Sentiment has been almost complacent as most investors have been steadily increasing their exposure to equities in an effort to eke out a decent level of income and capital growth.
However, the tide appears to be turning as fund managers increasingly up their cash weighting and the warning bells of an impending correction sound louder in our articles this week.
Prepare for a sell-off in both equities and bonds, warns McQuaker
FE Alpha Manager Bill McQuaker issued a stark warning earlier this week when he said a 1994-style double sell-off was on the cards.
In this article, senior reporter Alex Paget explains why the manager thinks the Fed will raise interest rates sooner rather than later and why this will send shockwaves through the market.
McQuaker paints a pretty bleak scenario for bonds and he warns the UK isn’t exempt.
Most recently, bonds reacted badly in last year’s taper tantrum when then Fed chairman Ben Bernanke warned that he would soon begin to taper QE.
Performance of indices in 2013
Source: FE Analytics
The question is, how do you protect your portfolio from this all-out correction scenario?
Failing funds: Who hasn’t beaten cash over the past decade?
In this article, FE Trustnet reveals the offending fund who have failed to beat cash over the last 10 years.
Investors in funds like Legg Mason Japan Equity and CF Ruffer Baker Steel Gold would have been better off taking no risk and sitting in cash, even with the record low interest rates since the financial crisis in 2008.
Are giant bond funds really that dangerous?
As we discussed in a previous article on the massive size of bond funds last week fund size has been a topic of concern for investors.
Performance of composite portfolios vs sector over 5yrs
Source: FE Analytics
However, according to FE Trustnet research, size hasn’t really impacted the performance of the industry’s biggest corporate bond funds.
In fact, equally weighted portfolios of the 10 largest and 10 smallest portfolios have performed broadly in line with each other over the last five years.
The manager who’s sure his fund will top the performance tables in 2014
There’s a lot to be said for confidence and fund manager Ian Williams is certainly not short of it.
In this article the manager explains why his WAY Charteris Gold & Precious Metals fund will win out over the competition this year.
In spite of the fact that gold miners were one of the worst performing asset classes during the equity rally of 2013, Williams expects gold equities to bounce back strongly before the end of the year.
Life after Woodford: How Invesco’s “other funds” have fared
A number of asset managers out there have been subject to the threat of ‘key man risk’.
This was certainly true for Invesco Perpetual when they lost front man Neil Woodford earlier this year.
However, the Henley-based asset manager has a number of other funds in its stable, run by star fund manager like FE Alpha Manager Mark Barnett, who took over Woodford’s Invesco Perpetual Income and High Income funds in April.
FE Trustnet look at how Woodford’s departure has impacted Invesco’s ‘other’ portfolios, like the £3bn Invesco Perpetual Distribution fund, which he ran alongside bond due Paul Causer and Paul Read.
