Emma Wall: Hello and welcome to the Morningstar Series 'Why Should I Invest with You'. I'm Emma Wall, and I'm joined today by John Chatfeild-Roberts, manager of the Jupiter Merlin series.
Hi John.
John Chatfeild-Roberts: Good Morning Emma. How are you?
Wall: Very well, thank you. But the markets and the economy perhaps not so bright because there is so much uncertainty out there. I thought we'd start with the most pressing issue for U.K. investors, and that's the recent Brexit vote. How does one invest across multi-asset, across multi-funds, with this kind of economic uncertainty?
Chatfeild-Roberts: Emma, I think the principles are just the same as they always were, which is you've got to invest with – in our case managers, but in underlying companies, that are good companies with solid balance sheets, decent cash flow and are going to be here for the long-term.
And whilst we're on the point of uncertainty, life is always uncertain. Brexit is another uncertainty, but actually, I'm actually quite chipper about it.
The pound has gone down a bit which is great for manufacturers and for our economy, and I think there is lot to look forward to.
Wall: So you didn't alter your portfolio ahead of the Brexit vote in anyway, because some multi-asset managers chose to take money out of those sort of more domestically focused stocks?
Chatfeild-Roberts: We've always had quite internationally invested portfolios and we were not investing ahead of the Brexit voting any other way than that which we always do.
Wall: And I suppose, it is worth mentioning, you say that uncertainty is always out there. We don't have a crystal ball for the markets. But the other thing that's on the horizon is the U.S. Election. I've been speaking to some people who say, or suggest, that actually should Trump become President, it would have far further reaching ramifications than this Brexit vote.
Chatfeild-Roberts: The interesting thing about American Presidents is they do not have untrammeled power. The American constitution is set up as a series of checks and balances, and I don't know the detail of what potential President Trump might do. But I think markets take these things in their stride, and as an investor, you just have to go back to the basics of investing in the good companies that will be around, will be generating those cash flows and those profits.
Wall: Because of course the other thing that's playing into investing at the moment regardless of the sort of geo-political tremblings is the low growth, slow growth theme that we are entering into because of the point in the market cycle that we are in. So, how does that affect the portfolio?
Chatfeild-Roberts: The world's problem personally I think is the excess of debt rather than lower grade per se. People are worried about the low grades, because they can't see how that debt pile is going to be managed down. And that actually is a longer-term problem and we've talked before about this slightly odd time that we live in because you've got this huge pile of debt which has got to be got rid of one way or another. But in terms of growth, I'm reasonably relaxed actually.
Wall: So, what should investors do that are worried? Is this purely then just about focusing on quality?
Chatfeild-Roberts: I think – I mean, that is my answer. If they are really worried – I mean, yes, you can invest in government bonds, but if you invest in the 10-year of German bonds, actually you pay them for the privilege.
If you invest in U.K. gilts, you're not going to get much over 1% as a return. So, you have to have a view about inflation and deflation. And I actually think in the long term the safer way of investing is to invest in high-quality companies with solid balance sheets and decent cash flows.
Wall: I suppose that key phrase in there as well as for the long term. Brexit maybe a blip, Trump may be a blip, but over the long term one shouldn't be concerned with these things that have short-term volatility?
Chatfeild-Roberts: Well, yes, and actually, I don't know how many of your viewers have looked at their portfolio valuations recently, but every single one of the Jupiter Merlin funds that I run was up during June. Well, it's not a surprise to me because sterling was weak and we're international investors and our companies are doing well. But if you read just the headlines, you would think that everybody lost huge, huge amounts of money, but that is not necessarily the case.
Wall: John, thank you very much.
Chatfeild-Roberts: Thank you, Emma.
Wall: This is Emma Wall for Morningstar. Thank you for watching.
