I
n the rst quarter of 2014 investor
attention was captured by political
developments, the actual onset of the Fed
taper, and geopolitical tensions between
Russia and Ukraine.While the start of
the year saw risk assets sell o markedly,
February continued much calmer as markets
looked beyond emerging market jitters and
the cold weather’s e ect on US economic
data.The MultiAsset UnitTrust began
adding developed market equities in early
February as the sell-o in January presented
a good opportunity to re-establish exposure.
In particular, we added positions in German
and UK equity markets and added futures on
the EURO STOXX 50 Index.At the same
time, the fund reduced broad emerging
markets equity, and in particular Chinese
large-cap exposure, by roughly 6%.While
PIMCO remains positive on longer-term
emerging market fundamentals, emerging
market equities are still shunned by investors
on negative technicals; including retail
investor out ows, currency weakness
and political uncertainty.The fund added
approximately 6% exposure to US REITs
(real estate investment trusts) since the start
of the year. REITs underperformed in 2013
due to their exposure to real rates, but we
expect them to bene t from increasing rents
due to growing demand for apartments this
year.The sector for 20- to 35-year-olds, with
their low and declining home ownership and
shorter-term leases, more quickly re ects
rising rents.
PIMCO
Multi Asset
Exposure to broad emerging markets
cut and more investment in US REITs
We addedpositions
inGerman andUK
equitymarkets
Mihir Worah (above), Curtis
Mewbourne and Vineer Bhansali
THE INVESTOR CENTRE
THE INVESTOR
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35
T
he UK stock market made an uncertain
start to the year on concerns over the
e ect of tapered asset purchases by the US
Federal Reserve and the knock-on e ect
that this may have on economic growth in
emerging markets. In March, these worries
were compounded by the crisis in Ukraine.
Despite these issues, investor sentiment
remains very positive and we have recently
seen a number of new companies coming
to the market. Investor con dence has been
helped by a continuation of the ultra-easy
monetary policies of the world’s central
banks and the accelerating economic
recovery in the UK. It is now ve years
since the trough in the market in February
2009 and the progress since then has been
remarkable with the UK equity market
delivering a total return of around 130%.
The index of medium-sized companies
has more than tripled during the same
period.These market moves have, however,
taken their toll on valuations. Generally,
dividend yields are now low and provide
little protection to investors in the event
that sentiment deteriorates. In our view,
the best opportunities still reside in some
of the largest companies in the market,
which may not o er the most exciting
rates of growth but which will a ord some
protection in the event that conditions get
more di cult from here.
Nick Purves
RWC
Equity Income
Largest companies offer more security
but lower rates of growth
It is now ve years
since the trough in
themarket
T
he rapid advancement and rate of
change in the capability of mobile
devices has spawned exciting opportunities
for growth investors over the past decade.
Today, we think companies like Baidu and
Facebook can create signi cant economic
value by enabling users to do more‘stu ’
on their devices, anywhere, anytime. In
2013, we initiated a position in Baidu
once we gained conviction it was making
the investments needed to extend its
desktop search dominance to mobile.
Today, Baidu is China’s clear leader in
mobile search, maps and app distribution.
Management remains committed to
investing in its mobile platform and
improving its product o erings, which
should meaningfully contribute to revenue
and strengthen Baidu’s competitive moat
over our investment horizon. Since 2012,
Facebook’s mobile platform has risen from
0% to nearly 50% of total revenue.As the
company continues to develop tools for
advertisers, grow its user base, and keep
engagement levels high, we think it is in a
leading position to take a greater share of
the $500 billion global advertising industry.
Increasingly inexpensive and capable mobile
devices and internet connectivity will
continue to drive productivity, commerce
and online/mobile advertising globally.
While mobile-based monetisation is in the
early stages, we believe and expect the most
successful companies in this area will grow
at above-average rates for years to come.
SANDS CAPITAL
Satellite manager: Global Equity
Investment in mobile-optimisation
and connectivity is good for growth
Baidu andFacebook
can create signi cant
economic value
David Levanson, Sunil Thakor and
Perry Williams
