Speaker 0:
joining me here in the studio of Vinson Magan Taggart, investment manager. The Diversified income strategy of egg on asset Management. Vincent. Thanks very much for being here. A pleasure.

Speaker 1:
Thanks for inviting me.

Speaker 0:
So we hear a lot about multi asset all across the news. But why now? What's the time right for multi us investing?

Speaker 1:
Well, I'd say the time is right now, because we we live in very uncertain times.

Speaker 1:
I think when things are uncertain, investors are either inclined to just sit on the money in cash, in the bank type of investment, or or or on BB uncertain about where to invest. And I think if you sit on cash in the bank, that's OK in the short term. But ultimately you need to put your money to work and to make a good return on drink. Multitask offers that it offers a one stop shop for investors know having to select equities or bonds or other assets they can

Speaker 1:
trusted to multi asset manager.

Speaker 0:
So now there's an income and capital growth approach to the fund, so strong total return since inception. But what's the yield looking like?

Speaker 1:
Yes, so we've way set out about 10 years ago, at a time when market yields were very law on D aftermath of the financial crisis you had yields around. But about the bass right around 0% bond deals around two or 3% on at that time,

Speaker 1:
delivering a four or 5%. In the case of our fund, the targets 5% you was was seen as quite ambitious, but also something that investors wanted, because in the end, if you can give somebody a 5% yield rather than a 4% yield, that's actually 25% Maurin come on bats very attractive to people. Very few people turned down a 25% extra income. You there are certain risks you have to take to deliver that, but that so we set out to do that at a time when market yours were low

Speaker 1:
on. We managed to do it over the last 10 years. Now we're in an interesting time because after last year, 2022

Speaker 1:
market yields have said reset higher, and so it's the yield that we offer is still a premium yield. But the gap to the market yield is Noah's Bigas. It was

Speaker 0:
on the cape. The approach doesn't mean that you can invest in these parts of the market, their love people. Unfortunately, they just ignore,

Speaker 1:
I think partly yes, I think. I mean, we invest globally. SO on Beacon do that because we're part of a big organisation. We have colleagues who cover fixed income markets around the world. Colleagues cover equity markets and alternatives on. Also, we can manage currency risk. These are these concerned like challenges things to put people off from perhaps considering Japanese equities or or or high yield bonds or different asset classes that seem a little bit

Speaker 1:
difficult for for investors on DSS. So we can access that. And I think it's important. One of having the flexibility to do that is what helped us to deliver those above market yields over the last 10 years on also to deliver attractive returns, So

Speaker 0:
has higher bonding. Come a large is to do things differently across the portfolio.

Speaker 1:
Yes, it has.

Speaker 1:
When, when bond yours were low, we had to own alternatives and other assets to try and get our yield to 5% which we did. But now that bond yields have reset higher, we own more bonds and that extra bond allocation is helpful in a number of ways. It first of all, bonds having more bonds means that the unit price of of the strategy is less volatile, so that's a good thing.

Speaker 1:
But it also means that because we're getting MAWR income from the allocation to bonds, we actually can have. We've got space in the portfolio for some securities that have lower yields. On good example, there is technology companies, particularly the US, where we can own the shares of the equity in those companies.

Speaker 1:
They might have yields of 1% which is low when you've got 5% target. But because you're getting that extra income from the bond part of your portfolio, then we can on some of these, which were very difficult to own in the past on. So that's a real positive because, of course, these US technology companies know all of them, but some of them are have been doing fantastically well. Andre at the centre of

Speaker 1:
one of the big market teams this year, the artificial intelligence machine learning on Do you know companies like Microsoft on Broadcom, which which we own, are doing very well on the back of that. Now those perhaps hard to own When? When? When bond yields are a lot lower

Speaker 0:
and you've increased your bond allocation. Recently, we've got exposure across the investment grade space. Has that performed recently?

Speaker 1:
Esso. We have. I mean, we ran when bond deals were very low. For most of last 10 years, we had a relatively low allocation to bones. Andre had to use other assets to help us to achieve our objectives, and that was either equities or alternatives.

Speaker 1:
But with this reset now to higher bond deals, we've been able to have more bonds in the portfolio. Now it's no, it sounds, can sound quite straightforward, and in some ways it is. But there are risks in owning any asset frankly on, for example, in the last thing this year to date, you know, UK government bonds have actually produced a negative return. It's about minus 3% for the 70 10 year government bond this year so far,

Speaker 1:
but you've had a positive yield about 3.5 to 4% so positive yield but negative total return because the the the yield has actually risen over the course of the year on Go, you're not

Speaker 1:
just because you've got higher yours doesn't mean you're going to make positive returns. So there are risks such as interest rate risk and credit risk, that have to be managed on. Obviously, that's something that we think we could do quite well on DATs what people get when the investor from layers

Speaker 0:
on. There's a lot of multi asset funds out there. What makes this one stand out?

Speaker 1:
Well, I think it's always that we would never try and claim we're unique because, you know, you say there's a lot of funds out there. I think we've been

Speaker 1:
We've been following this approach for for for 10 years now. We've delivered that premium yield in a difficult market environment. I think we've kind of created this footprint that at least makes a distinct and clear what it is we're trying to deliver. I think Andre part, part of what we try to do is we. We is always in our mind that

Speaker 1:
the capital is invested in this strategy is doesn't belong to us. We're way have a liquid strategy. The cabinet belongs to the investors. They can take the capital back whenever they want. We don't have any lock ups or that type of control. So we're always very aware of that on DATs something in the way that we communicate, not just the way we invest, but the way that we communicate with our

Speaker 1:
are are investors. So to say, I don't think that makes us unique. But I think it's something that's really important to us and something we try to convey to investors at all times.

Speaker 0:
Looking at the broader market. Is there something that you've noticed recently that you think the wider market just really isn't paying attention to any risks you see coming?

Speaker 1:
Yeah, it's an interesting one there, I think, for the last 12 months or so, everybody's a lot of people. The market's been obsessed with the idea of a US recession, and the longer that's going on, and we haven't had one more recently, you're starting to hear a lot of noise is saying, Well, there's not going to be a US recession or if anything, there might be a soft landing. So, in other words, nothing to worry about. Actually, it's that fact that people are now turning their starting to think there might not be one that gives me pause. I think that

Speaker 1:
perhaps, you know, it's really difficult to forecast that there will be The economies are dynamic and the often surprise you upside or downside. So it's a tricky one to call. But I'm or weary now that people have stopped talking about your association, that I probably was when they were talking about recession. So that's something on perhaps another one is just that. I think there's a lot of debt out there, whether it's consumer debt such as mortgages or corporate debt,

Speaker 1:
which is floating rate there. So what that means is that the interest rate the border has to pay goes up as the base rate goes up on a space. Rates have gone up a lot, then the repayments on those loans are are rising quite meaningful. E

Speaker 1:
SO Consumers on some corporate are feeling the pinch on that has a knock on effect in terms of what consumers could do. Whether they've got less disposable income, they'll go out less than they will spend less money because they have less money on Corporates won't invest, or they may have to cut jobs so that That's another headwind. It's been around, but interest rates, higher interest rates, sometimes a bit of time to what they do take a bit of time to work through two people spending habits. And I think

Speaker 1:
that's another risk that I think people are aware of it. But I think it's something that's bubbling under and could become

Speaker 1:
more problematic in the coming ones. I

Speaker 0:
think there's lags a very important point. But have people increase the allocation to floating rate notes in the period, maybe since covert?

Speaker 1:
Yes, they have, because as an investor, it's a good asset to own a ZA. Borrow our you're having to pay higher coupon, higher interest. But there's someone in the lender on the other side of that is getting a higher return. So it's It's a good asset to one right now,

Speaker 1:
but it's no, it's not the best place to be. If you're a borrower,

Speaker 0:
then something. It's a great place to Dave it. Thank you very much. Thank

Speaker 1:
you