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Tuesday, 03 February 2015
Sales Note
This Mornings News
Property
Picton Property (PCTN) Acquisition

PCTN has completed the acquisition of the long leasehold interest in two retail warehouse units adjacent to its existing
holdings at Angouleme Way Retail Park, Bury for £3.9m, reflecting a net initial yield of 7.9%. The units are currently let to
Argos and Poudstretcher for a further four years.
Investec insight

As previously noted, the rise in commercial values seem to be continuing as investors, apparently from the insurance space
seem to be increasingly hunting for yielding assets as government bonds across the world have seen their yields
compressed further over the last three months. While this search tends to be limited to trophy assets, the impact of other
investors outbid higher up the quality curve should not be underestimated. With yields of 7.9% there seems to be further
room for yield compression given the weight of money looking for a home in the sector.

Access Fund Detail Here
Hedge
Dexion Absolute (DAB) Exit offer

DAB has confirmed the first exit payment for the 2014 Exit Offer will be $2.586328 per redeemed GBP share, $2.895020
per redeemed EUR share and 3.535615 per USD share. Payment is expected to be made on 13 February.

Access Fund Detail Here
Polar Capital Financials (PCFT) finals to 30 November 2014

NAV: Total return of +9.8% vs MSCI World Financials Index +11%.

Dividend: of 1.35pps declared, meaning target of 3.1pps dividend for FY2014 met.

Relative Performance: Underperformance due to surge in value of USD and US financials relative to the Euro and
European financials in October 2014.

Discount/Premium: While the NAV rose decidedly, the Company's ordinary share price fell over the year by 4.5%. As a
result, the Company's ordinary share price, which had started the financial year at a modest premium to NAV, finished the
year trading at a 7.4% discount to NAV as sentiment towards the sector vitiated.

TER: At launch the estimated ongoing charges were 1.27%. In the initial, partial financial year it was 1.16%, which has
fallen further in the first full financial year to 1.09%.

Access Fund Detail Here
Investec Economics
MPC preview – How afraid of low inflation?
 The announcement from the MPC’s February meeting takes place on Thursday 5th at midday. Our main
interest is not so much the outturn of the meeting, which will almost certainly be unchanged policy (i.e. Bank
rate at 0.5% and QE target at £375bn), but whether members are becoming more concerned that the current
period of low inflation could extend into the medium-term. The significance of next week’s decision is that it will
Heads of Product
Sales
Sales Trading
Market Making
Corporate
Jamie Lowe
Charles Stagg
Carl Goossens
Peter Brown
David Anderson
+44 (0) 20 7597 5015
+44 (0) 20 7597 5042
+44 (0) 20 7597 5787
+44 (0) 20 7597 5063
+44 (0) 20 7597 5097
[email protected]
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[email protected] [email protected]
Fin Bodman
Edward Malone
+44 (0) 20 7597 5247
+44 (0) 20 7597 5098
[email protected]
[email protected]
Readers in all geographies please refer to important disclosures and disclaimers starting on page 6
[email protected]




be based on the forecast prepared for the BoE’s Quarterly Inflation Report the following week, which will
become the Bank’s baseline economic view for the ensuing three months.
Minutes from January’s MPC minutes already showed evidence of such a shift with members considering the
risk of low inflation becoming more engrained. Moreover Martin Weale and Ian McCafferty, who had both called
for higher rates in each of the previous five meetings, shifted their stance to ‘no change’. The UK is not unique
in fretting over the fallout from the slide in energy costs. The ECB of course, unveiled a €1.1trn plus QE
package at its 22 January meeting to counter risks of engrained deflation. Also both the Norges Bank and more
recently, the Bank of Canada cut interest rates unexpectedly, the latter citing concerns over the economy and
financial stability from recent oil price moves.
It seems unlikely that the MPC will include a message in next week’s accompanying statement and so markets
may have to wait until the Inflation Report (now due on Thursday 12 February) for a policy steer. Recently we
pushed back our view of the timing of the first increase in the Bank rate to November this year, but clearly this
will depend upon the collective angst on the committee over medium-term disinflation risks as well as the more
tangible metrics such as growth, pay and currency movements. In December, Governor Mark Carney remarked
that the reduction in oil prices was ‘unambiguously net positive’ for the economy. While this is probably the
case in terms of the short-term growth outlook, policymakers may not now be quite so confident about the
broader ramifications.
A final point is that the yield curve has been pricing in the start of policy normalisation at a more distant point in
the future – at the time of writing, this was around July 2016. We suspect that heavy demand for gilts (5y yields
are now below 1.0%) means that the short-end of the yield curve is being dragged down to the extent that it is
no longer an accurate representation of where ‘true’ market expectations are. As we pointed out in our recent
Global Economic Overview ‘Parity like it’s 1999?’, the opposite happened in 1994 when a major sell-off in
government bond markets resulted in an aggressive steepening in yield curves which subsequently proved to
be unfounded. We suspect that we are witnessing a similar situation now, only in reverse.
To access a printable version of this note please click here
Daily Article
Americans Are Feeling Better About the Economy—a Lot Better
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Consumers are breaking into a happy dance and breaking out their wallets.
Ever since oil prices began falling, consumers have been feeling better and been more willing to spend on stuff
not flowing through a gas pump.
The latest evidence of that came Friday with the release of the fourth-quarter gross domestic product report
and the January consumer sentiment index.
The Commerce Department reported real consumer spending jumped at a 4.3% annual rate, the fastest pace
since 2006 and the main highlight of a disappointing report that showed the economy overall grew just 2.6% at
the end of 2014.
The consumer acceleration was broad-based. Growth accelerated for spending on durable and nondurable
goods well as services.
Consumers are more willing to spend because they feel more enthusiastic about the economy and their
finances. The consumer sentiment index compiled by the University of Michigan’s Surveys of Consumers
ended January at 98.1, the highest reading in 11 years...
Full Article Here
Page 2 | Tuesday, February 03, 2015 |
UK Listed CEFs: Price, NAV and Volume
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
Price 1wk
Price Fallers 1 Week
NAV 1wk
Price Gainers 1 Week
Fund Name
Ticker
CATCo Reinsurance Opps Ord
CAT
Utilico Inv estments O/Inc
Baring Emerging Europe Ord
%
Fund Name
Ticker
-7.7
Redefine International Ord
RDI
6.4
UTL
-6.2
Renew ables Infrastructure Grp Ord
TRIG
5.1
BEE
-5.0
JPMorgan Income & Capital O/Inc
JPI
4.6
JPMorgan Russian Securities Ord
JRS
-4.9
Picton Property Income Ord
PCTN
3.7
Leaf Clean Energy Ord
LEAF
-4.8
Doric Nimrod Air Three Ord
DNA3
3.2
BlackRock Emerging Europe Ord
BEEP
-4.7
JPMorgan Global Conv ert Income Ord
JGCI
3.0
Fidelity China Special Ord
FCSS
-4.7
Greencoat UK Wind Ord
UKW
2.9
Ashmore Global Opp GBP Ord
AGOL
-4.4
Bluefield Solar Income Fund Ord
BSIF
2.9
NB Distressed Debt New Glb Ord
NBDG
-4.3
City Natural Resources Ord
CYN
2.7
North American Income Trust Ord
NAIT
-4.2
Atlantis Japan Grow th Ord
AJG
2.6
Fund Name
Ticker
%
BlackRock Latin American Ord
BRLA
JPMorgan Russian Securities Ord
Fidelity China Special Ord
NAV Fallers 1 Week
%
NAV Gainers 1 Week
Fund Name
Ticker
-4.5
Marw y n Value Inv estors Ord
MVI
4.9
JRS
-4.3
Baillie Gifford Shin Nippon Ord
BGS
3.2
FCSS
-4.1
Carador Income Fund USD Ord
CIFU
2.9
Utilico Inv estments ZDP
UTL
-4.0
Baillie Gifford Japan Ord
BGFD
2.8
Baring Emerging Europe Ord
BEE
-4.0
SVG Capital Ord
SVI
2.6
BlackRock Emerging Europe Ord
BEEP
-2.9
BlackRock Frontiers Ord
BRFI
2.6
JPMorgan Chinese Ord
JMC
-2.9
Fidelity Japanese Values Ord
FJV
2.6
Aberdeen Latin American Income Ord
ALAI
-2.8
DP Aircraft I Ord
DPA
2.5
Templeton Emerging Markets UK Ord
TEM
-2.7
JPMorgan Japanese Ord
JFJ
2.4
Allianz Technology Trust Ord
ATT
-2.7
New City High Yield Ord
NCYF
2.3
Fund Name
Ticker
Ratio
Fund Name
Ticker
BlueCrest AllBlue GBP Ord
BABS
12.2
3i Ord
III
8.2
Adv ance Dev eloping Markets Ord
ADMF
9.5
Scottish Mortgage Ord
SMT
2.9
Carador Income Fund USD Ord
CIFU
6.1
HICL Infrastructure Company Ord
HICL
2.6
Baring Emerging Europe Ord
BEE
4.6
Templeton Emerging Markets UK Ord
TEM
2.0
Dex ion Absolute GBP Ord
DAB
3.2
Alliance Trust Ord
ATST
1.9
JPMorgan Emerging Markets Ord
JMG
2.9
BlueCrest AllBlue GBP Ord
BABS
1.8
Henderson Value Trust Ord
HVTR
2.6
Pacific Alliance Asia Opps Ord
PAX
1.8
JPMorgan Ov erseas Ord
JMO
2.5
BH Macro GBP Ord
BHMG
1.7
Templeton Emerging Markets UK Ord
TEM
2.2
RIT Capital Partners Ord
RCP
1.6
JPMorgan Clav erhouse Ord
JCH
2.0
SVG Capital Ord
SVI
1.5
Daily Volume / 3m Volume
%
1 Month Average Daily Volume £m
£m
So urce: 2015 M o rningstar
Page 3 | Tuesday, February 03, 2015 |
UK Listed CEFs: Price, NAV and Volume
Price 1wk
0.00
NAV 1wk
-0.50
-1.00
-1.50
-2.00
-2.50
-3.00
-3.50
-4.00
-4.50
-5.00
So urce: 2013 M o rningstar
Price Fallers 1 Day
Fund Name
Gabelli Conv ertible & Income Ord
Tekla Healthcare Inv estors Ord
Tekla Life Sciences Inv estors Ord
Global High Income Fund Inc. Ord
MFS Gov ernment Markets Income Ord
Denali Fund Ord
BlackRock Health Sciences Ord
First Trust Specialty Finance Ord
Putnam Premier Income Ord
Gabelli Health & Wellness Ord
Price Gainers 1 Day
Ticker
GCV
HQH
HQL
GHI
MGF
DNY
BME
FGB
PPT
GRX
%
-4.1
-2.7
-2.4
-1.7
-1.6
-1.5
-1.5
-1.5
-1.3
-1.3
Fund Name
JH Tax Adv antaged Global Ord
GAMCO Glb Gold Natural Res&Inc Ord
Taiw an Fund Ord
Japan Smaller Capitalization Ord
MS India Inv estment Ord
Aberdeen Chile Fund Ord
Aberdeen Australia Equity Ord
Nuv een Div ersified Commodity Ord
Alpine Total Dy namic Div idend Ord
Guggenheim EW Enhanced Equity Ord
So urce: 2013 M o rningstar
NAV Fallers 1 Week
Fund Name
MS China A Share Ord
Mex ico Fund Ord
Latin American Discov ery Fund Ord
Mex ico Equity & Income Ord
Aberdeen Latin America Equity Ord
Sprott Phy sical Silv er Trust Ord
Turkish Inv estment Fund Ord
Central Europe Russia & Turkey Ord
JPMorgan China Region Fund Ord
Templeton Dragon Fund Ord
NAV Gainers1 Week
Ticker
CAF
MXF
LDF
MXE
LAQ
PSLV
TKF
CEE
JFC
TDF
%
-5.9
-5.2
-5.0
-4.5
-4.3
-3.9
-3.9
-3.9
-3.4
-3.1
Daily Volume/ 3m ADV
Fund Name
Japan Smaller Capitalization Ord
Aberdeen Australia Equity Ord
Nuv een Div ersified Commodity Ord
ASA Gold and Precious Metals Ord
BlackRock Core Bond Ord
BlackRock Income Opportunity Ord
GAMCO Glb Gold Natural Res&Inc Ord
MFS Gov ernment Markets Income Ord
MS Emerging Markets Debt Ord
Aberdeen Japan Equity Fund Ord
Ticker
JOF
IAF
CFD
ASA
BHK
BNA
GGN
MGF
MSD
JEQ
%
2.8
1.9
1.7
1.4
1.3
1.1
1.0
0.8
0.8
0.7
So urce: 2013 M o rningstar
1 Month Average Daily Volume £m
Ticker
USA
BTO
KF
BTF
HQH
JQC
CET
RVT
PFL
UTG
Ratio
3.2
1.5
1.5
1.5
1.3
1.3
1.3
1.2
1.2
1.2
So urce: © 2013 M o rningstar
Page 4 | Tuesday, February 03, 2015 |
%
3.5
3.1
2.5
1.9
1.9
1.8
1.7
1.5
1.4
1.4
So urce: 2013 M o rningstar
So urce: 2013 M o rningstar
Fund Name
Liberty All-Star Equity Ord
JH Financial Opportunities Ord
Korea Fund Ord
Boulder Total Return Ord
Tekla Healthcare Inv estors Ord
Nuv een Credit Strat. Income Ord
Central Securities Corporation Ord
Roy ce Value Trust Ord
PIMCO Income Strategy Fund Ord
Reav es Utility Income Ord
Ticker
HTY
GGN
TWN
JOF
IIF
CH
IAF
CFD
AOD
GEQ
Fund Name
MS China A Share Ord
BlackRock Resources & Commdty Ord
Tekla Healthcare Inv estors Ord
India Fund Inc Ord
GAMCO Glb Gold Natural Res&Inc Ord
BlackRock Energy & Resources Ord
DNP Select Income Ord
Nuv een Credit Strat. Income Ord
EV Tax Adv antaged Div idend Inc Ord
Templeton Emerging Mkts Income Ord
Ticker
CAF
BCX
HQH
IFN
GGN
BGR
DNP
JQC
EVT
TEI
£m
7.1
3.3
3.1
3.1
2.9
2.9
2.7
2.5
2.5
2.4
So urce: © 2013 M o rningstar
Source: © 2014 Morningstar
UK Listed CEFs: 1yr Z-Scores UK funds > £150m
F&C Investment Trust Ord
3.98
BBGI SICAV Ord
2.25
JPMorgan European Growth Pool Ord
1.62
Worldwide Healthcare Ord
1.56
D
E
A
R
1.39
1.31
1.22
JPMorgan Indian Ord
World Trust Fund Ord
Fidelity European Values Ord
BH Global GBP Ord
1.22
BH Macro USD Ord
1.1
Polar Capital Technology Ord
1.01
-1.96
NB Distressed Debt Ord
-1.96
City of London Ord
Henderson Value Trust Ord
-2
C
H
E
A
P
-2.01
Merchants Trust Ord
-2.07
Law Debenture Corporation Ord
JPMorgan Claverhouse Ord
-2.29
Murray International B Ord
-2.48
-2.87
Dunedin Income Growth Ord
-2.89
Lowland Ord
-4.32
Temple Bar Ord
5
4
3
2
1
0
-1
-2
-3
-4
-5
Source: 2015© Morningstar
US Listed CEFs: 1yr Z-Scores UK funds > £150m
BlackRock Energy & Resources Ord
3.16
India Fund Inc Ord
2.5
2.33
PIMCO Income Strategy Fund II Ord
2.29
Petroleum & Resources Ord
2.14
Boulder Total Return Ord
D
E
A
R
1.92
1.89
1.79
EV Tax Advantaged Dividend Inc Ord
PIMCO Income Strategy Fund Ord
Korea Fund Ord
1.49
Taiwan Fund Ord
1.45
JH Tax-Advantaged Dividend Inc Ord
-1.56
Central Securities Corporation Ord
-1.57
First Trust Energy Infra. Fund Ord
Nuveen Diversified Div & Inc Ord
-1.71
MS China A Share Ord
-1.91
C
H
E
A
P
GDL Fund Ord
-2.15
-2.31
Delaware Enhanced Gbl Div&Inc Ord
-2.32
EV Tax Adv Global Dividend Inc Ord
-2.33
Nuveen NASDAQ 100 Dynamic Over Ord
JH Financial Opportunities Ord
-2.41
-2.88
Liberty All-Star Equity Ord
4
3
2
1
0
-1
-2
-3
-4
Source: © 2015 Morningstar
Page 5 | Tuesday, February 03, 2015 |
Contact
Disclaimer
Investec Securities:
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Sales
Charles Stagg
Tel: +44 (0) 20 7597 5042
[email protected]
Fin Bodman
Tel: +44 (0) 20 759 5247
[email protected]
Market Making
Peter Brown
Tel: +44 (0) 20 759 5063
[email protected]
Edward Malone
Tel: +44 (0) 20 7597 5098
[email protected]
Sales Trading
Carl Goossens
Tel: +44 (0) 20 7597 5787
[email protected]
Corporate Finance
Darren Vickers
Tel: +44 (0) 20 7597 5043
[email protected]
Jeremy Ellis
Tel: +44 20 7597 5153
[email protected]
Page 6 | Tuesday, 03 February 2015 | www.investec.co.uk/research