Sharing our convictions

We have talked regularly about avoiding ‘next year’s skeletons’, and this is now more pertinent given the strength of the current technical backdrop, combined with spread levels that are significantly tighter relative to this time last year.

We have already highlighted the blistering pace of bond sales in both Europe and the US, and this being met with apparently insatiable demand from fixed income investors. Since European ABS markets tend to lag broader fixed income, it seems fitting that we have had to wait another week before seeing that primary machine start to accelerate.

While the European bond market was setting records last week, the US market has also begun 2020 with a flurry of transactions backed up by record inflows.

Kicking off the new year, we expected the new issue market to be very active and we certainly haven’t been disappointed, with the good momentum created at the end of last year – thanks to the US and China reaching a ‘phase one’ agreement and the resounding victory by the Conservatives paving the way for Brexit negotiations to move forward – allowing pent-up borrowing demand to hit the market.

At TwentyFour Asset Management we believe Environmental, Social and Governance (ESG) factors can have an influence on the value of our investments.

Fixed income investors are well versed in the risks of ‘fallen angels’, investment grade companies whose bonds tumble in value once they are downgraded to high yield.

We don’t know when the next downturn will hit, how severe it will be, or how long it will endure. That’s why we aim to build resilient portfolios by focusing on four essential company traits: competitive advantage, solid management, sustainability of growth, and sensible valuation.

Ramiz Chelat seeks opportunities in e-commerce, industrials, med-tech, athleisure, cruise lines, and the SaaS (software as a service) space.

The Bank of England (BoE) on Monday published its latest financial stability report and the results of its 2019 bank stress tests, and declared that the UK financial system is well prepared for even a worst-case Brexit and consequent trade war.

Jin Zhang provides insights on changes in the global supply chain, long-term beneficiaries of the trade war, India’s growth prospects and Brazil’s path to reform.

"One group of issuers that appears vulnerable to us as we move into a new decade is those facing increased investor scrutiny due to Environmental, Social and Governance (ESG) factors. The case of CoreCivic, a listed REIT in the US, is a good example"

David Souccar talks about markets in 2019, long-term structural risks, performance over the cycle, investing in Japan, and international vs US exposure.