fund manager views

Planning for radical changes in coming years

It has been a turbulent few years for UK income investors.

In client meetings, it is usual to be asked about what we are worried about.

Everyone likes low prices, but if I said to you the level of Japanese consumer prices are now at the same level as way back in October 1998, then correctly you would conclude something is not quite right.

The UK macro landscape is anything but settled. As Brexit D-Day fast approaches and signs of any tangible progress yet to materialise, markets are gearing up for a prolonged period of uncertainty and confusion.

Geopolitical tensions rear their head in a meaningful way at least once a year, as a number of concerns join forces to generate headlines.

European credit markets were hit this year by the rise in global trade tensions, a sudden spark in equity volatility and further political risks in Europe, mainly Italy.

The US administration appears to be targeting export-oriented entities out of China.

We expect the Federal Reserve to maintain its gradual tightening as the US economy extends its growth phase, with short-term rates likely to rise at least three more times to reach 2.5% by next year.

Commitment from government