of the facility. As the two sides look to build on the momentum of their historic summit, there is optimism around further talks, in particular the significant meeting between Donald Trump and Kim Jong Un.
Although hugely momentous, the markets are unlikely to be that interested, such is the nature of investing. Of more importance to the stock market is the hopeful end to another war: the Trade War. There is a risk that President Trump will change his mind on taxing US consumers of European aluminium and steel, which saw German Chancellor Angela Merkel hurriedly jet off for a meeting at the White House. Re-imposing taxes on aluminium and steel matters to both US and European markets. While welcoming European guests to discuss trade, President Trump is sending his own delegation to China to negotiate on tariffs.
One deal that has already been agreed before anyone knew it was happening, is the proposed merger between UK grocers Sainsbury’s and Asda. The combined entity will create the UK’s largest grocer and although both brands will be maintained, the economies of scale of the increased pact will mean improved purchasing power and the potential of Argos branches inside Asda. This is expected to generate in the region of £500 million of synergies, with the collective capturing more than 31% of the market. Nothing is certain though until the competition watchdog has pawed over the details of the deal, however there is recent precedent with the Tesco’s takeover of Booker, which was not blocked. Both Tesco’s acquisition and the merger between Sainsbury’s and Asda could be seem as a defensive move against both the discount German supermarkets and the global disruptor that is Amazon.
Beaufort Analysis 276 - It's all in the numbers
Markets were resilient last week despite a chemical weapons attack on Syrian civilians over the weekend prior. The co-ordinated efforts of the US, the UK and France, who jointly targeted Syria, in response to an alleged chemical weapons attack on Syrian civilians had little impact on global equity markets with the majority closing in positive territory.
There was a myriad of data releases last week. Key releases were US retails sales, China GDP data and UK inflation.
US retail sales rebounded in March following three consecutive monthly declines, buoyed by big ticket purchases such as motor vehicles. Whilst US consumers, who account for two-thirds of economic activity, continue to support the economy, business confidence has started to show some fragility in the light of recent market volatility.
China’s GDP data for the first quarter of the year surprised to the upside, growing at 6.8% year-on-year, 0.3% ahead of the Government’s target of 6.5%. Whilst this is positive news, the future growth of GDP will be dependent on China’s ability to continue to trade globally; should trade tensions between China and the US escalate, both economies will face harsher business environments.
UK inflation data was the focus of last week dropping to a one-year low of 2.5%. The surprise fall will take the pressure off the Bank of England to raise interest rates in May. UK inflation has been as high as 3.1% in January of this year, with the International Monetary Fund warning governments to get a handle on their finances as global debt levels have now surpassed those of the financial crisis.
Looking forward to the week ahead, there will be several key economy data releases with the highlight being the ECB meeting on Thursday.
Finding the right fit; looking for the right DFM
Discretionary fund managers (DFMs) now play an important part in advice firms’ propositions. Click here to read the New Model Adviser Outsourcing Roundtable supplement, in association with Beaufort Investment.
Beaufort Analysis 275 - Tension Ascension
Geopolitical developments took a potential turn for the worse at the end of the week as tensions heightened between the US and Russia in the wake of the US-led missile strikes on Syria and the latest round of US sanctions. President Trump had warned the Assad regime and its allies earlier in the week that they would pay a ‘big price’ following the suspected chemical attack in Syria which left over 70 people dead. Russia, which had already seen its main index fell 11% following the US’ sanctions on oligarchs and companies linked to Vladimir Putin, urged the US to avoid military action. The rising tensions lifted the price of oil to over US$70/barrel; a 50% increase from last June and a level not seen for three years.
Global trade grew at its fastest rate for 6 years in 2017, according to the World Trade Organisation (WTO), and the outlook is positive, but only if tensions between major economies do not escalate into a full-blown trade war. The tariffs imposed by Donald Trump on aluminum and steel from China kicked off a chain of retaliatory measures leading to China recently responding with its own tariffs on 128 US imports, which included soybeans, pork and fruits, aimed at crippling the US agricultural sector. In an attempt to put pressure on China, the President is now considering rejoining the Trans-Pacific Partnership (TPP), the organisation he withdrew from when he came to office, which resulted in US farmers being deprived of preferential duty rates with other members. The 11 members of the TPP would welcome back the US but only on their terms. In the meantime, analysts believe that China could use monetary policy to devalue its currency, thus making Chinese exports cheaper for Americans and mitigating the effect of the tariffs.
Needless to say, markets have seen continued volatility over the last few days but ended the week more than 1% higher. So far this year, the S&P 500 Index has either risen or fallen more than 1% in one day no less than 28 times. There were just eight similar sessions during the whole of 2017. The last time such volatility was witnessed at this point of the year was in 2009. The FTSE 100 Index has already recorded 15 daily movements of more than 1% compared to a total of 16 for 2017. Contributing to the weaker performance of the FTSE 100 has been the strength of sterling to the US dollar which currently stands at its highest level since the result of the EU referendum.
Beaufort Analysis 274 – "Seeing The Wood For The Trees"
The S&P 500 took a small hit at the end of last week, following China’s refusal to negotiate with the US to try to ease trade tensions. There are currently 1,500 items on a list that could be affected by the tariffs, including soybeans and cars. Soybeans are particularly important to worldwide agriculture, as they are crushed and used as livestock feed; but the global supply is not enough without the US, so China would struggle without this crucial import. Whilst the movements in the markets are small, the continuing bickering between the US and China could escalate leading to increased volatility. China’s President, Xi Jinping, is expected to deliver a speech this week at the Bo’ao Forum for Asia regarding economic reforms in his country.
The US and North Korea have been holding talks in preparation for a summit to converse about the possible denuclearisation of the isolated nation. However, North Korea does have a history of backtracking and it is not clear what The Democratic People’s Republic aims to achieve with the denuclearisation and talks with the US; and neither has a date or location been set for the discussion.
Last week was the deadline for companies with over 250 employees to publish their wage data for all staff, to show the difference in hourly pay between men and women. The average UK pay gap for these 10,000 companies that reported their pay data is 9.7%, with the worst industries including construction, finance and education. The data shows, at a top-level view, that there are more men in the workplace, and those men tend to be paid more often because of their more senior roles at work.
Despite the negativity around the media reports on the above, these events offer the opportunity for green shoots of growth and development globally.
Beaufort Analysis 279 - Drilling for Oil
Last week the Monetary Policy Committee (MPC) of the Bank of England voted to keep the base rate at 0.5%. This is due to weaker economic data for the UK, and February’s growth forecast of 1.8%, which was subsequently downgraded to 1.4%. Mark Carney is increasingly referred to as the unreliable boyfriend, not being able to keep his promises of rate rises, and has attributed the poor weather earlier in the year for this weak economic data. However, the MPC remain positive that rates will continue to rise to 1.25% by the middle of 2021. Sterling fell against the dollar after the news there would be no rate rise this month, only weeks after its high following the Brexit vote in April.
After Trump announced the US would be leaving the Iran Nuclear Deal, the price of oil jumped to over $78 a barrel, a figure not seen since 2014. In 2015, an agreement was put in place that the sanctions placed on Iran for oil production would be removed, if they halted their nuclear programme. The price of Brent Crude was pushed up as the markets anticipated how the reintroduction of sanctions would impact the 2.5m barrels a day that Iran export. The S&P 500 also experienced an increase of 2.4%, its largest weekly increase since March, with most of the return coming from the energy sector performing well as the supply of oil constricts without Iran’s exports.
But these increased returns are not limited to the US; both the UK and Europe have also seen buoyed performance because of Brent hitting its 3-year high. Forecasters are expecting to see $90 a barrel by the end of next year, with optimists even predicting $100 a barrel. Whilst the increase in cost per barrel can be beneficial for equity returns as oil companies increase their turnover, higher oil prices can lead to inflation so in turn, tighter monetary policy changes.