James Edgedale, Chairman
I was hoping that by now we would have a little more clarity on the political situation in this country but as this is not going to resolve itself very quickly the best we can hope for is a more orderly exit than the process thus far might suggest.
But we are not alone in this uncertain political environment. In many parts of the Western world, we continue to see the politics of populism creeping in and at the same time encroaching regulations on many aspects of life. I will not go on about politics and instead focus on markets.
Markets over the last year have shown modest returns but this does not take from the fact that at the end of last year conditions were extremely volatile and markets were concerned about a number of factors, including rising American interest rates, the continuing trade war between America and China, Brexit, the prospects of a recession in the United States and lower returns in Europe. Many of these issues remain but fundamentally the world economy is continuing to grow and I suspect will continue to do so over the next year or two. The American leadership will likely do what they can to continue this until after the next presidential election.
I have taken the view over the last couple of years to be fairly internationally invested and at this juncture, based on the politics in the United Kingdom, I continue to do so. However, at some stage I think the valuation differences between domestically based companies and the internationally based companies will change as, today, domestically based companies are trading on considerably lower valuations than international companies. I cannot see this changing in the short term but will probably do so in the medium to long term.
In the meantime we continue to watch the macro situation closely as well as remaining focussed on the fundamentals of the companies in which we invest our clients’ assets. You may notice in this edition of Prospects we have revamped our current investment thinking snapshot by adding to the asset allocation view the comments on specific sectors from our stock selection committee.
Additionally in this issue, I would like to draw your attention to the section where we detail the results of our client survey. Firstly, I would like to say to those clients who completed the survey a huge thank you. It is highly instructive for us to gather this data to ensure we continue to develop our services in line with our clients’ needs. We made a commitment to share the results with our clients and I hope readers will forgive us for trumpeting these as we are incredibly proud of the feedback which serves as a testament to the success of our business, which of course we hope will be used to encourage further recommendations.