Stronger than expected China export data this week gave a huge sentiment boost to markets around the world and pushed the FTSE 100 to its highest level of 2016 so far.
Mining firms led the rally, as an improving outlook for global was suggested by an 18.71 per cent leap in Chinese exports for March compared to this time last year cheered markets.
The winners of the FE Alpha Manager of the year awards yesterday evening no doubt also took some cheer from their recognition of superior outperformance with HSBC's Dr Guy Morrell scooping the top award of the night as FE Alpha Manager of the Year.
Another victory was had by activist investors in BP who scuppered the oil major’s chief Bob Dudley from receiving his £14m performance-related salary owing to its precarious position in a world of low priced oil and its worst loss for decades.
It was not such a good week for all in the offshore financial world with the continued scrutiny on tax arrangements resulting in a new international crackdown hammered out between the five largest European Union members.
In this article, we’ve pulled together some of our favourite stories from the week. From all the FE Trustnet team, have a great weekend.
Is an inflexion point arriving for UK value funds?
First up is FE Trustnet’s senior reporter Daniel Lanyon took a look at an increasing area of interest for many wealth managers and other professional investors.
UK value funds, which are those that generally seek to buy less popular stocks that are trading for less than their intrinsic worth, have been themselves out of favour among UK investors since the recovery from 2014’s autumn market correction, as growth and quality stocks have been more popular and therefore rewarding for investors.
Performance of indices since September 2013
Source: FE Analytics
However, trends never continue forever and several professional investors have been upping their exposure such as Whitechurch Securities’ managing director Gavin Haynes.
We have been increasing exposure because of the valuation gap that has continued to widen between growth and value areas. We are seeing more opportunities in value stocks than in growth and income areas,” he said.
Click through to find out why.
What were FE Alpha Managers’ 2015 ‘thank goodness’ moments?
Next, FE Trustnet caught up with a collection of FE Alpha Managers this week to hear what they thought of 2015 – including their ‘thank goodness’ moments.
M&G Optimal Income manager Richard Woolnough told us that for a bond manager, many of these moments often take the form of not owning something that is doing badly.
“There were a number of those during the year, particularly in the high yield energy sector, which we have been largely avoiding despite the temptation to buy at distressed levels,” he said.
“We don’t have much conviction that the oil price is going to significantly rebound and defaults could really ramp up in that sector, so we’re happy to remain on the side lines for now.”
Take another look at the story to find out the ‘thank goodness’ moments of managers such as Neil Woodford and Sebastian Lyon.
Has it ever been harder to build a cautious diversified portfolio than today?
This article by news editor Alex Paget kicked off a special day of copy entirely focused on portfolio diversification.
It stemmed from a poll on the website where we found that 56 per cent of the 1,888 readers who voted said the current environment was the most difficult period they had ever known to build a diversified cautious portfolio.
Years of quantitative easing and ultra-low interest rates have pushed up most asset class and there created heightened correlations between bonds and equities.
Though most agree there is value to be found in the current equity market, the problem seems to lie with bonds as yields in the space have fallen to very low levels by historical standards leaving them very exposed to downside risk.
Most industry commentators we spoke to agree with the readers, so we also looked at how the experts build a cautious portfolio, which asset allocation is the best for a cautious investor and some of the funds they may wish to consider within their portfolios and look through some of the best one-stop-shop multi asset funds for cautious investors who want asset allocation decisions made for them in articles throughout the rest of the day.
Julie Dean: How I’m positioning my new Sanditon UK fund for the end of a market cycle
Last up, reporter Lauren Mason met with Sanditon’s Julie Dean on Monday, who discussed her current views surrounding her market cycle investment process.
This methodology has been used by Dean since 2002 when she started managing money at Cazenove (now Schroders). The process worked in her favour as, since the turn of the century, the manager has doubled the returns of her peer group composite.
Given today’s unusually long cycle, which has been distorted by ultra-loose monetary policy, Dean warns that investors shouldn’t become complacent that inflation will stay low forever and should therefore start positioning their portfolios accordingly.
“Profits have been strong this cycle because every component of their margin has gone down – taxes have gone down, interest rates are low… for a long time you had a big arbitrage between labour costs in the West and the East which was helpful,” she said.
“But now corporate profits in the US are beginning to come under pressure. It’s starting to roll and we’ve only just had one rate cycle - the Fed is increasing late at a time when inflation is already picking up and some asset prices are very high.”
Click through to see how Dean is positioning her portfolio to minimise the impact of the end of the cycle.