Investments  

We will be adding on the wealth management side

Correctly judging what is noise and what is fact when it comes to investing in the stockmarket is a skill rather than a science – a trait that was lacking in some fund managers in the dark days of the global financial crisis.

Rathbone Unit Trust Management’s chief investment officer Julian Chillingworth’s wealth of experience means he has a clear memory of the ‘boom and bust’ times of the 1970s and 1980s, and that has informed how he sees the most recent financial crisis.

“To [paraphrase] the old expression, history is never the same but it does rhyme – Mark Twain said that. It doesn’t repeat itself exactly but there is a rhythm to it,” he says.

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“Trends will evolve in different ways. We have spent a lot of time, as other investors have, in the last credit crunch looking at what happened during the 1930s.”

The straight-talking chief investment officer (CIO) has one main concern on this autumnal day in his glorious Mayfair surroundings: the renewed interest in the banking sector.

“I am not yet convinced that all the problems in the sector and write-downs to the loans are completely out of the way, [and] whether people fully understand what the regulation will do in terms of profitability for these banks,” he warns.

“Perhaps people will get overenthusiastic and then realise the profitability isn’t going to be quite as great as they thought. You’ve got to judge what is noise and what is fact, and that comes with experience.”

Not wanting to appear negative however, Mr Chillingworth claims that it is, in fact, commodities – a sector that has been beaten to a pulp in recent months as a result of slowing growth in China and a sell-off in the wider emerging markets – that is showing interesting opportunities.

“Certain assets are looking cheap,” he contends. “Our view is people have got overly depressed about the big miners – not the Eastern European miners, which are more volatile, but Rio [Tinto] and BHP [Billiton].”

While not overly bullish on the sector, he is encouraged by signs that the larger companies are becoming stricter with their balance sheets.

“No one is saying these things are going to roar away tomorrow, but they are looking better value than they have been for some time and the management are all talking about capital discipline, which is good news because it means they aren’t going to rush out and invest lots of money in new mines and therefore commit shareholders to an asset that won’t necessarily return value for five years plus.”

As part of his role as CIO, Mr Chillingworth is often quizzed on his projections for the UK economy.

He thinks that while the nation has enjoyed a lot of positive news in the past few months, the major factor that will pull the country out of recession is the housing market.

“The important issue for the UK market is the housing market, because the housing market boosts consumer confidence… it’s all about rising house prices. We are so hung up on the price of property in this country,” he says, adding that he expects the UK economy to surprise on the upside, both this year and next.