While on a broad strategic level asset allocation has not changed, from a tactical point of view the team has recently moved money from North America into European equities.
“In terms of economic growth, Europe is behind the UK, while the UK is behind the US in moving through the cycle,” says Meyer.
“Europe is becoming the place to move into as many of the multinational businesses based there are still relatively cheap compared with their global peers, and relatively good value.
“We use James Sym’s Schroder European Alpha as a tactical play across the cap scale, and Mark Page’s Artemis European Opportunities, which is broader-based.
“They are two guys with different levels of experience and different approaches, but effectively both bottom-up stockpickers.”
While equities may not necessarily be cheap, Meyer is of the consensus that the asset class still offers value compared with fixed income, while believing that corporates should continue to deliver in relatively robust developed economies.
He adds: “When interest rates start to move up, we expect equities to take a small hit, but why are interest rates being moved up? It’s because the economy is growing and central banks need to build something back to control markets later in the cycle, when at some stage we have to tighten monetary policy.
“The logical analysis would be that if the markets can sustain interest rate rises, there is still reasonable growth in the economy, and corporates should deliver earnings growth.”
Of alternative asset classes, the preference is for property funds, through Columbia Threadneedle UK Property Trust and Aberdeen Property. Again, the intention is to blend two different approaches, says Meyer.
“Threadneedle’s is an old-fashioned bricks-and-mortar fund, having to hold relatively large amounts in cash to offer daily liquidity, while Aberdeen’s has a more modern construction using property bonds, so more of the money is put to work at any one time.
“We still think the total return from property is relatively attractive but I am concerned about the amount of money going into retail funds.”
A fine balance
Going back to their institutional approach, Meyer stresses he and Beaney are comfortable to not make too many changes for the sake of it.
He says the team will have around 20 discussions for every decision it makes, and very often that decision is not to change anything.
Having worked together for a long time, often in different locations, the pair trust each other to make independent decisions. Still, as Meyer makes clear, they work very much from the same page.
He says: “I’ve noticed several times we are doing the same thing at the same time, without talking to each other, which is possibly both a strength and a weakness. We bring different things to the discussion, but once we’ve decided to do something, we will implement it uniformly.”
