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'You know nothing': eight Game of Thrones fund lessons

With Game of Thrones set to return to screens next week, eight Liontrust’s fund managers shared investment lessons illustrated by the harsh world of Westeros

Fund management can be a cut-throat business, where 'you either win or die' – figuratively speaking, of course.

With Game of Thrones set to return to screens next week, eight Liontrust’s fund managers shared investment lessons illustrated by the harsh world of Westeros.

From warning that 'winter is coming' to recognising that 'you know nothing' – or at least not very much – here's what they told us.

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Fund management can be a cut-throat business, where 'you either win or die' – figuratively speaking, of course.

With Game of Thrones set to return to screens next week, eight Liontrust’s fund managers shared investment lessons illustrated by the harsh world of Westeros.

From warning that 'winter is coming' to recognising that 'you know nothing' – or at least not very much – here's what they told us.

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'You know nothing' 

– Ygritte

Citywire AAA-rated Matt Tonge, Economic Advantage team

'While no investor would want Ygritte’s accusation thrown at them, it’s also true that attempting to know everything can be pretty counter-productive.

'As a fund manager you are constantly bombarded with information; there is so much data and research available that you couldn’t possibly look at everything that comes across your desk.

'Recognising that “you know nothing” about the future and instead planning for a range of contingencies is sage advice for us all.'

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'Most men would rather deny a hard truth than face it' 

– Tyrion Lannister

Citywire A-rated Simon Clements, Sustainable Investment Equities team

'While awareness of plastic pollution and how to tackle it has quickly ascended the list of global priorities in recent years, other hard truths such as the need for better resource efficiency, global health issues, and the improvement required in supply chains remain under-reported.

'We believe that the market ignores these hard truths and underestimates the pace of change in companies which are helping tackle these issues.

'In a fast-changing world, the companies that will survive and thrive are those that improve people’s quality of life, drive improvements in the efficiency with which we use increasingly scarce resources, and help to build a more stable, resilient and prosperous economy.'

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'The storms come and go, the waves crash overhead, the big fish eat the little fish, and I keep on paddling'

– Lord Varys

John Husselbee, Liontrust Multi-Asset team

'In my 30-plus years of investment experience I have seen the sector develop at a rate of knots; from an industry of 806 funds in 1985 to a staggering 3,952 today, we’ve come through RDR, Mifids I and II, countless market setbacks and two market crises.

'What I’ve learnt over three decades is that patience is key – in fact it’s a cornerstone of our investment philosophy.

'So while the world – or the country at least – remains focused on Brexit, we note that market historians tell us politics rarely has a long-term effect on investment performance. The only thing that is constant in life is change – embrace it.'

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'You don’t want to wake the dragon, do you?'

– Viserys Targaryen

Carolyn Chan, Asia team

'The prospect of waking dragons might seem to have little relevance for international investors, many of whom are instead worried that China’s dragon economy risks slipping into a slumber.

'In our view these fears are unfounded. China has the largest economy in the world when measured in purchasing power parity (PPP) GDP terms, ahead of the US and greater than the combined EU members. Its own economic growth target may have been reduced from 6.5% to 6.0%, but it is still expected to contribute around half the growth of the global economy this year.

'China is undergoing a necessary, long-term economic slowdown and transition but it remains the biggest driver for investors in Asia.'

 

 

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'A lion does not concern himself with the opinion of sheep'

– Tywin Lannister

Jamie Clark, Macro-Thematic team

'We are Macro-Thematic investors. Our process entails identifying the kind of long-term trends that others have bypassed. Oftentimes, this demands that we roll up our sleeves and delve amidst companies that consensus regards as unattractive.

'Thanks to a decade of low rates and quantitative easing, the valuation spread between "value" and "growth" companies is at all-time highs. Buying value stocks has never been more attractive, particularly when the long-run returns data tells us that value beats growth over time.

'This unprecedented opportunity explains many of our key thematic overweights, from the miners of Scarce Resource basket to the banks of our Rising Rates play.'

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'The heart lies and the head plays tricks with us, but the eyes see true' 

– Syrio Forel

James Inglis-Jones, Cashflow Solution team

'Perhaps Syrio had company cash flows in mind when he said this.

'We find that often the desire to forecast company earnings can be dangerous to investors’ wealth. It is so often beset by our emotional extremes of optimism and pessimism – as Forel councils us, the 'heart lies and the head plays tricks with us.

'Instead a more reliable guidance for future profitability and share price return is provided by close scrutiny of recent cash flows – "the eyes see true".'

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'Chaos isn't a pit. Chaos is a ladder'

– Littlefinger

Olly Russ, European Income team

'While volatility does spike during bouts of chaos such as the credit crunch, most rational investors wouldn’t view it as "a pit" but rather a desirable feature of functioning markets!

'The global quantitative easing programmes that have flooded financial markets with liquidity over the last decade have smothered volatility and encouraged smooth asset price inflation.

'In our view this absence of chaos is completely fabricated and unsustainable, and therefore should be a cause of concern rather than celebration. The return of volatility could prove to be "a ladder" to better returns for discerning stock pickers.'

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'Winter is Coming'

– Ned Stark

David Roberts, Global Fixed Income team

'Government bond markets have enjoyed a long summer, with a combination of fear and, more importantly, technical factors driving yields to levels where they are now ridiculously expensive in absolute terms and even more so when adjusted for inflation.

' "Winter is coming" but when will it begin?

'Technical demand plus fund managers ‘chasing’ the market lower has created a powerful self-sustaining loop that means that the last days of summer could drag on for some time yet.'

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John Husselbee
John Husselbee Average Total Return:
25.4%
11/147 in Mixed Assets - Balanced GBP (Performance over 3 years)
Simon Clements
Simon Clements Average Total Return:
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Jamie Clark
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David Roberts
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Matthew Tonge
Matthew Tonge Average Total Return:
58.92%
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Oliver Russ
Oliver Russ Average Total Return:
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100/103 in Equity - Europe Excluding UK (Performance over 3 years)
James Inglis-Jones
James Inglis-Jones Average Total Return:
26.69%
71/103 in Equity - Europe Excluding UK (Performance over 3 years)
Carolyn Chan
Carolyn Chan Average Total Return:
41.52%
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