Gary Collier

A couple of (hopefully useful) thoughts from my presentation at QuantMinds on the potential of structural corporate liabilities pricing framework to bridge some gaps in factor investing. #QuantMinds #StructuralFactorInvesting https://lnkd.in/esK4GBWM

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My thanks to Citywire and Baroness Ros Altmann for the below article, which Baroness Altmann has written in response to Henry Cobbe, CFA’s article earlier this week. See below. Two key points are as follows: 1) everyone is calling for transparency and full correct disclosure. Investment trusts (or listed closed ended investment companies - LCICs) disclose all expenses via their reports & accounts, as they always have done. 2) LCICs share characteristics with OEICs but they do not have “ongoing charges”. Ongoing charges are deductions from investor capital that occur annually. For LCICs, there are recurring operating expenses (part of which is analagous to ongoing charges of OEICs), but these are known in advance and impact the NAV not the share price. The share price discounts (encapsulates) theses expenses. The value of the investment with a LCIC is the share price not the NAV. In a lively and good-natured comments section to my LinkedIn post earlier this week, Mr Cobbe called for a consultation. But first we need to wait for the results of the extensive consultation on HMT’s Statutory Instrument taking the UK out of the PRIIPs regime and into the new UK-only Consumer Composite Investment (CCI) regime. 329 signatories (the most significant response to a HMT consultation ever apparently) signed the LSEG (London Stock Exchange Group) response calling for LCICs to be excluded. LCICs are not “CCIs” (or even PRIIPs). Investors have no contractual right to receive a share of NAV at a time of their choosing (as they have with OEICs). Prospectuses are usually clear on this point. The value of the investment in a LCIC is the share price. If HMT decide to keep LCICs in scope of CCI, the FCA will surely consult on the disclosure regime. Incidentally, our arguments apply to ALL LCICs, even those investing in vanilla equities. I have long characterised LCICs has inhabiting a spectrum from ordinary listed operating companies to OEICs. Some are closer to either end, but none are at either end. We need a disclosure regime that is bespoke for LCICs and we mustn’t crowbar them into either category. Our campaign group has come up with a “Statement of Operating Expenses” that we suggest all LCICs could disclose. This surfaces expenses correctly and in a way that will aid comparison between LCICs & OEICs. Finally, our campaign group share some of the aims of the The Association of Investment Companies (AIC) but we do not agree with their back up proposals. We believe ongoing charges of OEICs, ETFs should be aggregated in the OCFs of fund of funds. These are deductions from capital. LCIC expenses should not be aggregated for the reasons outlined above: they simply do not have ongoing charges. Thanks again to Baroness Ros Altmann and Henry Cobbe, CFA for shining a light on this wonderful sector. https://lnkd.in/eB96qPrG

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With the world's two biggest economies and two biggest stock markets celebrating National Holidays this week, the scorecard for H1 is in - something we look at in more detail over at market thinking and the marketthinker substack in the July Market Thinking. But with the three largest stocks in the US driving a10% excess return of the market cap weighted S&P500 over the equal weighted version we need to recognise that this has to be in return for taking on concentration risk and that the traditional benchmark tells us increasingly little about the economy. Moreover when those three stocks have a market cap bigger than China, yet MSFT has almost no business there and both Apple and Nvidia are having to cut prices to stay competitive, not to say almost every global manufacturer. This, as the econ consensus (that gave you pivot to 2% rates) decides China has to devalue? To us, the obvious policy shock won't come from a China devaluation or from the Fed, but from a decision to talk down the $, 40 years after the last Plaza accord. Looking at the H1 scorecard, with Gold, commodities and the $ diversification trades all doing well, it seems like the smart money is already starting to price that in....

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We believe that when hedge funds have a clearly defined role in a pension portfolio, they can offer an attractive option for enhancing portfolio diversification and returns. In this new paper, my colleague Melanie Mandonas discusses the potential benefits of hedge funds for liability investors and outlines four actionable guidelines for effectively incorporating hedge funds into portfolios. Read more here: https://ow.ly/R0Ob50ST5Yq

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It was great to see Portfolio Manager, Helen Mason and Kellie Wood, Head of #FixedIncome featured in the Financial Standard recently (https://okt.to/H7V5Sd). In the article, they discuss the forces at play in the Australian credit universe and the launch of the Schroder Australian High Yielding Credit Fund. If you would like to find out more about the Fund, please register for our upcoming webinar: https://okt.to/gdzGDm #Investing #Insights #Schroders #Credit

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A great flow chart from the UK Investment Association for those who want to understand which fund share class to select as 'primary'. In contrast to how some data providers default to the oldest, legacy share class, it seems very clear that one should perhaps choose a share class that is 'unbundled', and 'freely available to all investors... '. For the Marlborough Multi Cap Income Fund, this is the 'P' share class! This also covers c.99% of all fund units in issue so most representative of the returns delivered to the wider investor base.

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Had a great time last evening meeting the quant community in India at Bloomberg office for the inaugural event for Lambda Quantitative Strategies Association (LAQSA) The event was an absolute standout! It was inspiring to witness so many prominent quant teams being set up across different AMCs and even more exciting to see the bullish sentiment around quant strategies taking shape in India. A big shoutout to Rishi Kohli and Pankaj Mani(Jha) for putting together this amazing event and Vanshika Kumar for being an amazing host! 🙌 I met so many amazing fellow panelists - Bhautik Ambani, Bijon Pani, Ph.D., Chetan Mehra PhD, Gaurik Shah, CFA, Nalin Moniz, Siddharth Vora. Also had the privilege of joining a panel with Nalin —my first boss at Edelweiss —who's been working on quant strategies for longer period than most people run their backtests. It was a full-circle moment for me and a great opportunity to reflect on the evolution of quant investing in India. The key takeaways from the event: ✳️ More education and training opportunities for quant finance enthusiasts. ✳️Frequent meetups & discussions to fuel innovation and collaboration. ✳️A push for regulatory support to help quant strategies thrive. It was also incredible to meet so many leaders pushing the quant agenda in India. 💬 Some exceptional discussions happened, and the networking was just as impactful. Looking forward to being a part of the next chapter in India’s quant journey. 🚀 #QuantFinance #LAQSA #InvestmentInnovation #Networking #India #QuantitativeStrategies #Finance

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Why short duration high yield? In recent years, record-high new issuance and refinancing activity pushed down coupons and interest expense – and pushed out maturities. Today, this adds up to an even more compelling yield-to-duration trade-off. https://lnkd.in/eMNTPC2f The linked content is intended for qualified institutional investors and/or financial professionals only.

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This FT Alphaville article by Robin Wigglesworth is certainly worth a read (and not just for the excellent Simpsons reference). He explores a recent note from Goldman Sachs in which they dispel some of the myths around index or passive investing having a detrimental impact on markets. The section on “Is passive investing entirely passive?” particularly resonated. As Robin and Goldman point out, indices are built differently and used by investors differently. Indeed, “passive” investors use index instruments to implement their strategic and tactical decisions. For instance, they may use regional, sector, factor, thematic, sustainable (etc). indices in allocating their capital. Additionally, as Robin notes, similar looking indices will vary from one provider to another - again, investors are making an active decision on which best meets their requirements.  As the adage goes, there is nothing passive about index investing. https://lnkd.in/eDVZgJKs

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I often refer to select specific investment options as “assets and earnings” plays where one gains exposure to tangible assets and growing profits at the same time. Whitbread (in the FTSE 100) ticks this box for me. The shares have retreated significantly from previous highs and thus have not been part of the increased buoyancy we have witnessed in the blue chip index in the recent past. This is Premier Inns in disguise with most of the business in the UK. Capital growth potential with a growing dividend not to mention always a possibly of takeover interest, an interesting opportunity perhaps. This is not investment advice and everyone must do their own research in determining suitability.

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Passive aggressive... The improving trend in midcap fund flows is encouraging. The bad news is that this is all in passive funds. This is not a negative on passives, but it is important to remember that passive funds have very little exposure to smaller companies and hardly any exposure to AIM companies. In addition, passive funds do not invest in IPOs or actively support fundraisings. (source EPFR, numbers cumulative in $m)

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Note: The following is my personal musing and not necessarily the view of GHC Capital Markets Limited It is with admiration that I post Ros Altmann’s latest column. No one has offered more support to UK 🇬🇧 #financialservices than the former Minister for Pensions, heading the campaign from within the UK House of Lords alongside her “partner in crime” Sharon Bowles, reflecting the anomalous cost disclosures regime for Members of The Association of Investment Companies (AIC)…. https://lnkd.in/e_GHBw8E are many in the industry who have assisted but the fact is, it requires political intervention to change the law). It puts to shame the House of Commons. She’s at it again, this time urging the UK government 🇬🇧 to support domestic #markets. There are many who ask why should UK 🇬🇧 #pensionfunds #institutionalinvestors and #retailinvestors allocate more of their savings at home? The lessons are there for us all IMO, if we don’t encourage! Ros is quite right to point to the effect that perceived de-risking of Pension Funds in particular has had. There was mass reduction of #equity exposure, it was going to have an effect…simple #supply and #demand tells us that. #Regulation encouraged pension funds toward greater matching of #assets to #liabilities and the shift to bonds, reflecting the locking in of returns in a lower for longer #interestrate and #inflation environment. Many people blame the speed at which UK 🇬🇧 interest rates rose on Liz Truss and Kwasi Kwarteng’s failed attempt to stimulate growth and reduce the #tax burden. However, that ignores what has similarly happened around the world! I’m not a #maths or #economics genius! However, even I could work out that the 2022 reversing of QE was always going to have an impact. We of course couldn’t have predicted war in Ukraine. But we could have been more ready to react better to rising rates of interest and inflation. I just hope we manage to learn the lessons quicker than in the one country, who in the late 1980’s early 1990’s, lost its way in terms of the value of its domestic market and is only now back to its peak of that time. I refer of course to Japan 🇯🇵. So-called “Abenomics” and in particular the implementation of painful structural reforms to return the economy to a growth path is, I would suggest, finally paying off. It was effective in supporting large firms by boosting #equity markets and nurturing a sense of #stability. Japan (and German) recovery after the Second World War (for the 50 years or more that followed) was stopped by corruption, together with the collapse of Communism across the Eastern Bloc. It coincided with the rise of the European Union 🇪🇺 only now being challenged again by events in Ukraine, and before that Brexit. To kick-on, the UK 🇬🇧 and it’s markets need the support of dometic #investors. Our economy is dominated by the service sector, it’s an industry too vital not to be supported. Now is the time to act! #socialmedia

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Morning. Our latest podcast covering possibility of disinflation, slowdown in software earnings and Idexx Labs, the Astra for pet.

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In this weeks edition of 'The Source' the Nasdaq team highlighted those 66 firms managing 77 strategies that passed the $100m AuM threshold on the Nasdaq eVestment platfom as of Q2 2024. Passing such milestones are key for managers as consultants and investors often sceen for strategies with a minimum AuM threshold when narrowing down the number of strategies for further consideration. As such this is a great opportunity to enhance visibility with gatekeepers. Congratulations to my former colleague and mentor, Lisa W., and the VELA Investment Management, LLC team with the VELA Small Cap strategy achieving this milestone! Please follow the link below for more details. If you are not receiving The Source please get in touch with the Nasdaq team and we can add you to the distribution! #equities #fixedincome #milestones #hedgefunds #balancedstrategies #insitutionalinvestors Rachel Johnston Andres Ramos

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LGIM co-leads the Glasgow Financial Alliance for Net Zero (GFANZ) Index Investing workstream (with SGX Group and PKA); in this LGIM Blog post we summarise key points. The workstream is looking at producing voluntary guidance on how index investing can support real-economy decarbonisation. One important aspect is how investors can incorporate "transition-potential" companies/issuers in such indices, at least initially. The role of engagement, and the need for accessible, standardised, quality data, are important areas for discussion. The GFANZ paper and link to the consultation can be found here: https://lnkd.in/eZZ8T56m #climatechange #climatecrisis #netzero #responsibleinvesting #decarbonization #energytransition #sustainability

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How is the UK ever going to win globally at technology? It looks like Graphcore, once the AI darling of the UK, is going to be consumed by Softbank https://lnkd.in/eTRZ8u3d Why? There was no UK procurement. This was needed 3 to 5 years ago. Even 2 years ago. Or 1 year ago. It didn’t happen. So Graphcore never had a chance to move along the experience curve.  The UK’s problem isn’t an investment issue. It’s a procurement issue. We also don't seem to care much about intellectual property. We have a prime minister (for a few more weeks) who wants open source and open data. He has overseen a government with no procurement of emerging technology despite Tory grandee Lord Hague saying he needs a central procurement buyer of first resort (with references to semiconductors!). We’ll see Softbank scoop up a bargain and the intellectual property that goes with it.  If we don’t have intellectual property, we will find it very difficult to become a technology superpower. 

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In this week's highlights we discuss the low level of global risk, the unexpectedly good performance of Utilities, and the drop in trading volume. https://lnkd.in/e8PwPfmX

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Jacobi recently hosted a breakfast event in London on the rapid growth of model portfolios with a good mix of DFMs and institutional asset managers represented. We summarise the themes discussed in this paper - ongoing implementation pains, continued fee compression and finding new ways to differentiate in a hotly contested space were key talking points. Shout out to our panel participants including Francis Chua (Legal & General Investment Management (LGIM), George Jecks (WTW) and Catherine Makin (FE fundinfo / Investments)... plus Chris Barnett for the feisty moderation. #modelportfolios #assetmanagement #investmentmanagement https://lnkd.in/e34rjsc9

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https://lnkd.in/eDg_YmhM The FX strategy team at JPMAM have held a long-term view that a global slowdown would not necessarily lead to broad US dollar strength, largely due to a huge shift in global capital flows since the GFC. We update our thinking below.

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