Contrarian Wellcome Trust produces 18% return on investment

first_imgIn his report, Sir William Castell, chairman at the Wellcome Trust, said: “Danny Truell [the trust’s CIO] and his investment team continue to evolve our portfolio to ensure we have greater control of our destiny and that our long-term returns are driven more by the evolution of businesses than by short-term market fluctuations.”For example, over the past year, the trust – which does not invest in companies deriving a material turnover or profit from tobacco-related products –neither sold shares nor added any new holdings to its directly managed Mega Cap Basket of 31 holdings in large companies, valued at £3.4bn.Set up in late 2008, the basket has returned 55% on cost, the best performer being its £255m block of Marks & Spencer shares, which has returned 134%.A significant post-balance sheet development was the Twitter IPO, which resulted in a profit of $100m, from a stake of more than 1% in the company.A further $100m profit came from the sale of Wellcome’s stake in drug company Amplimmune to AstraZeneca.The report said market timing was an important tool for the fund.“Having significantly increased our exposure to public and private equity holdings in the period between 2008 and 2011, when many investors had become risk-averse, we have reaped the rewards in the last two years as they have again embraced risk assets,” it said.Equities in total account for 74.5% of the trust’s portfolio.The report added that, over the past decade, the trust had consistently managed to secure better returns than equity markets – 10% per annum versus 9% for global equities – while recording much lower levels of volatility.However, the largest contribution to equity performance came from the outperformance of strategies against their benchmarks.The report said: “The £612m internally managed Optionality Basket – which consists of companies whose operating performance and valuation appear to offer considerable upside potential given the underlying strength of their franchises – led the way, returning 47% and beating markets by 29%.”Turning to fixed income, the trust said: “Not owning bonds or commodities, which generally delivered negative or lacklustre returns, removed a potential drag on performance. Both nominal and real bond yields remain, in our opinion, too low as a consequence of financial repression, and we are unlikely to change our stance on bonds.”But it said investment opportunities might be more interesting in commodities.The real estate portfolio – 10.2% of assets – is made up 90% of residential property, which recorded another strong year.As for the immediate future, Wellcome expects asset returns to be weaker over the next five years – say in the high single digits – than they have been over the last five or 10 years.“Companies will continue to struggle to grow revenues, given the negative impact on the productivity of both labour and capital from continuing zero interest rate policies, which divert capital away from productive investment,” said the report, which also said equities now appear fairly valued.The report concluded: “Our response has been to concentrate our portfolio further to seek excess returns, which are driven by the success of individual assets, business models and partnerships over the long term rather than merely by market price movements.”More than 80% of the portfolio value is now concentrated in just under 100 directly held public or private assets or in external partnerships, each with a value exceeding $100m. The Wellcome Trust, the UK’s biggest charity, made a total return of 18% on its investment assets for the year to 30 September, thanks partly to counter-cyclical action in previous years, according to its annual report.Returns were £2.6bn (€3.1bn) on a portfolio worth £14.5bn at the start of the year, with investment assets now worth £16.4bn.The trust – whose main activity is funding medical research – said it had enjoyed positive returns from each major element of its portfolio – public equities, private equities, venture capital, hedge funds and property – over one, three, five and 10 years.All those asset classes recorded gains of between 15% and 20% over the past year.last_img read more

ECB signals end to QE but interest rates to stay low

first_imgThe European Central Bank (ECB) has signalled its intention to end its €2.4trn bond-buying programme at the end of this year.However, in an announcement deemed by some investors as surprisingly dovish, the central bank indicated that it could keep interest rates at their current ultra-low levels until well into 2019.Speaking in Latvia yesterday, ECB president Mario Draghi said the bank would halve the monthly value of assets purchased through its quantitative easing (QE) programme for the last three months of this year, from €30bn to €15bn.As long as inflation remained within its desired range, the ECB said it would cease buying new assets at the end of December. Source: ECBECB president Mario Draghi (second right) addresses media in Riga on 14 JuneThe ECB planned to keep reinvesting the proceeds from maturing bonds purchased through QE “for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation”, it said in a statement yesterday.Draghi told journalists gathered in the Latvian capital Riga that “significant monetary policy stimulus” was still necessary to support prices and inflation.He added that the ECB “stands ready to adjust all of its instruments as appropriate” to meet its inflation target of close to 2%.‘Unnecessarily dovish’Nick Peters, multi-asset portfolio manager at Fidelity International, argued that the cautious tone was “unnecessary”.While the end to QE was expected by markets, he said the bank’s decision to commit to not hike rates until later in 2019 was “surprising” given that inflation forecasts indicated that the bank’s target was in sight.“Second, extrapolating the steady fall in unemployment the euro-zone has now enjoyed for many years, the [unemployment] rate will be back at 2007’s low levels by the time the ECB hikes for the first time this cycle,” Peters added.“The slowing in euro-zone data at the start of this year is clear, but this feels like an overreaction from a central bank that we would expect to remain a steady hand with a medium-term outlook.”Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers, described the comments as “firmly dovish”, despite the reduction in stimulus.“The still quite dovish ECB should also further help European risky assets which had seen risk premia rise on the back of developments in Italy,” Ahmed said. “All in all, global liquidity is moving towards a more tightening stance but the ECB is playing its role in trying to ensure that the journey remains gradual and anchored.”Currency movementsThe euro was likely to weaken against the dollar, according to Larry Hatheway, chief economist at Swiss asset manager GAM, based on the contrast between the Federal Reserve’s plan to raise interest rates twice more by the end of this year, and the ECB’s more conservative stance.David Riley, chief investment strategist at BlueBay, added: “The euro is understandably weakening against the dollar with the Fed ever more confident in the economic outlook and the need to raise interest rates, and the ECB that remains cautious about removing its extraordinary monetary support.“European government bonds will stay very low, anchored by a negative ECB deposit rate, while growth-sensitive assets will be supported by continued ultra-easy monetary policy.”  The Euro Stoxx 50 index closed 1.4% higher last night, while German 10-year Bund yields up 0.5% during the day at 6pm UK time on Thursday. Asset managers were surprised by the tone of the president’s comments, however, as he spoke of keeping interest rates low at least through the summer of 2019.last_img read more

Mr Green refreshes Redbet sportsbook with Kambi

first_img Share Betsson outrides pandemic challenges as regulatory dramas loom July 21, 2020 Submit Share Kindred marks fastest route to ‘normal trading’ as it delivers H1 growth July 24, 2020 Jesper Kärrbrink – Mr GreenStockholm-listed online gambling group MRG (formerly Mr Green & Co) has announced the relaunch of its Redbet European online sportsbook subsidiary.  The Redbet brand was acquired by MRG in December 2017, as part of the firm’s €7 million outright acquisition of Malta-based independent online gambling group Evoke Gaming.The Redbet sportsbook will be operated by MRG’s flagship online gambling subsidiary Mr Green.In its H1 2018 trading update, MRG confirmed that it would relaunch the Redbet sportsbook property utilising long-term partner Kambi Group sports betting software and platform provisions.Jesper Kärrbrink, CEO of Mr Green Ltd, comments: “Redbet’s new Sportsbook brings entertainment and adds value to a wider range of player preferences which is key when introducing the brand across more markets.Thanks to Kambi’s flexible product and our unique features, we believe the new Redbet Sportsbook will play perfectly among our customers and that our players will appreciate the improved user experience and design”Max Meltzer – KambiUpdating stakeholders, MRG details that the relaunched Redbet will feature a number of significant improvements, including greater market inventory, faster cash-out functionalities and all-around improved user experience following an updated redesign of the property.Relaunching Redbet, Max Meltzer, Kambi Chief Commercial Officer, said: “It’s great to see Redbet go live on the Kambi Sportsbook platform this week following what was a speedy and smooth transition from its previous supplier – just two months from start to finish during a busy period operationally with the World Cup and newly regulated markets opening up. The result is Redbet now has the flexible Sportsbook it required to take the next step and realise its ambitions of entering new markets with an exciting and differentiated sports betting experience.” Related Articles StumbleUpon GiG lauds its ‘B2B makeover’ delivering Q2 growth August 11, 2020last_img read more