Another Solid Year from Appian
Investors in Appian Funds enjoyed another good year in 2014 as our multi-asset and equity portfolios delivered strong absolute returns and navigated successfully through what were at times challenging market conditions.
2014 Fund Returns
Appian Value Fund +9.72%
Appian Equity Fund +10.7%
Appian Small Companies Opportunities Fund +12.04%
These performances follow on from equally good numbers in 2013 and mean that the Appian Value Fund for example has returned close to 8% p.a. on average in the past three years.
While 2014 was ultimately a positive year for financial markets, along the way there were several challenges which led to bouts of volatility and significant market weakness. In both October and December for example we saw falls of 6-7% in global equities. Throughout 2014, financial markets had to contend with issues such as conflict in the Ukraine, economic crisis in Russia, continued Eurozone fears including Greece, advance of ISIS in Iraq and Syria, Ebola outbreaks, Scottish referendum as well as many others.
However the underlying support for equities came from continued low interest rates and improved corporate performance. Underlying company profits in aggregate grew in most developed markets in 2014 as profit margins held up in the face of sluggish top line growth.
Our Multi-asset Appian Value Fund also benefitted in the year from good performance from our allocations to both Property and Forestry.
For 2015, we believe interest rates will remain low albeit with slight rises in the US and UK. Corporate profits are also forecast to grow in 2015. This is pivotal as we believe valuations in stock markets are well up with events and though they can be supported by this low interest rate regime we need to see earnings move ahead for markets to make progress. We believe they can, but there is little by way of a buffer in valuation terms so we may well see spikes of volatility as we did in 2014.
Many of the challenges that faced financial markets in 2014 remain intact in 2015 and no doubt new headwinds will emerge.
Our focus in Appian remains constant; to build and protect capital through investing in quality assets while remaining vigilant to risks on the downside. Our approach to asset allocation is truly dynamic and in selecting stocks we, as always, look for solid balance sheets, strong free cash flow, healthy dividends and effective management teams that can drive a business forward.
We look forward to 2015.