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Archive for the ‘Philip Gibbs’ Category

Unarguable Sense From Philip Gibbs

Some bullet points and a telling slide from a recent presentation by Philip Gibbs, the  fund manager and financials expert at Jupiter Asset Management. Not much need to comment, as it is hard to argue with anything in it (although the recent performance of Philip’s funds has been somewhat disappointing by his own exalted standards).

Medium term investment outlook:

  • Emerging market assets and currencies are by far favoured over the developed world.
  • On a view of a few years it seems highly probable that a crisis will ensue as a result of developed world indebtedness.  Governments may have to print so much money that they will unleash inflation.  US and Japanese government bonds will probably perform terribly.
  • Western equities relying on Western consumers will face many problems as a result of this situation.
  • The Swiss Franc and gold will probably perform exceptionally well.  The dollar and the yen and sterling and the Euro look to have a dismal outlook.

Read the rest of this entry »

Written by Jonathan Davis

September 27, 2010 at 9:27 AM

Philip Gibbs Goes Back Into Cash

Having navigated his way successfully through the worst of the global financial crisis by moving heavily into cash and Government bonds, Philip Gibbs at Jupiter has once again moved his flagship Financial Opportunities fund into ultra-defensive mode, with more than half the fund now in cash or cash equivalents, according to the latest monthly factsheet.

In an interview with Citywire last week, Philip made the following points:

  • The UK financial sector has halved in the last two years and it has left valuations looking attractive. HSBC and Barclays remain the top two long positions in the Absolute Return fund.
  • However there is a warning in these ratings as the economy in the West is being artificially sustained by governments. It is “complacent” to put too much in the UK when there are better opportunities in countries with stronger growth prospects. 
  • He has a negative view on both UK and Japanese government debt because there are better opportunities in corporate debt. “At the moment, I am long corporate and short government bonds thanks to the yield differential” .
  • The economies of indebted nations are going to suffer as debt levels are addressed. Nations such as the UK, US and Japan face high and growing deficits, and without the fiscal firepower to tackle them, the situation will deteriorate if yields rose and debt finance costs rise.
  • He is bearish on the outlook for both sterling and the euro because of the fiscal situations in the UK and Europe.
  • He prefers emerging market debt, given the more positive economic outlook in the region. Some Western government debt bucks the trend, pointing to Norway as a good opportunity.

My comment: It remains very hard to make a case for Government bonds at current yield levels, and there are good grounds for believing that the great Government bond bull market that began in 1982 is finally breaking down, which will create an entirely new backcloth for investment decision-making over the next 10-15 years. A return to deflation, which would prevent such an outcome, cannot be ruled out entirely, but to my mind now looks good odds against.

Written by Jonathan Davis

March 29, 2010 at 10:45 AM

Philip Gibbs Is Still Cautious

The following are the latest published views of Philip Gibbs, the outstandingly impressive manager of the Jupiter Financial Opportunities Fund, which produced a positive return of 7.25% in 2008, despite the year being the worst for equity markets since 1973-1974. Since its launch in 1997, the fund has produced a compound annual return of 19.65% and ranks 1st out of the 740 unit trusts/Oeics in existence for that period. (Disclosure of interest: I am an investor in this fund,but it is not the purpose of this website to make specific investment recommendations – if in doubt, please read the investment warning at the foot of this page).

Philip’s impressive performance last year is the result of his correctly anticipating the financial crisis in 2007, reducing his exposure to the US and UK markets and then moving into cash and long dated government bonds in a big way November 2007 . He is one of a small number of professional investors whose views I regard as required reading (one of the factors that helped me to turn bearish and miss the worst of last year’s crash).

His view now: “The market and government policy makers have consistently underestimated the depth of the banking crisis and its effects on the global economy. We are still at the early stages of the global recession, with the implications of rising unemployment and falling house prices only just being felt. Credit conditions are far from normal, with interest rate spreads remaining significantly above historic levels”.

“This implies that banks are unwilling or, more likely, unable to extend credit in an environment where personal and corporate bankruptcies are on the rise and rebuilding balance sheets remains a priority. It is quite possible that banks will require further government assistance during the year as the economic environment deteriorates. Despite the poor economic backdrop, some opportunities for investors remain. Valuations appear cheap, for example, in some parts of the insurance sector where companies are not far from or at discounts to their net asset values. However, there are few stocks that are able to truly be relied upon during the continuing credit squeeze and economic slowdown.”

In other words, don’t yet bet the shop on the encouraging signs of an equity market recovery we have seen in the last few weeks; and do remain wary of the banks. We still don’t know how bad things are going to be for them as the economic recession unfolds.

Written by Jonathan Davis

January 7, 2009 at 6:48 PM