James Baxter, 31 October 2024
Time for Tax: The UK Autumn Budget
The UK has seen a shift of power since the 2023 spring budget, with a large-scale swing from a Conservative majority to a Labour landslide - a surprising election, not by winner but by magnitude of victory. The Conservative party lost the public’s trust, stemming from malfeasances as far back as 2020. If it was simply a gameshow the burn rate of Conservative prime ministers would be comical, but unfortunately, it was a very real state of affairs, deteriorating public opinion of the party’s ability to lead. The tenure of Rishi Sunak, however, did calm the waters to some extent....
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Francis Banzon, 14 October 2024
Potential changes affecting sukuk issuance
The sukuk market has been growing over the past few years, as Muslim investors seek fixed income like returns. Sukuk is an Islamic-compliant bond with cash flows similar to traditional bonds, but is prohibited from the collection or payment of interest. In order to become permissible in the eyes of sharia religious laws, sukuk issuers sell investors certificates, and the proceeds are used to buy an asset, and the investor receives periodic payments derived from the revenues generated by the asset. Sukuk issuance is split into two types, “asset-backed” and “asset-based.” With asset-backed issuance, the investor becomes the owner of...
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James Penny, October 2024
Taking stock: Our outlook for Q4 2024 and beyond
As we begin a new quarter, it's important to take stock of the ground we covered in Q3, and importantly, how that sets the stage for what might be in store for Q4 and beyond. Political change in Washington, the first Labour budget, inflation moves, two global conflicts and a string of interest rate cuts, all wait in the wings to move this market as we head into Christmas. Despite these challenges, we remain optimistic and ready to capture the opportunities that lay ahead. As I tell the investment managers at TAM, a quarter in the stock market is but...
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Francis Banzon, September 2024
TAM Sharia: where do US tech valuations go from here?
The surge in investor enthusiasm for artificial intelligence (AI) has led to substantial gains in many related stocks, significantly boosting the current bull market this year. This has been accompanied by high earnings expectations and an unrealistic target for exponential growth to continue for AI players. The reality of this dynamic has come under scrutiny in recent months, and investors are beginning to sober up from a frenzy of euphoria. These shorter term headwinds have pushed markets into correction territory, slicing swollen valuations for AI stocks. Unfortunately, this has dragged the TAM Sharia portfolios lower following their strong run over...
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James Penny, September 2024
Wake me up when September ends
September, much like the number 13, holds a somewhat precarious position in people’s minds. It’s the month in which the summer holidays end, so its not a favourite with kids. Likewise, it’s the month in which most people perceive summertime drawing to a close, with it getting darker in the evenings. In its extreme, the Romans believed the month to be ruled by “Vulcan”, the god of fire and forge, giving rise to the expectation that large fires, volcanic eruptions and earthquakes usually happened in September. Weirdly, the great fire of London started on the 2nd of September, 1666. A...
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Daniel Babington, September 2024
The new gold rush
Gold has returned 22% in the last six months driving the metal to all-time highs in US dollars as well as multiple other currencies. The question investors must ask is whether this is a cyclical move, or has gold proved itself as a building block within portfolios? Gold usage has been traced as far back as the ancient Egyptians in Nubia around 2450 B.C. Early civilisations valued the metal so preciously as it was impervious to the tarnish and decay that plagued other materials. Its attraction as a symbol of love and opulence remains. However, it is safe to say...
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Francis Banzon, August 2024
How Magnificent is AI?
Twist and turns in the Magnificent 7 have propelled the S&P 500 beyond what many investors have expected. Optimism surrounding the utility of artificial intelligence (AI) to transform businesses have led a ‘gold rush’ to beneficiaries of the technology. However, this has translated into a concentration to seven… or rather six stocks that have proven the profitability of AI. Yet as enthusiasm grows, valuations continue to swell, and an aversion to ‘FOMO’ have rational investors questioning the level of optimism baked into current share prices. The technology sector has typically drawn the intention of investors due to its impactful innovations...
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Daniel Babington, August 2024
The Fed and Tokyo: Correction or Contagion?
After a strong rally since the start of the year, the first week of August saw a deeply negative period for developed markets. The belief that the Federal Reserve would be able to gracefully start its descent from the fastest increase in interest rates in four decades was looking unlikely. This rosy scenario had fuelled an impressive rally in US assets. The reality seems that the US economy is slowing, signalled on Friday by a soft jobs report (fewer hires, more people off-work and more lay-offs than expected). This data, on the back of results from semiconductor companies which fell...
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James Penny, May 2024
The UK election: Will it or won't it influence the market?
With the British Prime Minister, Rishi Sunak, recently announcing a snap general election taking place on the 4th of July, it is worth taking a look at how TAM think this is going to play out in the market. As a ‘starter for ten’, the hour after the announcement saw the UK FTSE 100 index move up 0.16%, which isn’t particularly exciting. The fact the announcement prompted a nothing response says a lot in and of itself. In fact, there was more speculation about why the PM was unable to find a brolly for the announcement, which some perceived as...
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Francis Banzon, April 2024
The squeeze on fees
The current state of the discretionary fund management market Over recent years, asset growth has been a challenge for many discretionary fund managers (DFMs). And the rising popularity of cheap passive solutions mixed with the recent appetite for money market funds only exacerbated the squeeze on DFMs. We’re now in a “race to the bottom” paradigm where DFMs are being pressured to slash fees in order to compete for assets whilst still offering value for clients. The challenge for DFMs Advisers today have the luxury to shop around, typically with the DFM’s investment capabilities steering the adviser’s allocation decision. Yet,...
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James Penny, 28 March 2024
It's behind you!
Inflation: Staying down or rising back up? Any movie watcher will know that well-trodden scene in which the hero puts the villain to the sword, turns around triumphantly only to see the same villain rising ominously behind them ready for action. When it comes to inflation, we are at a point in which central bankers have effectively said inflation is now coming under control and thus we look forward confidently to lowering interest rates. In our movie analogy it’s that exact part where the hero thinks they have slain the monster and confidently turns around for a victory lap. What...
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James Penny, March 2024
'You have to know the past to understand the present'
As we approach the end of the first quarter, the first real milestone in 2024, it’s worth taking stock. It has so far been a year in which most stock markets have already met or exceeded their targets for the entirety of 2024. Some will see this as a sell signal and others, a buy signal. Well, that’s what makes a market. For me, I am still a little shocked at the step change in direction over the last two years. We certainly came from a dark place in 2022 with little to be excited about. Compared to now: a...
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Francis Banzon, January 2024
TAM Sharia: Where we've been and where we're going
Performance Review 2023 has drawn to a close and investors are beginning to open the bonnet of their portfolios to check which areas need tweaking. Predicting market outcomes was certainly a challenge last year. Investors have yearned for some form of catharsis, as a gauge of market direction has continued to elude participants. A game of scenario table tennis is the term I use to describe 2023, as speculators debated between a hard or soft-landing scenario, or attempted to forecast when interest rate cuts will take place. In fact, the divergence between predictions from strategists and investors with ‘skin in...
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