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London’s prime property market will revive again once sellers’ price expectations have readjusted to the stamp duty increases

Date: 19 Nov 2015

Bumblebee Design

Penny Lovell, head of client services at Close Brothers Asset Management, talks about London’s prime property market and says long-short hedge funds have performed well.

 

Mobile company Talk Talk is the latest in the list of big businesses who have been victim to hacking. Is cyber-crime a risk to the wealth management community and its clients?

The Talk Talk attack is just the last of a series of cyber-attacks across blue chip companies, including LinkedIn, Ebay and the matchmaking website Ashley Madison, aimed at stealing and manipulating users private information.
Despite the massive costs associated with the harms of cyber theft – Talk Talk estimates that the recent breach will cost the company £30-35m – the implications of cyber-security also represent an investment opportunity underpinned by strong structural growth drivers. This is an area attracting money from new and established players alike.
Hacking issues that are also coming to the fore will change the way we give away data and the way companies store it. This implies that companies relying on consumers’ data such as retailers and social media will have to offer better incentives for people to give information about themselves as we all grow more uncomfortable about how our data is used and by whom.

London prime property: did we reach the peak?

Yes there has been a slow-down in the top end of the London housing market brought about by increases in stamp duty in the budget. However, underlying demand for London prime property continues and the market will revive again once sellers’ price expectations have readjusted to take account of the stamp duty increases. London is still a very attractive residential market for prime property.

Is everyone getting out of hedge funds?

Hedge funds have suffered from “crowding” of traders in the same positions. Increased volatility and high leverage often means that when markets move in a direction opposite to their bets, exiting a losing strategy can come at very high cost. By the term “hedge funds”, nevertheless, we mean a vast array of complex strategies, whose performance varies greatly.
Trading hedge funds usually employ quantitative strategies and are the most uncorrelated with equity markets. They have had solid performances so far. Conversely, macro hedge funds have been mostly hit, as the macroeconomic environment is largely driven by policy decisions and index volatility has taken a toll on performance.
Long-short funds, which invest in bottom-up researched equity positions and event driven strategies that profit from M&A activity, have actually performed well. So it is a question of ‘which’ hedge funds will outperform. Managers have to screen carefully, assess each fund and strategy separately to discover the next round of winners.