Sanjay Gupta

It is a surprisingly difficult task to make #SearchEngines work effectively with #InvestmentResearch. Even with the latest technologies at our fingertips, this remains a big problem for consumers of research to find the relevant information. This is the first in a series of articles I'm writing to discuss why this is and what can be done about it.     This first article covers the problems arising from the time-sensitivity and the dynamic nature of #FinancialResearch content. The effects of time are far reaching, it touches the core of the search index itself, and exposes the limitations of even the latest search techniques such as #VectorSearch, #LLMs and #RetrievalAugmentedGeneration.   To make an effective search experience, you need to embrace the fourth-dimension! 🕒

17

Blimey - that is a scary chart - https://lnkd.in/eDn4uwX4

5

Surprising R&D Tax Refund Numbers 💼 I’ve learned from a reliable source that HMRC has issued approximately over £150 million in R&D tax refunds in the last 3 months. This is more than the forecasted amount by over 33%, which was just below £100 million. This is interesting, given that fewer claimants may be applying right now. Possible reasons for this could include: 💠 Backlogs from previous accounting periods now being cleared 💠 Companies maintaining more accurate records and providing stronger evidence for claims 💠 More start-ups or loss-making companies claiming R&D tax credits as a vital cash injection It's important to note that this amount only includes cash refunds and does not account for any amounts offset against tax liabilities. #rdtaxcredits #researchanddevelopment #taxrefunds #randd #innovation #cashflow #hmrc

4

https://lnkd.in/eY3-AmYM will MoF walk the walk!?.. #JPY strength to play through opts. A very decent chunk of 5s and 7s UST auctions coming up, #SPX500 nearly achieved ideal correction level 4800-4900 range, mega cap earnings and PCE coming up - #highfrolonger still in play, core inflation could actually end up closer to 4.5% towards q3 2024.. QQQ ideal correction more towards 16K, the growth vs value rotation only just started #assetmanagement #qualitybalancesheets

1

📊 The question of where interest rates are heading remains a vital topic of discussion for the UK's economic landscape. → The Bank of England (BoE) has set its rate to 5.25%, affecting borrowing costs throughout the country. → The Monetary Policy Committee (MPC) decides this rate, which is the foundation for overnight loans to financial institutions, which have considerable economic implications. One of the BoE's main tasks is managing inflation. In March 2024, the headline CPI rate decreased to 3.2% year-on-year from 3.4% in the previous month. This was encouraging news; however, the Bank of England focuses on core inflation, excluding energy, food, and tobacco prices. Core inflation slowed to 4.2% in March 2024, although service price inflation remained high at 6%. The persistent level of core inflation is a warning to those expecting a sharp reduction in interest rates. 〰️ Recent market sentiment suggests a rate cut could happen as early as November. However, this outlook may be too optimistic, especially considering Governor Bailey's prudent commentary. According to the latest data, there is a lower probability of a rate cut in the near term and a shift in expectations towards August for the first potential move. Another way to look at the BoE's future movements is through financial market expectations. The trajectory of SONIA (Sterling Overnight Index Average) swap rates provides insight into the market's expectations for the direction of interest rates. The rates are as follows: 6-month Compounded SONIA: 5.2549% 1-year SONIA Swap: 4.846% 2-year SONIA Swap: 4.487% 〰️ These rates indicate that the market expects a gradual decrease in interest rates over the next two years, suggesting a measured approach from the BoE. In summary, the markets anticipate a rate cut later in the year. Still, the timing of such a move will depend on how the economic indicators develop, particularly with regard to services inflation and wage growth. Based on recent financial data, as the BoE is committed to achieving its 2% inflation target my view is that it will likely postpone any potential rate cuts until late 2024 or even later. Fun edit: Where Will Interest Rates Go - not up, not down (for a while longer). #BoE #InterestRates #Economics

14

Nationwide Building Society and Lloyds Banking Group putting money where every bank’s mouth is - #GenAI and dedicated financial #LLM. Congrats Aveni This is obviously important for the future of #AI in banking. I don’t have a view tbh whether a dedicated LLM would preform better than a generic one. Does anyone? Surely having input from outside FI would render any response more relevant and more reflecting of wider context of finance? That way or another, it is positive that banks are investing in finding out. The focus on #consumerduty is spot on. I do have some though questions wherever ‘ethics’ are mentioned. Whose ‘ethics’ are they exactly and how does one prove something is ‘ethical’? https://lnkd.in/eDbaCrqi

10

6 Comments

The UK IPO market is showing signs of life at last and it was great to see plenty of interest in a float from a diverse range of growth companies at our recent IPO conference. #Londonstockexchange #IPO #Investec

31

1 Comment

According to the researchers at Deutsche Bank a business "investment resurgence" is underway as UK companies look to invest in equipment. A recent survey noted that nearly 60% of UK manufacturers have engaged in reshoring their supply chains over the last year or so, which has likely added to investment levels The government's super deduction capital allowances scheme provides tax breaks for companies investing in new equipment in the UK. The current rules which were made permanent in the budget makes investing even more attractive because it's worth up to 25p for every £1 spent. Deutsche Bank goes on to say that business investment is now running comfortably above its pre-pandemic level, having grown by a solid 5.5% in 2023. I have been preparing capital allowances for a long time and I haven't been busier! Based on my own experience coupled with the above research it looks like this fiscal incentive is working well because businesses have increased the amount of asset purchases they are making. #capitalallowances #superdeduction #assets #investment #construction

5

Week 16 fixed income thoughts: UK government yields are back to the highs for the year and credit is at the years wides with crossover index at 325 having spent March bumping along at 300. RM Funds feel constructive on yields at these elevated levels but cautious on spreads so staying focused on high quality IG. Manchester Airport are in the market with a 18 year benchmark G+130 talk. Our last exposure to Manchester matured in March so SVBS Infrastructure Bond Fund will allocate. Baa1/BBB+ Senior Secured. Water is one to avoid; the recently launched SWSFIN 7 40 issued at G+250 last month is now +40bp or 5 points lower 95.00 cash. Thames Water :we are cautious on as senior issues inside the ring fence could still see material price reductions.

10

I've temporarily passed the Limeglass blogging baton to CTO Simon Gregory! Simon is writing a series of articles that get into the weeds on using #search for #investmentresearch - it's great stuff.   In his first article, he writes about the importance of time. 🕰 🗓 Some key takeaways:   💡 Traditional search engines (and recent Retrieval Augmented Generation tools) are bad at providing results based on a smart consideration of chronology and document shelf-life 💡 Research documents and users of research search tools are unusually sensitive to time 💡 Limeglass has built its own search engine that treats time as a first class citizen   Message to #Banks & #Research Houses:   If you're building #RAG solutions or updating your search tools, give us a call! Don't fall into the trap of making time a 2nd class citizen - your users will not thank you.

8

A great summary of what the budget means for Innovation Grants opportunities by one of our resident experts. If you'd like to talk about how grants could benefit your business get in touch!

10

1 Comment

As UK Finance continues to build awareness of the Crypto Asset Reporting Framework, I am pleased to share a link to a blog that David Wren has prepared. Do remember to sign up for our webinar as well. #cryptoassetreportingframework #carf #tax #taxtransparency #taxreporting #crypto #digitalassets #cryptotax #digitalassetstax #tax #taxpolicy

13

1 Comment

UK pension schemes have among the lowest proportion of funds held in domestic stocks and private assets of any significant global pension market. A new report by think-tank New Financial has added pressure on the government to revive investment in British industry. Just 4.4 per cent of UK pension assets are held in domestic equities, down from 6 per cent last year and much lower than a 10.1 per cent global average. Pension ownership of UK stocks has declined from around 50 per cent at the turn of the century as a slew of regulatory changes pushed corporate defined-benefit #pensionschemes into bonds. The UK’s corporate defined benefit schemes — which have around £1.4tn in assets or close to half of the UK’s pensions assets — have only 13 per cent invested in equities and only 1.4 per cent in domestic #equities, lower than every other system except the Netherlands. Lane Clark Rupert Forrest Bruce Spencer Peter Ripley source: New Financial

5

2 Comments

Price pressure is one of the dominant trends in Discretionary MPS at the moment. How are DFMs responding? Our latest report finds a shift towards passive in the MPS market. For more information about pricing pressure, the characteristics behind the fastest growing DFMs and the the instruments used in MPS portfolios, get in touch or email [email protected]

8

1 Comment

Yes, public leadership should be about creating an environment which enables, incentivises and rewards any and all corporate and individual members of society, and is a model to add optimum value in a globally competitive market. Public leaders including Prime Minister can’t do more, they can’t do it for us. The world would be a healthier, safer and happier place if this challenging purpose of public leadership was being routinely delivered. 8rather than by acception, and the electorate stopped thinking, expecting and saying the Government should do or provide XYZ for us.

12

UK Economic Assessment: May 2024 1. Probabilities of Recession The UK economy is currently navigating a delicate path. The British Chambers of Commerce (BCC) reports that the UK experienced a (mild) technical recession in the latter half of 2023, marked by two consecutive quarters of negative growth. The BCC anticipates modest growth for 2024 and 2025, at 0.5% and 0.7% respectively, with a slight improvement to 1.0% by 2026​ (British Chambers of Commerce)​​ (Welcome to ICAEW.com)​. Despite these positive projections, the overall growth outlook remains subdued, with persistent global economic headwinds and internal economic challenges. 2. International Trade UK trade dynamics are challenging. The country's trade performance has been hampered by global uncertainties and internal economic adjustments post-Brexit. According to the latest forecasts, UK exports are expected to decline by 1.3% in 2024 before rebounding slightly in subsequent years. Imports are projected to remain weak due to the relatively tepid domestic economic environment​ (British Chambers of Commerce)​. Furthermore, ongoing geopolitical tensions, including conflicts in Europe and the Middle East, continue to impact trade flows. 3. Trade with the EU The introduction of new trade barriers post-Brexit has complicated trade relationships, leading to reduced export performance. The EY Regional Economic Forecast highlights that these barriers, alongside subdued global demand, are expected to constrain trade growth. The ongoing negotiations and adaptations in trade policies will be crucial in shaping future trade dynamics between the UK and the EU​ (EY US)​. 4. UK Unemployment Trends The UK's labor market shows a mixed picture. While employment is set to grow by an average of 1.1% annually from 2024 to 2027, regional disparities persist. London and the South East are forecast to lead in employment growth, whereas other regions, particularly in the North and Wales, are expected to lag behind. Despite these challenges, average earnings are projected to rise, outpacing inflation over the next few years​ (British Chambers of Commerce)​. 5. GDP Trends UK GDP will slowly grow; a meager growth of 0.1% in 2023, GDP is forecasted to grow 0.5% in 2024 and 0.7% in 2025, with improvement to 1.0% by 2026. This sluggish growth is driven by weak consumer spending, inflation, and cautious business investments​ (British Chambers of Commerce)​​ (Welcome to ICAEW.com)​. The National Institute of Economic and Social Research (NIESR) notes that while inflation is expected to ease, core inflation remains stubbornly high, dampening economic recovery efforts​​. Conclusion The UK economy is facing a cautious recovery phase with modest growth prospects. The risk of recession remains. Trade challenges, particularly with the EU, continue to impact economic performance. Strategic policy measures and sustained international cooperation will be pivotal in steering the UK towards a more robust economic future.

3

UK Pension Funds Underperforming Index Trackers A significant majority of UK pension funds are underperforming simple FTSE All Share index tracker funds, raising concerns about the value and effectiveness of active management in this sector. This underperformance has serious implications for savers' retirement outcomes. Key Ideas and Facts: Widespread Underperformance: 91% of UK pension funds underperformed the FTSE All Share tracker over the past decade. (Sources: IFA Magazine, Pensions Age, AJ Bell) Magnitude of Underperformance: 72% of funds lagged the tracker by over 10%, with 37% underperforming by over 20%. (Sources: IFA Magazine, Pensions Age) Big Names Implicated: Funds from prominent providers like Clerical Medical, Phoenix, Scottish Widows, and Standard Life are among the under performers. (Source: IFA Magazine) Impact on Retirement Savings: Underperformance translates into significantly smaller pension pots for savers upon retirement. (Sources: IFA Magazine, Pensions Age) "Inertia Tax": Closed pension funds, no longer accepting new business, may suffer from neglect as providers focus on newer products, leaving investors in these funds to bear the brunt of poor performance. (Source: IFA Magazine) Historical Context: The underperformance can be partially attributed to the proliferation of "closet tracker" funds, established when trackers were less common, charging active fees while closely mirroring index performance. (Sources: IFA Magazine, Pensions Age) High Charges: Older pension plans often carry higher charges set before investment and platform costs declined, further eroding returns. (Source: IFA Magazine) Stakeholder Pension Legacy: The popularity of Stakeholder pensions in the early 2000s, driven partly by regulatory pressures, has left many savers with outdated and underperforming schemes. (Source: IFA Magazine) Consumer Duty Implications: The FCA's Consumer Duty regulation, applied to closed books from July 2024, is expected to push providers to improve performance in these funds, but its effectiveness remains to be seen. (Source: IFA Magazine) Actionable Steps: Investors are urged to assess their pension fund performance, compare charges, consider valuable guarantees, and explore options like transferring to modern SIPP or workplace pension schemes with better potential. (Source: IFA Magazine) Active vs. Passive Debate: While acknowledging the advantages of index trackers, experts highlight that not all passive funds are equal and investors still face choices regarding benchmarks and fees. (Source: AJ Bell) Further Points: The report by Bestinvest (Business Insider) focuses on consistently underperforming funds, highlighting the long-term issues plaguing some specific funds. AJ Bell’s analysis reveals that active fund managers, in general, are struggling to outperform passive funds, with only a third achieving this feat in the first half of 2024 and over the past decade. (Source: AJ Bell)

6

1 Comment

Worth a view of this video here with Imran Sattar and Emily Barnard from Edinburgh Investment Trust PLC Liontrust Asset Management PLC The Association of Investment Companies (AIC) outlining their investment thoughts

1