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Spring


In recent weeks Angela Merkel has described Ireland as “the growth engine of Europe”. Whilst she was defending the economic benefits of austerity there is a general recognition within financial markets that Ireland is likely to, just as with 2014, record the highest GDP growth figure of any nation in the Eurozone this year.

As unemployment has fallen a virtuous circle has been created with greater consumer confidence, improving property values, better growth figures via net exports and retail sales, an increased tax take (with associated improved debt metrics) and lower borrowing costs. A recent survey of consumer confidence in the Dublin region showed it to be at its highest level in its 12 year history. This confidence is translating into spending with retail sales volumes up by close to 5% over the past year. The economic imperative is to further reduce our unemployment level, currently at 10%, getting more people back to work to ensure this virtuous circle continues.

So with suggestions that fiscal tightening will shortly come to an end, a material depreciation of the Euro and the positive consequences of falling oil prices, our view is that upgrades to GDP growth in Ireland are more likely than downgrades. Even Permanent TSB, a bank that failed the ECB stress tests in October, is now being warmly welcomed back to markets. But how and what is the most appropriate manner for Appian to profit from the Eurozone’s fastest growing economy.

Firstly our funds continue to do well:
 

Fund performance year to date 2015

Appian Value Fund

+7%

Appian Equity Fund

+13.5%

Appian Small Company Fund

+13%


As always we seek out opportunities but are very mindful of the risk. A broad-brush exposure to Irish equities doesn’t really capture the improving Irish economy we are referring to, as many of the leading stocks are global in nature and world cement demand, international low cost air traffic or food flavourings matter more than the domestic market. We do have selective exposure to stocks such as UTV Media, which will benefit from stronger advertising revenues and the investment it has made in the Irish market. We also own Hibernia REIT, which will capture the improving commercial property market. Property is a reasonably direct route to the improving local economy and we are seeing the benefits of this in our property exposure in the Appian Value Fund. We take our exposure through the Irish Property Unit Trust. This provides us with exposure to quality assets in the office, retail and logistics sectors. This asset has delivered strong returns to the fund – just under 34% in 2014 and up 2.4% in the first three months of 2015. Our meetings with management confirm our view of a well-managed and, very importantly, disciplined approach to the management of the portfolio. The fund’s clear objective is to deliver a consistent and stable income yield. IPUT currently produces a yield of 5.7%. More recently the fund has been allocating capital to the retail sector, but still is heavily weighted to the Dublin office market. There is, we believe, further potential in this sector as evidenced by recent deals and on- going levels of demand.

At Appian we always look to build diversified portfolios where we can add value across different sectors or asset classes. Property, selected quality equities and in the future building exposure to Irish infrastructure will allow Appian fund investors to benefit from this improving Irish economy.

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WARNING: The value of your investment may go down as well as up. Past performance is not a reliable guide to future performance. These investments may be affected by changes in currency exchange rates.

Appian Asset Management is regulated by the Central Bank of Ireland. No part of this document is to be reproduced without our written permission. This document has been prepared and issued by Appian Asset Management on the basis of publicly available information, internally developed data and other sources believed to be reliable. It does not constitute an offer or an invitation to invest, or the provision of investment advice. No party should treat any of the contents herein as advice in relation to any investment. While all reasonable care has been given to the preparation of the information, no warranties or representation express or implied are given or liability accepted by Appian Asset Management or its affiliates or any directors or employees in relation to the accuracy fairness or completeness of the information contained herein. Any opinion expressed (including estimates and forecasts) may be subject to change without notice. 

Appian Unit Fund Prices  
1 May 2015 

Appian Value Fund 140.99 

Appian Equity Fund 165.26 

Appian Small Companies Opportunities Fund 166.26 

Appian Liquidity Fund 106.47


For more detailed information on each of our funds click here
 

Patrick J Lawless
Managing Director
John Mattimoe
Head of Equity Analysis
 
Eugene Kiernan
Head of Investment Strategy
Gareth Henson
Portfolio Manager
 
Pat Kilduff
Head of Economic Analysis
Frank O’Brien
Consultant
Click here for more information about our Investment Team
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