Asset AllocatorJan 21 2022

Why Artemis has much to ponder; Does Martin Gilbert's cash in the attic gives him an edge?

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Bigger doesn't mean better

There is also much to ponder for the deal makers across the City and beyond in the London Stock Exchange table below, which shows the share price performance of the various listed asset management companies in the UK in 2021. 

On the surface, the outcomes mirror the trends in the wider market, with sustainable investment fund house Impax near the top of the pile - more than doubling in what was a  breakthrough for ESG funds. 

Propping up the standings were emerging market specialists Ashmore, and Abrdn which isn’t a specialist but has a significant exposure to the same asset class. 

Worries about supply chains, the slowdown in China and the potential for US interest rates rises to hurt the emerging world in 2021.

But the much more granular impact of M&A can also be seen in the data. Gilbert’s above-mentioned AssetCo topped the tables in a year when it bought Saracen Fund Managers and the Parmenion platform among other assets.

Investors are taking something of a punt that Gilbert and his long-standing lieutenant Campbell Fleming, who is chief executive of the business, can replicate their successes of old.

But the hidden gem may be the £30m of cash the company has as a result of winning a litigation claim that predated their involvement in the business, meaning that despite being acquisitive, they may not have to go to shareholders for fresh capital with the frequency that might have been expected for a company with its business model.

Meanwhile two of the industry’s behemoths - Schroders and Janus Henderson - are stuck distinctly mid-table.

Brewin sticks to growth guns

Brewin Dolphin’s chief strategist Guy Foster isn’t offering much to cheer about in his latest economic outlook for 2022.    

The central thesis behind the rally in 'value' stocks since the start of the year has been the belief we are at the start of a period of persistently higher growth and inflation.

Foster rejects this and says we are instead heading for a period of "deceleration", after the "breakneck speed" of recovery in 2021. 

He thinks governments will start to rein in spending after splurging during the pandemic with inflation remaining high, leading to low growth without ever looking like a recession is on the horizon.  

Foster believes those are the ideal conditions for growth and US listed shares to thrive once again, despite the valuation disparity.