Displacements
We expect some divergent paths in 2015 driven by key displacements in commodity prices, and currencies. Bottom line: a volatile year where quality should be emphasised.
2014: The Next Act
Our tech focus, energy underweight and contrarian China calls were top contributors to solid performance. Our foresight of a US Dollar breakout also delivered the benefits of a global view.
The Big Picture: Push/Pull
We introduced the Push/Pull world last year. It continues to apply given the mix of monetary, fiscal, geopolitical and market dynamics. We conclude we are in a muddle through - low rates will persist, growth will be positive, but slow.
Key Issues 2015
Displacements. Energy: supply or demand? Currencies: the ultimate rebalance in the land of competitive QE and persistent G-zero policy.
China and Asia-Pacific: Coming of Age
China and Asia-Pacific stand with a variety of advantages - demographics being primary. Strategically, the region is well positioned to realise on its advantages. Rising valuation is a potential outcome of Coming of Age.
Technology and Key Segments for Portfolio Growth
Technological change has been a constant thematic focus for us. The progression to the age of context puts us on the cusp of exponential growth where the strategic integration of systems, applications, e-commerce, machines, and entire value chains will set the stage for success. Cyber Security is key to the integrity of the networked economy.
2015 Investment Strategy
Our stance evolves from last year primarily due to the strength of the US Dollar and the steep drop in the price of oil. Where we carried an upside bias last year, the fact that multiples expanded further in 2014 moves us to a more cautious stance in 2015. The result is volatility where selectivity and quality will be key.
Appendices
Two keys to our Investment Philosophy: Global Challengers and our Fixed Income approach to low, and eventually rising interest rates.