This is the first time we have met the manager; our initial view is that this fund is all about whether you agree with his macro thesis. Ultimately this will determine the potential returns; essentially this fund will do well in underperforming markets and lag in rising markets.
His view is that QE is a failed experiment which has inflated asset prices with no foundation behind them. People are being hoodwinked into thinking that central banks know what they are doing and are in control. He believes he can see the danger of this approach playing out with investors migrating from ‘risk free’ assets to risk assets.
This provides comfort to investors when risk assets are going up, but as Nick explained comfort will turn to panic when the tide turns. He feels we are already seeing this with some Italian Banks overvalued last year now being worthless, as are some Spanish Banks. He believes the next asset to fall will be EM debt….read more