John Roe

Head of Multi-Asset Funds

With failed football dreams behind him, John applies the same level of enthusiasm to investing, with more success (fortunately). When not suited and booted, his outside interests are almost exclusively football, craft beer and reading about how the brain works.

Posts by John Roe

Portfolio Thinking

The linker tail

The UK inflation-linked government bond ('linker') market is dominated by vast UK defined benefit pension schemes. Derisking by schemes tends to increase demand for linkers as equity prices rise, pushing up their prices. For multi-asset investors seeking diversification, that could make them less attractive to buy.

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Strategy

And the beat goes on

Market volatility has picked up, but as multi-asset investors we must be careful about derisking too much or too often. Otherwise we risk missing out on upside for our portfolios. Given cyclical inflation pressures and quantitative tightening, the risks are higher in 2018, but as long as we remain confident in the fundamentals we'll remain invested and try to dance to this different tune.

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Macrobites

Share the love, don't love the share

Love is not logical. Arguably, nor are investors who stick with underperforming investments in the belief that their fortunes may reverse against all evidence.

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Portfolio Thinking

UK - The inflation nation?

Unlike their US or Eurozone counterparts, UK pension funds will readily pay quite a premium for inflation protection. However, that premium is relatively unattractive for multi-asset investors, who we think can find better ways to manage UK and global inflation risks.

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Portfolio Thinking

Pulp Fixion

At times, over 50% of fixed income managers outperform their benchmark indices. Understanding the drivers for that is important for manager selection, but far too often it's attributed to the wrong causes. It's time to pulp the fiction and instead recognise the roles that non-benchmarked investors and new issue premiums play.

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Strategy

2018 – Inflation inflexion risks

US inflation was lacklustre in 2017, despite falling unemployment. This combination was very supportive for equities. In 2018, a key risk is that we see a similar wage pick-up in the US to what we’ve already seen in Central and Eastern Europe, where labour markets are also tight. As a result, we believe there are potential benefits in holding US dollar and US inflation exposure in portfolios to help mitigate the risk of higher interest rates undermining equities and other risk assets.

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Portfolio Thinking

The small-cap anomaly

Regardless of intention, I think a lot of the commentary on active management performance is misleading. High or low success rates for active managers are far too often explained in nonsensical ways. In fact, there are just four main options in my view and three of these likely explain the anomaly in small-cap equities.

 

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