Sean has over 15 years of financial services industry experience and joins CSWM from Zurich Intermediary Group, the distribution arm of Zurich’s UK Life Business, where he has spent the last 12 years marketing to IFAs, banks and other intermediaries.

Phil Simmonds, Head of UK Intermediary Sales at CSWM commented,
"We are delighted to welcome Sean to our growing intermediary distribution team. We look forward to benefitting from his experience and industry contacts as we look to broaden the reach of our discretionary portfolio management, specialist IHT and other independent investment management services to UK IFAs."

Mr Sherwell has extensive business and board room experience, holding NED positions on a number of investment related companies offshore. In a wide-ranging career, Mr Sherwell has worked as a journalist for the Financial Times and spent time in London and Hong Kong as Far East Regional Strategist with Smith New Court Securities before joining Schroders in 1993.

Mr Sherwell became Managing Director of Schroders (CI) Limited in 2000 and after stepping down in 2004 continued as an NED until 2008. Mr Sherwell’s current NEDs include Chairmanship of Goldman Sachs Dynamic Opportunities Limited, a fund of hedge funds, and of Hermes Commodities Umbrella Fund Limited.

Mr Sherwell commented:
"I’m delighted to be joining the Board of Collins Stewart in the Channel Islands. CSWM has its roots locally and, through its recent acquisition of Corazon Capital in Guernsey, demonstrated its ambitions in wealth management and its commitment to the Island. I’m looking forward to working with the many talented professionals within the business."

Martin Bralsford, the offshore Chairman of CSCI, added:
Chris' appointment will significantly add to the depth of expertise currently held on the CSCI Board. His extensive knowledge of the industry and regulatory environment, both locally and internationally, will provide strong guidance and support in developing CSWM’s local governance structure and in implementing our strategy."

• "The odds seem stacked against a double dip this time around"
• "This continues to be a remarkably normal recovery in an abnormal cycle"
• "Economic growth should continue, equities are cheap, corporate earnings are strong"
• "... and we perceive excellent opportunities in many markets"

It's been a busy ten days for central bankers, with a blizzard of press conferences and statements. Normally such matters would not merit much attention outside of the arcane world of economists but an interesting theme began to develop as the meetings unfolded: a note of caution on the global economic outlook. Until a couple of years ago, central bankers used to speak a language all of their own which required a codebook to decipher but today they speak clearly and, on occasions, are forthright. We've heard nothing quite so explicit for a while and so it is worth taking note of their words. In reality, they told us little that we didn't already know from observing the data. And anyway, central bankers have an even more rotten record of successfully predicting economic activity than private sector economists. But the mere fact that Ben Bernanke, the Fed Chairman, discussed a slowdown of growth and Mervyn King, Bank of England Governor, announced a downgrade to UK growth forecasts is significant.

Investors had already noted that economic growth was once again softening. With a few notable exceptions, such as Germany which is now benefiting from a weaker Euro, the softness has been evident across a broad range of global statistics. To be clear, this is a deceleration in the pace of growth, not an actual contraction in the economy. However, it has led to inevitable chatter about a "double dip" in global growth.

Having been firm believers in the reflation of the global economy since mid 2009, this change of tone has caused us to prick up our ears. It's not the first time we’ve heard such talk during this cycle – there were similar concerns as recently as January this year before economies reaccelerated, and the markets with them. This time though, there is clearer evidence that the pace of growth is slackening. However, the reality is that double-dips are pretty rare phenomena in economics, even though it is entirely usual for economies to have a mid term softening. This is usually a temporary wobble as the first stage of economic recovery wanes (that first phase being triggered by the initial stimuli and the rebuilding of stocks) and the second phase (of self-sustaining growth underpinned by business investment and employment gains) takes over. A double dip is usually only triggered when this hiatus is accompanied by an external shock (such as the oil crisis of the 1970s) which is sufficient to tip the economy back over the edge.

The odds seem stacked against a double dip this time around. Not only is there no external shock, the impressive recovery we've seen is based on the massive stimuli applied globally by governments and central banks and it is clear that these authorities to stand ready to apply yet further stimuli if required – witness the introduction by the Fed in recent days of what has been dubbed "QE-lite", whereby they will recycle the Quantitative Easing to date back into further bond purchases. Further, an element of softening right now is no surprise whatsoever because one of the most effective measures taken by governments in early 2009 was to seek to "front load" the recovery by subsidising consumers to buy new cars and houses. Those subsidies have recently expired and so, understandably, consumers are catching their breath.

"This continues to be a remarkably normal recovery in an abnormal cycle."
So at the risk of sounding like a scratched record, this continues to be a remarkably normal recovery in an abnormal cycle. Our central case remains that growth is entering the self sustaining phase, that policy actions will remain successful but that interest rates will have to remain low for a long time, reflecting the fragility of the Western capital markets. Against such an outlook, equities are becoming an increasingly cheap asset class both in an historical context and against the alternatives such as bonds.

"The reality is that the central case may remain the same but the risks, having once been skewed to the upside, are now more "symmetrical"."
But what if we’re wrong? Every double dip starts with a gentle slowdown. Perhaps this time it is not an "external shock" that triggers a second recession but the deep fiscal retrenchment that some governments, like that of the UK, are starting to implement. We are not so naïve as to dismiss recent economic evidence and the statements of the central banks. The reality is that the central case may remain the same but the risks, having once been skewed to the upside, are now more "symmetrical". Some people describe this in terms of a "fan of uncertainty". As you peer into the future there is always a range of possible outcomes, a range that inevitably widens into the future. In normal circumstances it is possible to predict a relatively narrow “outer band” of outcomes around your central case. But these are not normal times. For a while we have been faced with a fan of uncertainty that is wide (i.e. the possibility of fairly extreme positive and negative outcomes is uncomfortably high). Now, however, it is both widening further and has also become quite symmetrical to the downside versus the upside. This means that careful portfolio construction is more important than ever. The job of the investment manager is to take controlled risks, and generate return as a result. I’ve never known that to be an easy job, but it really is very tricky right now. This means that it is essential to fully understand where the risks lie in portfolios, to manage these stringently and to be properly diversified. Using a gambling analogy, one of the keys to our success has been to ensure that we "don't put all the chips on red" because if black turns up you're in trouble.

"Economic growth should continue, equities are cheap, corporate earnings are strong and we perceive excellent opportunities in many markets"
It might appear surprising then that we have not simply reduced equity risk in client portfolios in light of these evolving circumstances. The reason for this is simple - our central case remains exactly the same: economic growth should continue, equities are cheap, corporate earnings are strong and we perceive excellent opportunities in many markets. Rather, our response recently has been to bolster the most efficient portfolio counterweight: the fixed interest allocation. We have done this not by allocating additional monies to bonds but by reducing credit risk and tilting towards government bonds, so ensuring that we have sufficient fixed interest duration to give us “bang for our buck” if we need it. Our credit exposure has served us well over recent months and, we believe, offers less obvious value than outright equity risk. Therefore we’re in the pleasant position that it’s painless to reduce this exposure and in so doing, our portfolio construction is purer: taking risk where it is most efficiently expressed and ensuring an adequate counterbalance if we’re wrong.
The good news is that it should become fairly apparent fairly quickly whether this growing downside economic risk is real and sustained. So our approach is tactical rather than strategic. Having been nimble we should be in the enviable position of capturing upside whilst bolstering our defences. And whether we’re right or wrong in our central case, greater clarity should soon return and the widening fan of uncertainty should narrow once again. Whoever said that markets go quiet in the summer?

Neil Darke, Head of CSWM commented:

"Clive is experienced and well connected within the sports, media and entertainment sectors and we hope to be able to help his clients with their wealth management needs.

Our business objective of achieving £10bn by 2012 has seen us acquire two independent wealth management firms this year. The focus now shifts back to organic growth and we look forward to working with Clive in achieving our objectives."

Clive Richardson commented:

"I am excited to work with Collins Stewart Wealth Management whose dedication to independence, client service, an international perspective and offshore heritage will appeal to the entrepreneurial spirit that exists within the sectors – sports, media and entertainment – where I have experience."

In line with its stated strategy, CSWM announced the acquisitions of Corazon Capital and Andersen Charnley during the first six months of the year, adding £0.7bn of discretionary assets under management. It also added organic net inflows of £0.1bn of assets, which were focused in the lower end of the risk spectrum reflecting investors continued nervousness towards markets.

As at 30 June 2010, CSWM managed and administered £6.8bn of assets, of which £2.5bn was discretionary, up 47% since 30th June 2009.

Neil Darke, Head of Collins Stewart Wealth Management commented:

"We are delighted to have completed the acquisitions of both Corazon Capital and Andersen Charnley during the first half, which puts us on track to achieve our stated ambition of growing assets to £10bn by end 2012.

The integration of both businesses is proceeding well and continuing this process will be our primary focus in the second half together with renewed efforts on organic growth. To support our organic efforts, we have invested in and diverted resources towards our intermediary distribution efforts."

• Developments in the euro region have regrettably overshadowed what has remained a generally supportive macro-economic environment
• We continue to feel that there are many better investment opportunities than lending to the UK government for an extended period
• We remain firm believers in the Asian and emerging market growth story
• Investing in technology and healthcare are now alternative ways of capitalising on the superior growth profile of Asia
• Equity market valuations are not overly demanding at current levels
• We cannot rule out a re-test of recent stockmarket lows, before further gains are made and we do not believe that a broad "double-dip" recession is the most likely outcome

London, Guernsey, Isle of Man, Jersey and Geneva – 21st July 2010:

Commenting on the current global investment outlook, Nigel Cuming, Chief Investment Officer, at Collins Stewart Wealth Management, said:

They think it's (eur)over. Financial markets were undoubtedly driven by developments in the eurozone during the second quarter, as Greece’s precarious financial position became sufficiently untenable to finally prompt policymakers to intervene in an attempt to restore some form of order. The rescue packages only provided some short-lived relief. However attention quickly shifted to the concerns over the fragility of the European banking system. Ultimately, investors are not yet convinced that Greece will not default and fear that this could trigger broader contagion throughout the region. The total sovereign debt exposure to troubled borrowers by European banks is large in absolute terms, albeit relatively moderate in the context of the previous subprime meltdown. BCA estimate that, in a worst case scenario, losses at European banks could total $400bn, a sizeable sum, but considerably less than the c.$1 trillion cost of the whole 2008/2009 crisis.

A Greek default would have far wider repercussions for financial markets and the European region as a whole than would be fundamentally justified by its 2% contribution to European GDP. Some form of default or debt rescheduling does however seem inevitable, given that even if Greece does all that is required of it under the terms of the IMF program, gross debt to GDP is expected to rise from 115% in 2009, to 149% by 2012. Even then, one must be sceptical that it will be politically possible to implement the necessary austerity measures and we have grave doubts that the Greek government will succeed in avoiding default .Ultimately, we believe that the euro will survive and it is difficult to envisage how the Greeks (let alone Spain, Portugal and Italy) might engineer a withdrawal from the euro and the adoption of some form of "new Greek drachma" given that this would inevitably lead to a collapse of the Greek banking system.

Developments in the euro region have regrettably overshadowed what has remained a generally supportive macro-economic environment. Whilst in Europe the growth outlook was not particularly inspiring, even before the sovereign debt crisis erupted, conditions across the rest of the world continue to give little cause for concern. In terms of the former, the October 2009 World Economic Outlook produced by the IMF, forecast euro area growth of only 0.3% in 2010 and 1.3% in 2011. Whilst growth might be further negatively impacted by constraints within many of the "Club-Med" economies, the substantial decline in the value of the euro is providing an offsetting real and meaningful boost, especially to the export sensitive German economy.

Elsewhere, while some softer economic data releases have been issued of late, our central contention remains that this is likely no more than a moderation in the rate of expansion and this will ultimately allow the global economy to settle into a steadier, if somewhat slower, growth path. Certainly ISM reports in the US remain strong, household income growth is robust and consumer spending is supportive. Personal income levels in the US, minus government transfer payments (offsetting the positive effect which may have been provided simply through the government's attempts to directly support households), rose in April by the biggest margin since 2008.

Ultimately, sovereign debt concerns outweighed other supportive factors during the quarter with the consequence that most "risk assets" lost ground over the three month period as a whole. Fundamentally, we continue to find it extremely difficult to reconcile investors’ periodic risk aversion with a flight into UK government bonds, particularly given the UK's still parlous financial position. Nonetheless, such are investors' well rehearsed moves that nothing short of default will likely impact this correlation. However, we continue to feel that there are many better investment opportunities than lending to the UK government for an extended period.

We believe that China's pre-emptive and pro-active policy tightening measures, implemented in an attempt to cool the pace of expansion in one sector of a booming economy, is in reality an extremely positive development, given that it reduces both the possibility of an asset price bubble and the probability of more robust action having to be taken at a later date. However, market participants seem to have used these positive developments as an excuse to mark down prices.

We remain firm believers in the Asian and emerging market growth story, but similarly we must recognise that this is no longer as contrarian a position as it once was and particularly when we maintained this weighting at the beginning of 2009. It is entirely possible that there are now alternative ways of capitalising on the superior growth profile of Asia over and above purely maintaining a dedicated exposure to the region’s stockmarkets. Already our thoughts have turned to sectors such as technology, where our research would suggest that there is considerable pent-up demand for tech products. Also in terms of healthcare, having invested in this area in the past albeit for somewhat different reasons, we can also easily identify reasons why these stocks might also benefit from increased expenditure towards this area across the developing world. As a percentage of GDP, healthcare spending accounts for just 5% in China, but will clearly grow meaningfully as the healthcare insurance program is extended to cover 90% of the entire Chinese population by 2011, up from under 20% of urban employees in 2001.

Notwithstanding the short term volatility in share prices, we believe that the backdrop for stockmarket investment remains favourable. This confidence hinges on 3 key supporting factors. We have already touched on the first of these – continued economic expansion – and do not believe that a broad "double-dip" recession is the most likely outcome. Whilst the most dynamic phase of the expansion may have passed, there remains a palpable underlying strength to the global recovery which should support share prices moving forward.

The second and equally important factor is corporate earnings growth; companies have continued to positively surprise on the upside. Over 80% of US companies reporting first quarter results beat market expectations. Meanwhile, the US corporate sector is highly cash generative, which could support increased dividend payouts, share buybacks, M&A activity and further increases in the capital spending cycle.

Finally, it is unlikely that inflation will accelerate sharply in the near term, which will give central banks sufficient comfort in keeping interest rates at, or near, their current levels. In addition, monetary authorities will be aware that a significant level of fiscal retrenchment must take place across much of the western world in order to prevent public debt levels spiralling ever further out of control. Increased taxation and reduced government spending represent a real and appreciable fiscal drag and, as well as the deflationary impact that this will have, central banks will be wary of pushing interest rates too high too quickly lest this action induces a sharp growth slowdown.
In amalgamation, this combination of economic expansion, growth in corporate profitability and supportive liquidity, provides a powerful underpinning for equity prices and would argue for share prices moving higher over the remainder of the year.

As a consequence, we have not initiated a wholesale change in our investment strategy. Instead, we have looked to gently trim stocks, sectors and markets into strength, whilst continuing to try and identify areas and assets which have not yet moved to reflect the underlying fundamental reality.

The current market situation can be described as a case of "two steps forward, one step backward," as, we expect global growth to continue to recover, albeit at a slow pace. Equity market valuations are not overly demanding at current levels and our central contention remains that equity markets and the price of general risk assets will move higher over the remainder of this year. However, in the near term the European debt situation may continue to make its effects felt and we cannot rule out a re-test of recent stockmarket lows, before further gains are made. Over the much longer term there remains meaningful scope to generate positive returns and a satisfying number of investment opportunities at the current time.

Previously of Sun Life of Canada, Alasdair was responsible for introducing retirement income products to the IFA market. Prior to that, Alasdair has worked for Zurich and AMP NPI.

Phil Simmonds, Head of Intermediary Sales at Collins Stewart Wealth Management commented, "We are delighted Alasdair has joined us and look forward to introducing his industry contacts to our independent wealth management services."

ACL is a well established, award-winning independent private client wealth manager offering both discretionary portfolio management and independent financial advice, with offices in London and Bagshot, Surrey. Focusing on the upper end of the high net worth market, its client base incorporates professional advisers and senior corporate executives. Its high-touch service proposition is based around a holistic approach to wealth management incorporating both discretionary portfolio management and financial planning.

Neil Darke, Head of CSWM, commented: "I am delighted to have completed this mutually beneficial acquisition. While ACL will provide us with critical mass and resource to our London business, with both the addition of significant discretionary assets under management and a one-off addition of a financial planning capability, Collins Stewart provides ACL with a significant enhancement to its back office, investment and corporate functional capabilities.
In addition, this deal takes our assets under management to £6.8bn, further highlighting our commitment to growing the business and achieving our stated goal of £10bn in assets under management by 2012."

Chris Wozniak, Chief Executive, Andersen Charnley, added: "When the business first discussed succession plans, various criteria were imposed upon the Board, including seeking a firm that would significantly add value to our existing proposition and would maintain that proposition for our clients. In Collins Stewart, we have been very impressed with the hands-on, practical and no nonsense approach and we firmly believe we have found the right partner to ensure that our clients continue to receive the high level of service they expect."

Collins Stewart plc was advised by its in-house Corporate Broking team and Andersen Charnley was advised by IMAS Corporate Advisers (www.imas-corporate.co.uk) who initiated the transaction.

The year has started satisfactorily. Total revenues in the first four months of 2010, at £63.6 million, were 12% ahead of the same period a year ago in spite of a fall in the value of the dollar. Revenues for businesses outside the US were 19% ahead.

In the US, dollar revenues were comparable to the same period last year, which is a marked improvement on the 2009 second half run-rate, and the business has made progress this year in line with expectations.

The Wealth Management division, which has the largest investment team in the Channel Islands, has started the year solidly and assets under management at 30 April 2010 were £6.7 billion, up from £5.9 billion at the end of 2009. The integration of Corazon Capital, which was acquired in March, is proceeding well and other wealth management acquisition opportunities are under review.

Hawkpoint – Collins Stewart's finance advisory arm which advises corporates, financial institutions, private equity houses, governments and quasi-governmental bodies on mergers and acquisitions, capital markets, debt and restructuring – has also had a good start to the year with 12 deals already announced, compared to five at the same stage last year.

Corazon is an independent Guernsey-based investment manager with assets under management of £382m (£368m of which is discretionary). The intention is to integrate Corazon’s 16 staff across its two offices in Guernsey and Geneva into the Collins Stewart team, taking the number of investment professionals in CSWM’s Channel Island offices to more than 60.

Charlie Roger, Head of CSWM in Guernsey, commented,

"We have made clear that one of the ways in which we would further grow our business was through seeking out like-minded organisations to join our team.

"Corazon is a particularly good fit and we welcome their clients and staff to Collins Stewart. This acquisition bolsters our resources and assets in our Channel Island heartland, whilst also strengthening our presence in Geneva, and helping us to cement our position as the Channel Islands’ leading wealth manager."

Paul Meader, Chief Executive of Corazon, who has become Head of Guernsey Portfolio Management at CSWM, added,

"I firmly believe that by partnering with Collins Stewart Wealth Management we can offer our clients greater opportunities and enhanced service levels. The commonalities between our businesses have always been in evidence and my colleagues and I are looking forward to joining the team at CSWM."

CSWM also released their annual results today. Net inflows for the year of over £330m represented strong organic growth of 6.8% with assets under management and administration climbing to £5.9bn.

Charlie Roger commented, "We set out to grow the business via a three-pronged approach: organic, recruitment and acquisition and I’m delighted that all three approaches have led to such a strong set of results for our Wealth Management business."

Robert Jukes, Global Strategist at CSWM said, "While we remain bullish on the global recovery, we do not see a sustainable push in core inflation necessitating premature interest rate rises for the remainder of this year."

As with CPI inflation, asset prices (e.g. House prices, Oil) are determined by more than just interest rates. Other forms of monetary stimulus are also important – such as exchange rates.  There are three key points to note: 1) both the level of interest rates and the value of the currency usually fall during a recession, in order to stimulate growth; 2) interest rates may have fallen to historic lows, but they have fallen by less than they did during the last recession; 3) at no other time during the last 30 years have interest rates and Sterling been so far below the average together.

Robert Jukes, continued, "This last point is very important, as interest rates and exchange rates together form the basis of what many economists call monetary conditions and we believe these conditions are, relative to historical levels, extremely loose. Loose conditions not only stimulate prospective growth, they also fuel risk assets; specifically cyclical rather than defensive stocks and small as opposed to large stocks.

"So while interest rates remain low, we suggest that the medium term goal for clients should be to sell risk premia and buy risk assets."

Chris, who will report into Symon Hawken, Head of Wealth Management for CSWM in London, had responsibility for the management of over £450m on behalf of private clients, across multiple asset classes.  Chris had been at Gerrard (now part of Barclays Wealth) since 1986, where he was a senior investment manager and Divisional Director.  During his time at Barclays, he also worked as the product specialist in Private Equity.

"We are very excited to welcome Chris as a senior member of our team in London.  His 23 years of industry experience and network will be hugely beneficial to us as we seek to develop our private client business further," commented Symon Hawken.

Chris stated: "As an award winning wealth manager, I am delighted to be joining Collins Stewart Wealth Management. With their unrivalled dedication to traditional client servicing coupled with the latest money management techniques, I am looking forward to delivering outstanding client experience and contributing to the long term success of the business."

Despite a number of leading commentators declaring an end to the Alternative Investment Market (‘AIM’) following the significant decline in 2008, AIM has delivered impressive returns over the past 12 months; the AIM Index increased by 66% in 2009, significantly outperforming the FTSE 100, making it one of the best performing markets in Europe.

The recovery in 2009 was driven by an improvement in sentiment following a return to global growth and recognition that smaller companies typically have a higher degree of operational gearing. Added to this was the increase in secondary fundraisings and corporate activity prompting investors to ask the question, has it gone too far too quickly?

The answer, according to Paul Parker, manager of the CSWM Inheritance Tax Mitigation Service, appears to be no:

"The AIM Index is trading at 50% of the July 2007 peak and when an index halves it needs to increase by 100% simply to return to the initial value. We have seen the ‘dash for trash’ just after the turn in the market where highly financially and operationally geared companies benefited from an increased appetite for risk. The second half of 2009 saw good quality companies, whose share prices were unfairly affected in the panic to exit small cap stocks, benefit from an increased appetite for risk.  Companies such as May Gurney, James Halstead, Nichols and Albemarle & Bond have made significant progress since their recent lows as they continued to produce record turnover and profits. Cash generation remains key, with a focus on continued progressive dividends. Although these companies have seen their share prices recover, they still remain off their peaks and should have further to go when you factor in their leading market positions, track records and solid balance sheets."

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