Investor 91 Asia

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THE INVESTOR CENTRE
SCHRODERS
Managed Growth
Schroder Managed
Mining firms South32 and Anglo
American rebounded well
UKequityholdings
grow invalue a er
referendumresult
STEWART INVESTORS
Global Emerging Markets
Portfolio benefited from position in
Banco Bradesco over last quarter
SELECT EQUITY
Joint manager: Worldwide Managed
and Worldwide Opportunities
Strategy continues to be rotating
capital into high-quality businesses
Businesses need to
resist the temptationof
short-termmoney
Central banks have
created an asset price
bubble inmarket
T he fund bene ted from positions
in Banco Bradesco (Brazil:
nancials) and Housing Development
Finance (India: nancials) over the past
the negative side,positions
in Infosys (India: IT) andTullowOil
(UK: energy) remain
focused on quality companies trading
at reasonable valuations.
Many years ago we were told by a
family member of one of the most
successful consumer companies from
the developing world that they had
been able to build pricing power in the
US, not because they chased business,
but precisely because they were
prepared to walk away from it.
We try to make sure that clients’
money is invested in businesses where
we believe people running themwill
resist the temptation to make short-
make these subjective
assessments by considering how they
have behaved in the past; considering
things they refused to do. In our
judgement, as many of these types of
businesses are outside the traditional
global emerging market (GEM)
universe as inside ignore global
companies for GEM clients is to risk
becoming a poor steward of their
money, a fate we work hard to avoid.
T he Managed Growth fund’s UK
equity holdings have risen in
value since the result of the EU
referendum, outperforming the
broader UK market.
Mining companies South32 and
AngloAmerican continued to
rebound, better re ecting underlying
fundamentals rather than short-term
sentiment.Meantime interdealer
brokerTullett Prebon performed
well as it provided a reassuring
update on the planned acquisition of
rival ICAP’s voice-broking division.
In the banking sector, in line with
other domestically focused nancials,
Barclays and Royal Bank of Scotland
recovered from falls in their share
prices in the immediate aftermath of
the UK’s decision to leave the EU.
On the negative side, shares in
educational publisher Pearson fell
following disappointing rst-half
results, while electricity generation
business Drax also lost ground as
investors took pro ts after a strong
run on the shares.
C entral bankers are deploying poor
policies to bad e ect, for which
there is no accountability.They have
created asset price bubbles that have
exacerbated the di erences between
the rich and the poor, allowed supply
excesses to remain by eliminating
carrying costs, thereby creating
de ation, penalised savers and
retirees, and further encouraged
political scal irresponsibility by
aggressively printing money.
There is also a growing distrust of
the political elite globally.The Brexit
vote showed that wealth inequality
presents an opportunity for populist
politicians able to tap into widespread
discontent.Consequently, there is
greater-than-normal uncertainty
ahead of the Italian referendum and
US presidential markets
have continued to shrug o growth and
increased risk,attractive valuations are
harder to continue to rotate
capital into high-quality businesses
trading at the largest discounts to our
estimates of intrinsic values.
Kevin Murphy and Nick Kirrage George Loening and Chad Clark Jonathan Asante
THE INVESTOR | 39