A message to investors

As we begin another year of active investing, it's worth reflecting on 2016 and the year that was. A sharp equity correction, concerns over China, and even recession fears earlier in the year, were displaced by two significant and unforeseen political events later in the year. The Brexit referendum result and the election of Donald Trump as the 45th president of the United States caught most commentator's off-guard. Those same commentators were also confounded by how quickly equity markets regained their poise and moved higher shortly after those events.

We've said on several occasions that we are not market forecasters and the tumultuous events seen in 2016 underscore that stance. Being in tune with market trends, having a flexible stance but maintaining conviction, is our approach and one we have persisted with for many years now. Historical patterns suggested to us that 2016 could be another year of volatility, which is what happened, and this prediction allowed us to actively navigate through times of market stress. We believe that volatility presents opportunities for active managers, and the active asset allocation decisions that we made, in particular in the latter part of the year, led to strong returns across the large majority of our funds.

We see two main trends continuing into 2017 - volatility in investment markets and positive returns from equities. We remain focused on our top-down view of the world, where economic and market cycles drive asset allocation preferences combined with a due regard for price trends and risk control.

We feel that the balance of evidence backs our current market stance: namely heavy equity positions, low fixed income weightings and high exposure to a strong dollar. We are always alive to extremes of sentiment or valuation that might arise, and recognise that some of our views are becoming consensus views now. So we expect to get opportunities during the year to reposition our asset allocation or currency exposures, either tactically or for the longer-term.