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Men’s heavyweight boxing is perhaps set for its biggest year this century. Two upcoming bouts could lead to the winners meeting later in the year in a bid to become the undisputed champion of the heavyweight division. When assessing the potential entertainment value for spectators, an often-used phrase is “styles make fights”, meaning the blend of the two fighters’ boxing styles will ultimately determine how exciting a fight is. This is not too dissimilar to investment styles, where some work better together than others.

The latest elevated CPI print of 7.5% has spooked investors this year, triggering volatility in both bond and equity markets. In trying times, it sometimes helps to take the long view. In a recent paper the Bank of England has taken this advice to the extreme, looking back 800 years to the 14th century to calculate the average global GDP-weighted inflation rate of just 1.51%1. Unfortunately, 800 years is not a particularly sensible investment horizon for most people, but there are plenty of other more relevant periods for us to examine when considering the importance of current economic events.

There have been a number of academic papers that have examined the performance of funds managed by smaller “boutique” investment houses versus the much larger “asset gatherers”.

The outcome of these various studies is overwhelming; that boutiques are the better performers with a consistent performance premium across various asset classes, ranging from 0.23% to 0.62% per annum net of fees.

As a fund selector who has worked for one of the world’s largest asset managers and one of the smallest, and having met with and analysed the portfolios of managers ranging from new fund launches to $50billion funds, I can provide some insight into the “boutique premium”.

Markets suffered a severe jolt in the early weeks of the new year. Bond yields rose sharply, and Wall Street suffered its steepest drop since the pandemic crash of March 2020. The S&P 500 fell by close to 10% from its all-time high recorded on 3rd January before a late rally reduced the loss for the month to 5.2%.

My mother used to say to me “a stitch in time saves nine”, as a child who grew up in the war and rationing, she was the product of her formative years. In the 1970s and 80s I would see her darning my father’s socks in the evening, something I doubt many households do today as the price of clothing and the expectation of durability has waned in the decades since.

My father ran an industrial clothing firm, John Peck Ltd, on Edge Lane in Liverpool; it had hundreds of employees and was renowned as a high-quality supplier to a wide range of customers throughout the public and private sectors, they even held a Royal Warrant as a supplier to the Royal Households.

2022 has started with a bang! Barring a recovery today January will close out as being the weakest start to a year for global equities – down 7.0% in US dollar terms – since 2009, when markets were still spiralling through the financial crisis. While that’s enough to warrant attention, some of the underlying trends in markets have been considerably more abrupt.

Nonetheless,rather than being cause for panic, we believe this is a healthy correction, led by parts of markets where the most excess had built up, and that the conditions for further medium-term progress in equity markets remain in place.