The Weekly Update

Happy New Year to everyone and let’s hope 2017 is a prosperous year for everyone.

December was a very busy month for us with the launch of two new UCITS funds; the Stratton Street NFA Global Bond Fund launched on 30th November and the Stratton Street Next Generation Global Bond Fund launched on 16th December. With our Renminbi Bond Fund strategy, we now have three Luxembourg UCITS vehicles to complement our Guernsey PCC funds.

Looking forward, 2017 is going to be an interesting year. Against a backdrop of ageing populations in the “developed world”, voters are likely to continue to hope for a return to “the old days” even though there is very little prospect of that happening. Consequently, political change in the major economies is likely to continue with populist parties getting an increasingly large share of the votes. But whatever party is in power, one cannot escape the reality that economies cannot gain competitiveness by continuing to do things the same way things have always been done. There are plenty of difficult ways to gain competitiveness; through significant investment or by slashing wages, but the easiest one is to devalue your currency.

Which raises the question as whether Trump’s fiscal policies will achieve their goals. The short term impact is likely to be an increase in the budget and current account deficits and with the FOMC likely to tighten more quickly than might have otherwise been the case, the dollar is quite likely to rally further. But that is unlikely to make the US more competitive, quite the reverse. So don’t be at all surprised to see the US Treasury market flatten as investors look through the short term growth boost and start to factor in the combination of a stronger dollar and higher short rates on the longer term outlook for the US economy.

Which is why, after coming up with the Next Generation Global Bond Fund a couple of years ago, we were so keen to launch the fund at the end of last year. The flip side of a stronger dollar will be weaker exchange rates elsewhere. Somewhat perversely, Trump’s policies will help some of the emerging economies as they gain competitiveness if the dollar does indeed strengthen as we currently expect. Weakening currencies are bad news for indebted nations however, as their unhedged dollar liabilities rise as a proportion of GDP, but for the creditor nations, this will help their longer term prospects. In due course it will also present opportunities in some emerging currencies, although that may be a story for later in 2017 or maybe even into 2018. We shall see.

Markets are certainly interesting and anomalies remain numerous but for the time being at least, we still have a bias towards long-dated high grade bonds of the creditor nations.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.