A Brucie news week!

15 March 2017

The Chancellor announces that National Insurance (NI) contributions for the self-employed are going to increase, Wheelchair Rugby kicks off its much needed funding appeal, I am privileged to chair the formal launch of the AREF / IPD Pooled Property Fund Index and last, but certainly not least, KFIM passes yet another milestone, exceeding GBP 1.5 billion of assets under management.

I will leave others to comment on the NI increases and, for those that know me well, you will already have heard far too much on the rights and wrongs of the UK Sport decision to remove elite funding from GB Wheelchair Rugby.


As far as the launch of the Pooled Property Fund Index is concerned, there were no real surprises. Most of the retail funds suffered net capital outflows, in contrast to which the long income funds benefited from capital inflows (reflecting the inevitable flight to safety following the Brexit vote); this in turn leading to the long income Funds, with a 12 month return of 5%, considerably outperforming the benchmark at 2.3%. The Specialist Funds were the worst performing sub-group, albeit this masks quite a wide range of returns with the specialist “alternative” Funds actually performing relatively strongly. The presentation contained a slide which we have all probably seen many times before, showing the volatility of the UK relative to a basket of other countries including Germany which, as always, looks remarkably stable; albeit for those of us that are familiar with such data, this does of course mask a myriad of issues such as liquidity, transparency and the particular idiosyncrasies of the German valuation system (as the old saying goes, if it looks too good to be true, it usually is!). Interestingly the UK now has the lowest leverage of all of the Global markets at around 10% (with the specialist funds having de-leveraged from around 55% to circa 12%). At these levels, the impact on performance relative to the additional administrative burden, does make me question whether the debt is actually worth having.


Turning now to KFIM, over the last five years the business has grown from circa GBP 400m of AuM to just under GBP 1.6 billion. Whist we are very pleased with how the business has developed, what we are really proud of is our relative performance track record with our independently measured portfolios out-performing the market over one, three, five and ten years. Investment performance is of course the most valuable marketing tool that we have and is therefore fundamental to the continuing development of the KFIM business and remains our number one priority.


A good week; albeit I am not quite sure what I should read into the observation that my performance as Chair at the AREF / IPD launch was "a bit Bruce Forsyth-ish".


Kevin Aitchison



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