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How we stand today

It’s been a very eventful 6 months for financial markets, culminating in the fall-out from the result of the “Brexit” referendum in the UK. Volatility in financial markets, including currencies, spiked on the result and sentiment remains fragile. 

Markets took some re-assurance in the view that Central Banks would step up their efforts to support growth in the face of this new threat, and that while it might be bad for the UK, the rest of the world can cope.

Apart from a likely recession in the UK, a key risk is financial contagion from the UK to the Eurozone, fuelling more populist pressures, and if we were to see more knife-edge votes, it would impact on Eurozone markets overall.

Policy and politics are key drivers in the near term and the leadership vacuum in the UK may persist for several months. Indeed the invocation of Article 50 in the UK, the necessary step to begin the process, appears to be pushed back even further.

Brexit does represent a negative shock to a global economy where growth is resilient but not that robust. It seems central banks will remain very supportive. The Bank of England and the ECB look like they will remain in easing mode and the Federal Reserve in the US may hold off on rate hikes as it takes account of the health of the global economy in its decision making process. In the near term we are likely to see a wave of downward revisions to corporate profits and economic growth as the full impact of postponed investment plans, relocation, volatile property prices and weaker consumer confidence is assessed.

We believe markets will ebb and flow as we get greater clarity around the process and as companies firm up on strategies to manage their way through this uncertainty.
How are we positioned?
Brexit was one of a number of risks that we identified at the turn of the year, along with a debt-laden Chinese economy, European instability and US politics. It’s fair to say we can’t close the file on any of these.

Because of these “event” risks and the back drop of a sluggish global economy, we had been building up the cash levels in our funds over the past 12 months. Today, for example, our allocation to cash is in excess of 30% in our Value Funds.

We have also built up (and will continue to) our allocation to assets such as forestry, property and infrastructure, which offer real growth and diversification.

Our equity portfolios have a solid back bone of strong balance sheets, superior return on capital, good free cash flow and sustainable dividend yield. This discipline ensured we had modest exposure to banks and none at all to UK banks which bore the brunt of the market downturn.

Our asset allocation and our quality bias meant that, in spite of all the market and currency volatility, the Appian Value Fund registered a decline of just over 2% in the first half of the year, and was essentially flat (-0.09%) for the second quarter.

While we are cautious, we are not pessimistic, and on weak days in the markets we are ready to pick- up stocks where we see value in indiscriminate markets.

The information contained in this material is not financial advice. Nor does it constitute an offer for the purchase or sale of any financial instruments, trading strategy, product or service. No one receiving this material should treat any of its contents as constituting advice. It does not take into account the investment objectives, knowledge, experience or financial situation of any particular person. You should seek advice in the context of your own personal circumstances prior to investing or taking out any product from your own independent adviser.
This material has been prepared and issued by Appian Asset Management Limited on the basis of publicly available information, internally developed data and other sources believed to be reliable. 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 Limited 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. 

If you decide to invest in the Appian Unit Trust, further information in relation to all risks is provided in the Fund Prospectus and supplements. This material is available from Appian Asset Management Limited, 42 Fitzwilliam Place, Dublin 2. If you invest in the Appian Unit Trust, you may lose some or all of the money you invest. The value of your investment may go down as well as up. This investment may be affected by changes in currency rates. 

References to past performance are for illustrative purposes only and are not a reliable guide to future performance. Projected returns are estimates only. Forecasted returns depend on assumptions that involve subjective judgement and on analysis that may or may not be correct. 

The above disclaimer and limitations of liability are applicable to the fullest extent permitted by law, whether in Contract, Statute, Tort (including without limitation, negligence) or otherwise.
Appian Asset Management Limited is regulated by the Central Bank of Ireland. 

Appian Unit Fund Prices  
1 July 2016 
Appian Value Fund
Appian Equity Fund
Appian Small Companies Opportunities Fund
Appian Liquidity Fund
Appian Ethical Value Fund

For more detailed information on each of our funds click here

Patrick J Lawless
Chief Executive Officer
Eugene Kiernan
Head of Investment Strategy
Frank O’Brien
John Mattimoe
Head of Equity Analysis
Lisa Neary
Fund Manager
Niall Dineen
Senior Fund Manager
Click here for more information about our Investment Team
John Flavin
Senior Relationship Manager
Tel: (01) 662 4053 direct
Click here to email John
Pat Kilduff
Senior Relationship Manager
Tel: (01) 662 3985 direct
Click here to email Pat
Cillian Quinn
Client Relationship Executive
Tel: (01) 662 4055 direct
Click here to email Cillian
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