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

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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Portfolio Thinking

All about that base

When making decisions, data on similar past decisions and their outcomes provide a useful starting point as a ‘base rate’. Too often though people ignore them or give them too little weight. Base rates of the historic performance of active fund managers provide an insight into the potential benefits and costs of choosing them in different asset classes.

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Strategy

Cloud gazing

All seems well with markets, but there are always clouds on the horizon. With price inflation remaining contained, one risk we think deserves more airtime is how a corporate margin squeeze could cause the next downturn. The next US Federal Reserve chair is also a mystery that could rock markets and President Trump’s objectives will be central to what candidates have to promise if they’re to get the big job.

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Portfolio Thinking

Sell the rumour, buy the fact

With Philippe Coutinho and Alexis Sanchez staying at their clubs, the most recent football transfer window offers a great example of the availability bias at work and a counter example to the common investment adage “buy the rumour, sell the fact”.

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Macrobites

Splinter is coming

While the UK prepares to break away from the EU, the voting age population is evolving. When the transition concludes, younger people’s views could be significantly under-represented. Adjusting for this could lead to some very different conclusions.

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