THE INVESTOR CENTRE
THE INVESTOR
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31
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arkets are supported by increasingly
accommodating central banks
(outside the US), the sharp fall in energy
costs, and a low in ation and interest rate
outlook.While this is constructive, we
remain wary of risks, including political
instability in Europe (where we see a rise
in populism threatening stability), the
fallout from a recession in Russia and the
knock-on e ects from sharp movements
in currencies and commodity prices.
After a weak performance in 2014,
dividend stocks globally trade at attractive
valuations relative to the market. Globally,
we continue to favour dividend stocks
with economic sensitivity and growth over
defensive bond-proxies, while maintaining
a well-balanced and diversi ed portfolio. In
the UK, dividend cover has fallen back to
the levels seen pre-crisis.This has reduced
the scope for companies to increase their
dividend payments unless they generate
earnings growth, something that has been
missing from the UK market in recent years.
Thus, in this environment, it is increasingly
important to be able to hunt successfully for
speci c income stocks.
COLUMBIA
THREADNEEDLE
INVESTMENTS
Strategic Managed
Wary of risks from European
instability and currency movements
Dividendstocks
globally tradeat
attractivevaluations
Richard Colwell, Stephen Thornber
and Jim Cielinski
W
hether watching market
prognosticators on television or
reading the headlines in business papers, it
is apparent that the US is now the place to
be when investing globally.While that may
be the consensus, we were investing in the
US when most investors were sceptical.
At the time, we were able to identify
many businesses that we believed could
survive irrespective of what happened in
the economy (within a band of reason),
and would be bene ciaries of an economic
recovery.While the US still o ers plenty of
attractive investment opportunities, over the
past year many of our investment ideas in the
region have materialised.As the consensus
view catches up, we have been spending a
disproportionate amount of time looking
at ideas internationally, and have recently
made investments in Japan and Europe.
Wherever the opportunities are, we make
sure they‘tick our boxes’ of having strong
management, defendable barriers to entry,
growth potential and an appropriate entry
price.As bottom-up stock pickers, we don’t
pay attention to whether or not we are
over- or underweight a particular sector or
country.We know that where a business is
domiciled doesn’t necessarily re ect where
it does business. Our focus is to nd quality
companies and assemble them in a portfolio
that is diversi ed by business ideas.
EDGEPOINT
Satellite manager: Global Equity
Many investment ideas in US have
materialised, but still plenty to offer
Wewere investing
intheUSwhenmost
investorsweresceptical
Tye Bousada and Geoff MacDonald
W
e spend time considering the
sustainability of the companies
we invest in.We de ne sustainability as
a company’s potential to exist in 10, 20
or more years.We believe that every
company has a series of licences to operate,
granted either explicitly by bodies such as
governments and regulators, or implicitly by
groups such as communities and employees.
If the terms of the licences are broken,
the business can be severely impaired, or
even fail.As shareholders in the companies
our clients will bear the full consequences
of this.The industrialisation of emerging
markets presents some huge challenges.The
recent release of
Under the Dome
, a lm by a
Chinese journalist about pollution in China,
had more than 100 million views within
48 hours which, to put it in perspective, is
larger than any movie’s opening weekend in
the US. Initially, and unusually, the lm was
praised by China’s environment minister,
but it is now no longer available on networks
accessible within China; one of the research
tools we use allows us to nd information
published about a company that might a ect
its reputation.While this works well in
many countries there is still no substitute
for meeting with company management.
These meetings allow us to form a view
about who is taking their responsibilities
seriously. Over the longer term we think the
companies that are focused on these issues
should be well positioned.
FIRST STATE
Global Emerging Markets
No substitute for meeting with
management to form views
We believe that every
companyhas a series
of licences tooperate
Jonathan Asante
