Duncan Goodwin, Will James, Nick Ford, Robin Willis, Daniel Hughes and Jim Wright.
Premier Miton Fund Managers
For information purposes only. The views and opinions expressed here are those of the authors at the time of writing and can change; they may not represent the views of Premier Miton and should not be taken as statements of fact, nor should they be relied upon for making investment decisions.
Article snapshot
- The markets may continue to be challenging for some time as both inflation and interest rates remain elevated and recessionary concerns grow.
- Central banks appear to be caught between a rock and hard place, attempting to battle inflation whilst not wanting to test the fragility of the economy and the banking sector.
- Companies continue to grapple with the ongoing impacts of inflation, a rebalancing of supply chains and demand patterns that are not yet clear.
Global equities: Duncan Goodwin
Premier Miton Global Sustainable Growth Fund Manager
“As ever, macroeconomic predictions are fraught with danger. Central banks appear to be caught between a rock and hard place, attempting to battle inflation whilst not wanting to test the fragility of the economy and the banking sector. Geopolitical risks remain elevated; the war in Ukraine rages on and the west’s relations with China continue to deteriorate.
The short-term path of equity markets is inherently uncertain and we refrain from making such predictions. Instead, we aim to invest in companies that we believe are undervalued relative to their long-term earnings potential. We continue to believe that adopting such an approach is best over the long term.”
European equities: Will James
Premier Miton European Equity Income Fund Manager
“Despite the March scare around Silicon Valley Bank and the volatility this caused in Europe, the drivers of equities in the short term will remain largely macroeconomic in our view. This means both sectors and companies alike are being buffeted by the latest inflation reading and/or move in the government yield curve.
On the back of more benign, though still high inflation readings, it appears the market is contemplating the prospect of a ‘peak’ in interest rates. As we proceed through 2023, we will continue to get a better sense of the extent of the economic slowdown globally. While hopes remain that the economy in China continues to slowly recover and the US is clearly not the engine of relative growth it was in 2022, the corporate backdrop in Europe does not appear too challenging.
It will not be a surprise to see profit warnings in the months ahead as certain companies continue to grapple with the ongoing impacts of inflation, a rebalancing of supply chains and demand patterns that are not yet clear. Against this backdrop a focus on cash flow and dividends is a good place in our view, to ensure that the fund’s approach to pay and grow dividends is delivered. Given the potential challenges and opportunities ahead, we have a strong conviction that dividends are going to continue to remain an increasingly important part of equity total returns.”
US equities: Nick Ford
Premier Miton US Opportunities Fund Manager
‘’We expect US economic growth to moderate over the coming months following a rise in technology job losses, the impact of higher interest rates and a possible slowdown in lending activity in the aftermath of the banking crisis. This environment increases the risk that first quarter earnings results might come in slightly below analysts’ forecasts.
With this in mind, we continue to focus on investing in and holding companies that are strong cashflow generators with stable end markets and predictable demand, because we believe that companies with these characteristics could perform well over the long term.’’
Absolute Return: Robin Willis & Daniel Hughes
Premier Miton Defensive Growth Fund Manager
‘’We believe that markets may continue to be challenging for some time as both inflation and interest rates remain elevated and recessionary concerns grow, accordingly, the fund remains defensively positioned. The ability to manage risks in this sort of environment is important and we continue to implement reactive and tail risk Protection Strategies, that are not dependent on historical correlations of traditional asset classes, to provide that protection. The investment outlook remains uncertain and in such an environment having a flexible and active investment approach such as ours can be very advantageous.’’
Infrastructure: Jim Wright
Premier Miton Global Infrastructure Income Fund
“We remain positive on the outlook for listed infrastructure and for the fund. We believe that sentiment towards US regulated utilities and renewable stocks has become overly negative, and their underperformance is in no way justified by cashflow, earnings or dividend fundamentals.
More widely, we have seen several very positive data points around earnings forecasts and dividends throughout the portfolio.”
