Cyclicality is a feature of many industries. In businesses such as mining, oil and gas, automobiles and airlines, the extrapolation of current demand trends leads in turn to over or under-supply, until the cycle eventually starts swinging the other way. Whilst some industries are driven by global economic conditions, others are fuelled by their own specific factors. One such, less well-known example, is...
Voters in the United Kingdom went to the polls for a third general election in four years yesterday. With results coming in overnight and a fuller picture emerging this morning, Deon Gouws (Chief Investment Officer at Credo Wealth) offers perspective.
Developed market equities continued to rally in November with the S&P 500 and NASDAQ hitting all-time highs. The FTSE 100, S&P 500 and NASDAQ were up 1.8%, 3.6% and 4.7% respectively. Markets were supported by the potential for progress on the 'Phase One' trade deal between the US and China. In the UK, the focus has now turned to the upcoming general election on the 12th of December, with the latest polls suggesting Boris Johnson's Conservatives should succeed with a majority. Sterling was down 0.1% against the US dollar but was up 1.1% against the euro. The yield on UK 10-year bonds increased by 0.07% and the US 10-year yield increased 0.08%.
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In our search for value, we often find ourselves drawn to companies which have announced the separation of their different business units. We have written previously about the stock market anomaly of conglomerate discounts and spin-offs. For various reasons, companies which are comprised of unrelated business units tend to trade at a discount to the theoretical value calculated when simply adding together the individual parts. The spin-off provides a catalyst for the realisation of this theoretical value and can, under the right circumstances, result in very satisfactory returns for shareholders. Our recent purchase of Madison Square Gardens (MSG) aims to...
October was largely a positive month for global equity markets. The S&P 500, Euro STOXX 50 and Hang Seng were up 2.2%, 1.1% and 3.3% respectively, while the FTSE 100 was down 1.9%. Markets responded well to Donald Trump's announcement of "Phase One" of a possible trade deal with China but the Fed cut interest rates a further 25 basis points on concerns that the US economy may still be slowing. In the UK, the Brexit departure date was extended to 31 January 2020 after Parliament refused to approve Boris Johnson's new deal before the prior 31 October 2019 deadline. The pound was up 5.3% against the US dollar and up 3.0% against the euro. The yield on UK 10-year bonds increased by 0.03% and the US 10-year yield increased 0.14%.
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The impact of artificial intelligence and machine learning on financial services is the topic of this quarter's Collective Insight (supplement to South African business magazine Finweek).
Credo's Head of Multi-Asset, Ainsley To, was featured in the recent Citywire Wealth Manager Top 100 for 2019. Ainsley talks about his career to date, his investment research role and the philosophy underpinning the successful Credo Multi-Asset Portfolios.
There have been slim pickings for investors looking for good news on Wells Fargo (Wells) in recent years. The unveiling in September 2016 of millions of unauthorised accounts, opened as a result of aggressive sales practices, has been compounded by further revelations of malpractice across various divisions. Upon the exposure of the initial issues, Wells agreed a settlement with the Consumer Financial Protection Bureau, instigated training programs, monitoring processes and internal controls. Unfortunately, as details emerged of further problems in various other divisions, the political fallout has escalated. Multiple investigations have been launched, various settlements and fines have been paid, which although immaterial relative to the market value of the company, have created negative sentiment. Two CEOs have...
Credo Global Equity Fund was featured in a recent edition of the SimplyBiz Adviser Today publication. The article explains how Credo adopt the principles of Value investing, combining with qualitative analysis to produce our stated value-based investment approach.
On Thursday this week, UK Prime Minister Boris Johnson managed to agree a draft Withdrawal Agreement with the EU leadership. The next big hurdle he now faces is his own parliament which needs to sign off on any deal and will sit on a Saturday for the first time in decades this weekend. Deon Gouws, Chief Investment Officer at Credo Wealth, was interviewed by CNBC Africa in this regard on Thursday afternoon.
September and October has been a busy time for several Credo staff who have attended 21 SimplyBiz Investment Forums across the UK. The events started in Wetherby, West Yorkshire and finished in Leicester seven weeks later. Over 1,000 financial intermediaries attended the events and discussions focused on Credo's Dynamic and Global Equity funds, plus the Credo Wealth Platform.
September saw global equity markets make positive ground. All the major equity indices made gains over the month, with the FTSE 100, the Euro STOXX 50 and the Nikkei 225 up 2.9%, 4.3% and 5.7% respectively. However, the Federal Reserve lowered interest rates on concerns the US economy may be slowing. During the month, oil prices increased by as much as 20% due to the disruptions caused by a drone attack on the Saudi Aramco oil production plant, before falling back to the $60 per barrel range on news that oil production was back to pre-attack levels. In the UK, Boris Johnson's suspension of parliament was ruled unlawful and legislation was passed to force the government to ask for a Brexit extension if a deal cannot be made. Sterling was up 1.1% against the US dollar and up 1.9% against the euro. The yield on UK 10-year bonds increased by 0.01% and the US 10-year yield increased 0.17%.
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This summer marked the 5th anniversary of the inception of the Credo Multi-Asset Portfolios. In a four part series, Ainsley To shares his reflections on the evolution of the MAP philosophy over the years and the road ahead. Part IV concludes by examining the nuances of applying academic evidence in practice and the importance of continuous research going forward.
This summer marked the 5th anniversary of the inception of the Credo Multi-Asset Portfolios. In a four part series, Ainsley To shares his reflections on the evolution of the MAP philosophy over the years and the road ahead. Part III highlights how relatively dull aspects of investing, such as diversification, are often underappreciated by investors.
A powerful tool for creating an economic moat is the 'network effect'. This occurs when an increasing number of users increases the value of a product or service. Well known examples of companies benefitting from the network effect are Facebook, Visa and Microsoft. Amazon is another powerful example. Around 50% of all product searches now originate on its website in the USA. As more consumers use the platform, more vendors join in order to gain access to said consumers. This results in a broader range of products and better choice, leading to a better customer proposition. The virtuous circle is established. New entrants often struggle to attract enough users to allow effective competition with incumbents, creating a competitive...
Financial publication Citywire Wealth Manager recently ran a piece on UK exposure in client portfolios amidst all the political uncertainty in the country (including Brexit developments).
This summer marked the 5th anniversary of the inception of the Credo Multi-Asset Portfolios. In a four part series, Ainsley To shares his reflections on the evolution of the MAP philosophy over the years and the road ahead. Part II illustrates how the emphasis the portfolios place on process has led to a preference for systematic strategies.
This summer marked the 5th anniversary of the inception of the Credo Multi-Asset Portfolios. In a four part series, Ainsley To shares his reflections on the evolution of the MAP philosophy over the years and the road ahead. Part I highlights how the portfolios' focus on costs have changed.
Global equity markets performed poorly in August, with the S&P 500, the Euro STOXX 50 and the FTSE 100 all down 1.6%, 1.1% and 4.1% respectively. Renewed escalation of trade tensions prompted profit-taking in global equity markets as investors turned to safe-haven assets. Global bond yields continued to fall, as the yield on UK and German 10-year bonds decreased by 13 and 26 points respectively, while the yield on US 10-year bonds dropped by 52 points. US economic data showed that the weakness in the manufacturing sector could be spreading to other areas of the economy but, so far, the strength of the labour market and rising wages continue to outweigh trade and recession concerns. In the UK, Boris Johnson's decision to prorogue parliament in a bid to force through a No-Deal Brexit caused further political tensions. Sterling was flat against the US dollar.
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This summer marked the 5th anniversary of the inception of the Credo Multi-Asset Portfolios. In a four part series, Ainsley To shares his reflections on the evolution of the MAP philosophy over the years and the road ahead. Part II illustrates how the emphasis the portfolios place on process has led to a preference for systematic strategies.
There are many questions that one can ask about Brexit and unfortunately the vast majority of those that we were asking ourselves in March, last time we wrote about Brexit, remain unanswered. Then, as now, there were limited days left until the deadline and then, as now, there was no way of seeing for certain what the outcome would be. Some things have changed. We have a new Prime Minister in the UK and new presidents of the European Council and Commission. The resurgence of the Liberal Democrats and the emergence of the Brexit Party in the EU elections have both the main political parties looking nervously over their shoulders. Regrettably, these factors have only added more questions to the already extensive list. Perhaps the most important question for our clients though, and the one we get asked most often is, how will Brexit affect my...
Credo's Chief Investment Officer, Deon Gouws, recently spoke to Citywire about how the wealth management industry has changed during his career.
July was another positive month for global equity markets, as the S&P 500 and the FTSE 100 were up 1.4% and 2.2% respectively, while the Euro STOXX 50 was largely unchanged. Crucially, July saw Boris Johnson win the Conservative leadership contest and replace Theresa May as Prime Minister of the UK. The pound came under pressure over the month, falling 3.8% against the US dollar and 2.2% against the euro, with Boris Johnson refusing to rule out the possibility of a no-deal Brexit and the Cabinet increasing preparations for such a scenario. The US Federal Reserve reduced the base interest rate by 25 basis points, which was the first interest rate cut in 11 years. Despite this, the yield on US 10-year bonds was largely unchanged, while the yield on UK and German 10-year bonds decreased by 22 and 11 points respectively.
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It can be argued that one of the downsides of being a publicly listed company is the relentless earnings reporting cycle which encourages a short-term approach by both company management and shareholders. The need to continually meet and beat expectations for growth can result in management taking decisions that are not in the long-term best interests of the company. Analysts can end up focusing on the next quarterly report and subsequently, companies can find themselves being penalised for investing in long-term projects when there is a short-term negative impact on earnings or cashflow. Often, this can create opportunities for...
June saw global equity markets make positive ground, as the S&P 500, the Euro STOXX 50 and the FTSE 100 were all up 7.0%, 6.0% and 3.9% respectively. The Fed and ECB indicated that a monetary stimulus could be on the horizon as they were faced with weakening economic data. In the UK, headlines were dominated by the Conservative leadership battle which saw 10 candidates being whittled down to just two; the favourite, Boris Johnson, and the Secretary of State, Jeremy Hunt. Against this backdrop, the pound was up 0.5% against the US dollar but down 1.3% against the euro. The yield on US, UK and German 10-year bonds all nudged lower by 12, 5 and 13 basis points respectively. Brent crude oil rose 6% over the month as tensions between the US and Iran intensified after two oil tankers were attacked in the Strait of Hormuz.
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Our investment strategy involves taking advantage of temporary divergences between share prices and intrinsic value. This necessitates a longer-term investment horizon than next quarter's earnings and an ability to look past current industry trials and tribulations. Flutter Entertainment plc ("FLTR"), previously Paddy Power Betfair plc, is a sports betting and gaming business with core operations in the UK, Australia and more recently, the United States. Roughly 90% of profits are...
To coincide with the ICC Cricket World Cup being held in England and Wales, Credo invited clients to an informal Cheese & Wine tasting at La Fromagerie in Marylebone in June 2019. Guests were entertained by Michael Holding, the well known British Jamaican cricket commentator and former cricketer. One of the fastest bowlers to have ever played test cricket, he was nicknamed "Whispering Death" due to his quiet approach to the bowling crease and was part of the fearsome West Indian pace battery that devastated batting line-ups throughout the world in the seventies and early eighties. Michael took part in a fascinating conversation with Roy Ettlinger (Credo CEO) and Deon Gouws (Credo CIO).
Global equity markets performed poorly in May, with all major indices down over the month. The S&P 500, FTSE 100, the Euro STOXX 50 and Nikkei 225 had negative returns of 6.4%, 2.9%, 5.1% and 7.4% respectively. May saw the trade war between the US and China intensify as the US increased tariffs on a further $200 billion of Chinese imports. President Trump also threatened to impose 5% tariffs on Mexican imports until Mexico contributes more to solving the migrant issue. Theresa May announced she is to step down as Prime Minister on 7th June after failing to get support for her Brexit. Pound sterling was down 3.2% against the US dollar and 2.8% against the euro. The yield on US, UK and German 10-year bonds decreased by 38, 30 and 22 basis points respectively, as investors moved into safer assets.
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Credo's Financial Intermediary Seminar in London at The Ivy Soho Brasserie proved very popular with clients. Clients heard from several key speakers, including Credo's CIO and Fund Managers. Topics included a global markets update, an overview of Credo's Global Equity and Dynamic Funds, as well as Credo's Wealth Platform.
Technological innovation is disrupting many industries and the media industry is no exception. For several years Disney has been seen by investors as an established player, defending itself from the changes in consumer viewing habits that new, more innovative players were driving. We wrote in August last year of our excitement about the new way Disney was tackling the challenge of not only surviving, but thriving, in the creative destruction of the transition from packaged content to streaming. Historically...
Developed equity markets continued to rally in April, following on from a strong first quarter. The S&P 500, FTSE 100, Euro STOXX 50 and Nikkei 225 were all up 4.0%, 2.3%, 5.5% and 5.0% respectively. The environment during this time was characterised by accommodative central banks, strong US earnings, recovering Chinese growth and an improvement in US/China trade negotiations. With regards to Brexit, the EU granted the UK a flexible Brexit extension until 31 October 2019, delaying the threat of a no-deal Brexit; the pound sterling was unchanged against both the euro and US dollar. Brent crude oil was up 7.4% over the month as Trump decided not to renew waivers on US sanctions granted to some countries. In the fixed income market, the yield on US, UK and Germany 10-year bonds all increased 10, 19 and 8 basis points respectively.
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Jarrod Cahn, Fund Manager of Credo Global Equity, was featured in the latest edition of Investment Week's Bull & Bear. He examines the benefits of a global mandate as well as highlighting the recent compelling opportunities in high-quality technology stocks.
You don't get paid for taking risk, you get paid for creating value. Risk doesn't disappear, but it can be managed. It can be avoided, accepted, reduced, or transferred. Commodity risks such as those in car, home and life insurance are well understood. These follow the "Law of Large Numbers" where something that isn't at all predictable on an individual basis, becomes very predictable for large groups. In contrast, the risks involved in speciality insurance against events such as art theft and cyber-attacks are more esoteric. If you are selling cans of Coke, it is very easy to know what you have sold, and what profit you have made. Insurance is different. You are covering an unknown event in the future for...
Financial Intermediaries, please join us for a breakfast and discussion about Credo's investment philosophy. Deon Gouws (CIO), Rupert Silver (Dynamic Fund Manager) and Jarrod Cahn (Global Equity Fund Manager) will talk about Credo's investment philosophy focusing on our value-based approach. Tuesday 21 May 2019 at The Ivy Soho Brasserie, London. Please contact your Relationship Manager should you wish to attend.
Credo's Equity Spotlight article on Sainsbury's was featured in a recent edition of Citywire Wealth Manager. The article highlighted the strong outperformance of Credo's flagship Global Equity Fund over the last 12 months.
DevelopedIn the month that was supposed to see the UK leave the EU, but instead saw the Brexit deadline extended to the 12th April and the House of Commons gaining control of the Brexit process, European equity markets continued to shrug off the political uncertainty; the FTSE 100 was up 3.3%, while the Euro STOXX 50 was up 1.9%. The political and economic uncertainty surrounding the UK was a drag on the value of the pound sterling which fell 1.7% against the US dollar and 0.3% against the euro. In the US, the S&P 500 ended the month up 1.9%, despite weaker than expected jobs figures and the US yield curve inverting for the first time since the financial crisis. The yield on US, UK and German 10-year bonds all decreased by 31, 30 and 25 basis points respectively, as fears of a global slowdown started to re-surface once again.
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Last week, Deon Gouws (Chief Investment Officer at Credo) was interviewed by Moneyweb on South African radio program RSG Geldsake on the topic of how international investors view the country.
Sainsbury's is a food retailer with about 17% of the market share of all UK grocers. In 2016, the company bought Argos, a UK home and general merchandise retailer which operates both online and physical stores. As the domestic market opportunities have saturated, the big UK retailers like Tesco and Sainsbury's have had to get creative to...
An article written by Jason Spilkin (Co-Portfolio Manager of the Credo Global Equity Fund) has just been featured in the Barron's column: View From The Buyside. Barron's is one of the leading sources worldwide for financial news and in-depth investment analysis and commentary.
Global equity markets continued to perform strongly in February, as progress was made with regards to US-China trade talks, averting a scheduled increase in tariffs by 1st March. US equity markets were also boosted by a relatively strong earnings season. All major equity indices made gains over the month, with the S&P 500, FTSE 100 and Nikkei 225 all up 3.2%, 2.3% and 3.0% respectively. Pound sterling increased 1.1% against the US dollar and 1.7% against the euro, as resistance against a no-deal Brexit, the perceived worst-case scenario for business, increased. In the fixed income markets, yield on US, UK and Germany 10-year bonds all increased 9, 8 and 3 basis points respectively. Brent crude oil increased 9.0%, as larger than expected production cuts from Saudi-Arabia restricted supply and as demand was boosted by the prospect of a truce of the trade war between the US and China.
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Chipotle Mexican Grill (CMG) is a fast-casual, Mexican restaurant chain in the United States, United Kingdom, Canada, Germany and France. McDonalds (MCD) was an investor from 1993 to 2006. During that time, CMG went from 16 locations to around 500. Today it has over 2,000. Sometimes making money is about "thinking inside the box". Taking something that works well and doing it again in a similar market. Good management is largely on the edges, tweaking something that already works (the menu, the prices, the store layout). CMG has proven...
Global investing is the topic of this quarter's Collective Insight (supplement to South African business magazine Finweek). Credo's Deon Gouws (Chief Investment Officer) and Ainsley To (responsible for the firm's Multi-Asset Portfolio offering) were featured.
Credo's Equity Spotlight article on Prudential was highlighted in a recent edition of Citywire Wealth Manager. Jarrod Cahn, Manager of the Credo Global Equity Fund, analyses the globally diversified nature of the business and why we are happy to invest in the stock.
January saw global equity markets make positive ground following recent weak performance. All major equity indices made gains over the month, with the S&P 500, FTSE 100 and Nikkei 225 up 8.0%, 3.6% and 3.8% respectively. Despite this turnaround, the same underlying geopolitical issues still seemed to persist. However, this time, added to the mix, was the US Government shutdown. As the 29th March approaches, progress with regards to Brexit was lacking. There was temporary optimism as MPs voted in favour of replacing the backstop, the insurance policy designed to avoid a hard border in Ireland in the event of a no deal. However, the EU seems adamant that there would be no change to the deal already agreed. Despite this gridlock, the pound rose 3.0% against the euro. Amongst other currencies, the pound rose 2.9% against the US dollar. In the fixed income market, the yield on US, UK and Germany 10-year bonds decreased 5, 6 and 9 basis points respectively.
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Join Ainsley To, Research Analyst at Credo Wealth, and other senior investment professionals and thought leaders at a round table discussing finweek's Collective Insight supplement on the topic "Getting to Grips with Going Global", jointly organised by CFA Society South Africa and ABSIP (Association of Black Securities and Investment Professionals).
On Friday last week, veteran investment writer Stephen Cranston was responsible for an article in leading South African financial publication Business Day, focusing on alternatives for investors when it comes to global diversification. We were proud to see that Credo Wealth was the first manager mentioned in this piece.
The first two paragraphs of the article were as follows:
"It is a good idea to remind ourselves why we invest in global assets. In the days before the relaxation of exchange controls the focus was simply on taking money out of the country in case of a national emergency. Few people cared about the returns they would receive, they just squirrelled away the unused portions of their travel allowances in low-yielding bank accounts.
But more sophisticated professional advisers have come onto the market and can offer multi-asset and multijurisdictional portfolios. I would say businesses such as Credo Wealth, Stonehage Fleming and Citadel offer a much better alternative than sticking your money in a NatWest savings account."
Companies have nationalities just like people - even multi-nationals. Prudential is a British Multinational Life Insurance and Financial Services company headquartered in London. It was founded in 1848, with door-to-door salesmen selling insurance for as low as a penny a contract, to the working class. An army of collection agents became known as "the men from Pru", and the company became as British as a pint at the local pub. However, the world changes. Prudential now has...
Credo Dynamic Fund Managers Rupert Silver and Ben Newton joined Citywire journalists for an informal lunch to discuss the fund and recent developments at Credo. The pair teamed up in 2017 when the fund was launched and have produced impressive performance, despite recent market volatility.
Following the appearance by Deon Gouws (Chief Investment Officer at Credo Wealth) on South African news channel ENCA, he was also interviewed on CNBC Africa, discussing the same topic.
Last night, British Prime Minister Theresa May's controversial Brexit deal was rejected by an overwhelming majority in the UK parliament. Soon after, Deon Gouws (Chief Investment Officer at Credo Wealth) discussed the aftermath on South African news channel ENCA.
December failed to provide the Christmas rally many investors were hoping for as major global equity markets made significant losses over the month. As has been the case for much of the preceding year, the usual themes of trade wars and the US Federal Reserve Bank increasing interest rates played a significant role in the continued sell-off. The S&P 500, FTSE 100 and Nikkei 225 ended the month down 9.0%, 3.5% and 10.3% respectively. In the UK, progress with regards to Brexit was minimal with political tussles at the forefront as the government was found in contempt of Parliament, and Theresa May survived a vote of no confidence. Pound sterling reflected the Brexit stalemate as it dropped 1.2% against the euro. Oil prices continued to decline, with Brent Crude oil down 9.5% over the month as increasing supply and a weaker global outlook continued to weigh on the market. In fixed income, yields on US and UK 10-year bonds decreased 30 and 9 basis points respectively as investors migrated towards safe haven assets.
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Investors have just been through a tumultuous few weeks, with December 2018 being the weakest month for the US and international markets in nearly a decade, only to be followed by a rapid bounce over the last couple of weeks.
