For UK investment firms, that silence is a missed opportunity to stand out from the crowd.
The ‘too risky to provide them’ thought process needs a rethink.
Geopolitics is a big part of investments – commenting during political turmoil will not damage a brand.
Investment firms spend considerable resources understanding geopolitical risk.
Analysts model scenario outcomes. Portfolio managers adjust exposures. Risk teams stress-test against tail events. This expertise is genuine and substantial. When firms don’t share any of it with the press, that knowledge stays entirely internal – useful to clients, invisible to everyone else.
The press will fill the gap regardless – investment firms are missing a golden opportunity to highlight their expertise and convictions.
The public conversation about what a geopolitical event means for markets, economies, or specific sectors gets shaped by whoever is willing to engage. Firms that stay silent concede that space by default.
There is also a straightforward matter of credibility.
An investment firm that offers clear, considered analysis during a crisis builds a reputation for intellectual genuineness. Over time, that matters – to potential clients, to competitors, and to talent who want to work somewhere that contributes meaningfully to the public discourse.
“We might get it wrong. It may damage our brand.”
This is the real issue, but it applies equally to every form of client communication. Firms already issue research notes, market outlooks, and economic forecasts to their clients and partners. The standard for press commentary isn’t certainty – it’s informed, qualified analysis.
Journalists understand that geopolitical situations are fluid. Firms can say “based on current information, the most likely market impact appears to be X, though this could change significantly if Y occurs”.
A lot of firms hide behind compliance. Compliance teams are right to flag risks, but the framing of geopolitical commentary is typically different from stock-specific recommendations.
A general view on something like “rising energy costs from a conflict might impact European equities broadly” is not the same as a specific buy or sell recommendation.
In my view, the most valuable commentaries from investment professionals tend to share certain characteristics.
The spokespeople that distinguish between short-term market reactions and longer-term structural shifts are the ones that are listened to and quoted by journalists.
One big important issue is time.
An untimely comment in a journalist’s inbox, however, is a cardinal sin for a PR. Companies need to be quick – there is no time to be dilly dallying around when planning to comment on a matter which is fast moving.
Lastly, firms also do not need to comment on everything. But they should speak when they have something substantive to add. More people may want to read it than you may think.
The UK investment industry manages a substantial share of public and private wealth. The decisions it makes, and the frameworks it uses to make them, have real consequences for millions of people. Participating thoughtfully in public discourse about the geopolitical forces that shape those decisions is not a distraction from the core business. It is part of what it means to be a serious institution in a complex world.
The reporters covering these stories are asking the right questions. Investment firms should be willing to answer them.
Robbie Lawther is an Account Director at Quill PR
But is this a good thing? The amount of consolidation and the array of acquirers have reshaped what “independent” means in financial planning. The question some ask is whether the FCA is doing enough to protect the very concept of independence that sits at the heart of consumer trust.
An Independent Financial Adviser must consider all retail investment products from the entire market. They’re supposed to be free from conflicts, unshackled from product provider incentives, working purely in the client’s interest. It’s a noble ideal.
But does it survive when small IFA practices are absorbed into large consolidator groups?
Advice consolidators are building scale. But some argue that sometimes this is at the cost of the client. Others ask whether firms that own advice companies be allowed to own an investment arm? Does this create a conflict of interest?
Now, the FCA would argue they’ve got this covered. Regulatory permissions remain. Supervision continues. Firms must still demonstrate independence in their investment selection processes. But a fair question is whether ‘box-ticking’ compliance is enough when the entire commercial infrastructure surrounding advice has fundamentally changed.
Consider what independence meant fifteen years ago: a small firm, perhaps two or three advisers, deeply embedded in their community, their reputation their most valuable asset.
Now compare that with a consolidator managing two hundred advisers across multiple brands. The incentive structures are different. The accountability is different. The relationship between adviser and client, mediated through corporate structures and centralised investment propositions, is fundamentally different.
The consolidators, naturally, push back. They argue they bring benefits: better technology, more robust compliance, access to institutional pricing, career progression for advisers. These aren’t trivial advantages. Small firms struggled with regulatory burden; many sold precisely because they couldn’t sustain the cost of compliance. Consolidation has, in some ways, professionalised the industry.
But professionalisation and independence aren’t synonymous. In fact, they may increasingly be in tension. As firms become larger and more sophisticated, they may develop preferred panel arrangements, centralised research functions, and house views on asset allocation. All perfectly legitimate. But each step moves further from the founding principle: one adviser, one client, whole of market.
What should the FCA do? At a minimum, greater transparency. If you’re seeing an adviser whose firm is owned by a consolidator, you should know it. The ownership structure, the commercial pressures, the extent to which investment selection is genuinely independent or guided by central direction – all of this should be front and centre in client communications.
More radically, perhaps it’s time to revisit what “independent” means in an era of consolidation. Should there be limits on the size of firms claiming independence? Should there be stricter separation between advice and centralised investment management?
The stakes are high. Independence isn’t just regulatory semantics – it’s the foundation of consumer trust in financial advice. If that trust erodes because independence becomes a convenient label rather than a lived reality, the damage could extend far beyond individual firms. The FCA has the tools. The question is whether they have the will.
Robbie Lawther is Account Director at Quill PR.
Quill PR team, 2025.
Tell us about your company, services and specialisms
We are a boutique agency specialising in media relations and strategic communications for the investment, wealth management and financial advice industry, as well as PR and investor relations for investment trusts.
Which financial services clients do you currently work with?
We only work with financial services firms and our clients range from large asset managers, wealth managers, investment trusts and investment industry bodies to smaller boutique and start-up businesses. Our asset management clients cover the gamut from private equity and real assets to listed funds covering all and every type of asset class.
Who is on your team?
We are a close-knit senior team with a variety of industry backgrounds, plus some Rising Stars (as nominated by Headlinemoney!)
What’s the best way to get in contact with your team?
Email or telephone/mobile is the easiest way to get hold of any of us. Or just pop in to our offices for a coffee.
How long does it take you to turn around requests?
We always aim to turn around requests within the deadlines we are given, even if they are within a few hours.
What kind of resources do you have at your disposal – e.g. spokespeople, case studies etc
We have some excellent fund manager, wealth manager and distribution experts who are always happy to help, diaries permitting. We can cover almost any asset class, as well as comment on tax and planning through our wealth clients. We have some real characters among our client base as well, as many of your journalist readers can probably attest to!
Tell us about any recent press campaigns you have worked on
Quill is currently working on a major investment trust campaign alongside agencies, Hub and Warhorse. Called “The Missing Lever”, the campaign looks to help investment trusts take a broader view to help shrink discounts, reduce the amount of buybacks and organically grow their company. This includes an industry-led campaign, making full use of marketing and PR to reach a wider audience of potential investors. Quill, Hub and Warhorse launched the campaign with a documentary screening featuring luminaries of the investment trust world and drinks at the London Stock Exchange in September.
Congratulations on your success at the 2025 Headlinemoney Awards! How did you feel when you were announced as PR Agency of Year?
Regrettably, I was away when the awards happened but judging by the number of excited messages I received during the evening, I would say the team were overjoyed.
Any upcoming events for the financial press in the next few months?
We will be continuing with The Missing Lever investment trust campaign and hoping to speak to as many investment trusts as we can. The first of a series of regular roundtables is starting on 14 October.
Quite a few of our clients will be hosting 2026 outlook breakfasts and lunches over the next few weeks, and our clients often host popular journalist masterclasses on more complex financial services topics which could use a little extra explanation.
We’re more than happy to arrange meetings with… CEOs, spokespeople, star managers, etc
Our clients would love to meet any journalists in the investment, wealth and advice space (and frequently do), so please do get in touch.
Do you have any upcoming stories for journalists to look out for?
2026 outlooks and, of course, the Budget! Plus, some exciting new fund launches, private equity fund closes, roundtables and lots more!
And finally, anything else you would like to bring to the attention of financial journalists?
I know many claim it, but Quill really is a one-stop shop for anything and everything investment-related, and we pride ourselves on our responsiveness and helpfulness in our dealings with journalist colleagues.
This article was originally published on HeadlineMoney.co.uk
This new category for 2025 at the esteemed Fund Manager of the Year Awards recognises excellence in communications and marketing within the asset and wealth management industry – and we’re honoured to be its first ever recipient, among a very strong field of peers.
The judges commented that Quill PR “impressed the judges by providing solid evidence of the impact of its work, including communications support for major M&A deals, and multiple client endorsements.”
To have our results-driven approach and strategic impact highlighted in this way is a very proud moment for our team.
Images courtesy of Investment Week
At Quill PR, we strive to be more than just a service provider. We aim to be true partners to our clients – working closely with them to shape narratives, navigate critical moments, and build lasting reputations in an increasingly complex communications environment.
We extend our sincere thanks to our clients for placing their trust in us, and for allowing us to play a role in their continued success. Their endorsements, and the strength of those partnerships, were instrumental in this recognition.
We’re also grateful to Investment Week and the awards judges for acknowledging our work in such a meaningful way. Congratulations to all of this year’s winners and nominees.
Journalists’ inboxes were heaving under the weight of comments on the Bank of England’s announcement that the interest rate was being cut 25 points to 5%.
And frankly the industry response is understandable given the long-awaited cut after years of high rates.
The cut will prove only a chink of light for those on variable mortgage interest rates but experts are seeing encouraging prospects for markets.
Emma Moriarty (pictured above), portfolio manager at CG Asset Management says: “While not completely unexpected, today’s rate cut by the Bank of England has buoyed the gilt markets, and has also improved wider equity market sentiment. Listed funds in some of the longer duration asset classes – such as property and infrastructure – have been clear beneficiaries of this.
“While the Monetary Policy Committee did not give guidance on the pace and quantum of rate cuts to come, markets are now pricing in an additional two cuts for 2024. This seems in line with the downward direction of travel in headline inflation to date. Looking ahead, the key question will be how many rate cuts the Bank can reasonably make from here.
“Despite falling headline inflation, wage growth and services inflation remain sticky and elevated, and the Bank has warned that headline inflation looks set to increase over the latter part of this year. In a similar vein, consumption and growth have been stronger than expected, and the new Labour government’s focus on state-directed growth may mean that inflation – and interest rates – need to stay higher for longer than markets currently expect.”
Stuart Widdowson, portfolio manager at Odyssean Investment Trust says the cut will support investors increasingly looking to small to medium sized UK companies as market sentiment turns in the sector.
“Until recently people were very reluctant to look at new investments. What we hear from brokers is that people are interested now: it’s not just M&A activity and the mood music of our peer group is generally more positive.
“We, and other fund managers, are seeing shareholders and potential shareholders over the last quarter more open to putting assets into the small to mid-cap sector now and that’s a significant change from Q4 last year.”
Widdowson says investors may also be looking for stocks with a global reach beyond the Magnificent Seven.
“We do think one of the key catalysts for people reassessing UK equities is basically the momentum trade of the big seven stopping. We’re seeing people being open to invest in the UK and small to mid-caps and the UK is seen as a relatively safe haven now compared with the rest of Europe.”
As Emma alludes, the Monetary Policy Committee was cautious in explaining it’s decision to avoid any hopes of this being a start to a continued fall in rates.
It said: “Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further. The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.”
But, hey, let’s take the chink of light – and hope for more to come.
Stephanie Spicer is head of content at Quill PR
It was confirmed the following day, that the BBC story that Rishi Sunak’s government would be rolling back some of its net zero commitments, including the ban on sales of new petrol and diesel cars being pushed back from the proposed 2030 to 2035, and a delay in phasing out gas boilers, was correct.
The leak and subsequent government announcement of a slowing of the pace to targets, comes on top of what, while the title of this article may seem hyperbolic, is not far from the truth after the summer many have experienced this year. Here in the UK, we were met with the typical British gloomy summer of wind and rain, whilst our European and American counterparts have been met with drastic extremes.
It was recorded that July was the hottest average month on record, with many parts of southern Europe reaching unbearable temperatures of 50 degrees. Accompanying these temperatures were raging wildfires, devastating large areas of Italy, Greece, Croatia, Canada, and Hawaii. These events should be ringing the alarm bells louder than ever on the effect that climate change is having; with the destruction of agriculture, homes, and threatened health of locals, with deteriorating air quality and insufficient infrastructure.
While the effects of climate change are more urgent than ever, it seems that in 2023 ESG funds are now facing the effects of global markets, and ESG may not be at the top of every fund’s lists.
Reuters reported in August that ESG investments have been out of favour with UK investors, with a staggering £1 billion in funding having been pulled since May because of continued interest rate rises and persistent inflation, leading investors to seek more stable grounds for returns.
Figures from global funds network Calastone show that the amount investors sold of their ESG funds snowballed to a total of £1.96 billion by the end of August. This has also been reflected by consumers, with The Telegraph reporting that the ‘number of people making decisions with a ‘’planet first’’ mindset nearly halved from 24pc to 13pc between June 2022 and April this year’.
Once the front runners of global change with the momentum of the Paris Agreement in 2015 behind us, seemingly, under Rishi Sunak’s government, matters of ESG in the UK have taken a back seat. While we need to ensure our own energy supplies in light of the Russian war on Ukraine, the new North Sea oil licenses that Sunak has approved have faced huge backlash from both members of his own party and environmental groups, urging him to look at renewable energy sources – with Sunak claiming that it is “entirely consistent with our plan to get to net zero”.
While Sunak was widely criticised for his move, London Mayor Sadiq Khan hasn’t fared much better at the other end of the spectrum of ESG matters. The controversial ultra low emission zone (ULEZ), aiming to improve the air quality in London, with vehicles not meeting emissions standards being charged £12.50 a day, or a fine, has seen Khan suffer a drop in popularity given that the charges are hitting those who are unable to either pay the charge or afford to get a car that is compliant.
Sunak says the government is still committed to reaching net zero by 2050 but in a “more proportionate way”, however it is increasingly evident that the UK is struggling to find the right balance between the needs of its people and achieving its net zero targets.
Emma Taylor is account executive at Quill PR
Photo by Matt Palmer on Unsplash
There are four problems zipping around currently that could be marshalled into a very good solution: how to encourage the young to invest; how to encourage investors to invest in start-up, small companies and UK plc generally, how to encourage pension schemes to do the same, and how to encourage companies to list on the London Stock Exchange and base operations here.
Each issue carries its own hurdles.
Investing is not top of many young people’s lists – spare cash is not that readily available – and yet the attraction of cryptocurrency offers excitement it seems and the potential for fast or vast profits. If cryptocurrency is attractive, this suggests the young are prepared to take some risks with their investing – so let’s try to educate them about things which could be deemed ‘exciting’ but are more tangible, i.e., small company, start-up, tech, entrepreneurial businesses looking for funding.
Pension funds have a lot of money to invest but for various reasons are not investing in less liquid and more risky assets and very often also not in the UK. Calls are being made to change this mindset although it has to be borne in mind that broadly this pension money sits under two sets of policy: defined benefit schemes, which guarantee the pension member their pension and defined contribution schemes – which don’t. For the latter each individual can choose their level of risk. If that individual has forty or fifty years to invest over, why should they not consider the potential growth options which stem from scale-up businesses?
That’s always supposing UK businesses see a future in the UK. Lots don’t because they see the opportunity for better valuations elsewhere and lots of companies that would like to come and list in London and present opportunities for investors don’t, because of regulatory restrictions. Citing the problems British fintech company Revolut has had in getting a full banking licence in the UK, Professor Stefan Allesch-Taylor, entrepreneur and Professor of Practice at King’s College London recently wrote: ‘Why do we care about the toings and froings between a multi-billion-pound UK fintech company and our regulators? Simply because other companies considering London as a home will be watching the process, whatever the outcome.’
Pictured above, Nicholas Lyons The Lord Mayor of London, head of the City of London Corporation (until his term ends and he returns to his role as chairman of Phoenix Group) in its report Powerful Pensions Unlocking Defined Contribution capital for UK tech growth March 2023 has written: ‘If we want to keep firms here in the UK, we need to make sure they can get the investment here in the UK.’ And he proposes this is facilitated by a Future Growth Fund: ‘Such a fund would enable investment via private equity into fintech, life sciences, biotech, and green technology. By channelling this investment, we can create growth and in turn support jobs and prosperity across the whole UK economy,’ he writes. He proposes the investment comes from the defined contribution pension schemes.
All the hurdles to these issues have the same root – that of risk. Regulators, businesses, investors have to work together to calculate that risk and then make a calculated risk, to benefit all.
Stephanie Spicer is head of content at Quill PR.
Photo courtesy of City of London Corporation
Much has been reported in recent months of companies de-listing from the London Stock Exchange and de-camping to the US for better valuations of their businesses. And yet the UK has its champions and investors should perhaps consider the positives and buy more British.
One advantage for UK investors is that companies remaining listed in London are seen as cheap – and these are not companies which are doing badly – it is just that they are often under appreciated.
Alec Cutler, portfolio manager and head of multi-asset at Orbis Investments (pictured) says: “UK names keep popping up as being super cheap. We find that they’re good companies, they might need a tweak here or there, but they’re fantastic yet selling at very cheap prices. So they offer high dividend yields, high free cash flow yields, very solid book, and cheap book values.”
Examples, he highlights are Headlam, energy players Hunting, Drax and Balfour Beatty, the latter he says “one of the best positioned construction companies in the world, selling at a double-digit free cash flow yield, eight times earnings.
“The reason these companies are cheap is because of changes to pension reform in the UK. UK pension holdings in UK equities went from approximately 50% around 1997 to 4% today, a massive outflow of money. And the current prices reflect the fact that investors around the world just don’t know these names as well as they should, and as well as we think they will.”
Examples of a company which wants to forgo its London listing and one which might like to list here, are Okyo Pharma and Coinbase, respectively.
Gabriele Cerrone, founder and chairman of biotechnology company Okyo Pharma, which specialises in eye disease treatment, is taking his company out of the UK and his issue is not so much valuation as appreciation. Quoted in the Daily Mail he says UK investors are only interested in mining and oil giants – “What I learnt about trying to create a niche biotech company in the UK is that it is like trying to grow plants in the desert. It has been a complete waste of time and we never raised money from investment banks. There’s no biotech culture nor any liquidity in the United Kingdom at all.”
In its Notice of Intention to delist from the London Stock Exchange, Okyo said: ‘The Company has decided to request the voluntary cancellation of listing as the volume of trading of the Ordinary Shares on the Main Market is negligible and does not justify the associated costs.’
Meanwhile crypto exchange Coinbase may not be averse to the idea of a London listing given dissatisfaction with the clarity of crypto regulation in the US.
Brian Armstrong, co-founder and chief executive officer of Coinbase told BBC Radio 4’s Today programme, when asked if he would have considered listing on the LSE rather than New York: “We started in the US so it was natural for us to list there but honestly given the UK has recently actually been quite positive on crypto, in a different world going back we may have considered it, to be honest at this point. I do think the US risks falling a little bit behind here if some of the regulators don’t engage further with the industry and create that clear regulatory environment that will remove some of these clouds.”
Then we have statistics from The Insolvency Service showing that the number of corporate insolvencies was 16% higher in March than in the same month last year. Yes, there is a cost of living crisis but when we do spend and where are we spending? Not on these businesses, it seems.
One has to consider where, as investors we are focusing. Who does crypto currency investing benefit and who benefits from biotech investing? No one is suggesting one invests in the latter for philanthropic reasons alone – there are returns to be made after all. But is investing in something that can’t be seen, rather than in something that develops treatment for inflammatory eye diseases, somewhat myopic.
Stephanie Spicer is head of content at Quill PR
There are generalisations about women and investing: they are too hesitant, too risk averse, they have too many other calls on their finances, are not paid equally … are they generalisations? Excuses? Actualities?
The Wisdom Council which worked with companies such as Scottish Widow, St James’ Place and Vitality to attempt to tackle the gender pensions gap claims Women have simply never considered investing – even when they are part of a pension scheme, they don’t think of themselves as investors (75% of those polled didn’t know they were investors, even though the recruitment criteria included involvement in a workplace pension).
While auto enrolment may mean more people have access to pension saving and investments a key part of the advantage is missing if there is no active investment involved – which it won’t be if these women actually invested in pensions don’t recognise themselves as investors.
The Wisdom Council’s Yes She Can campaign research showed that the average woman’s pension pot is one fifth of the average man’s pension and at current rates, it will take 100 to 250 years to address the gap. Additionally 49% of women had never invested and, of those, 85% didn’t think investing was ‘for people like them’.
The statistics run on. According to the Fawcett Society women took home on average £564 less per month than men in 2022 (£536 in 2021) and possible because of or exacerbated by the cost of living crisis 53% of women would use the additional money to turn on heating and lights more often, and 48% report that their mental health would improve. For many the prospects of improving things are not overwhelmingly positive as 35% of women want to work but are prevented by reasons including a lack of flexible working options and affordable childcare.
Fidelity has for years research and campaigned on women and money. Its most recent research shows that while women are passionate about tackling societal and environmental issues, with 57% wanting to take action against climate change, 40% want to improve poverty and homelessness and 34% would like to influence positive change towards animal welfare, many are unaware of ‘the positive impact they could have through their pensions and investments, with 68% unfamiliar with Environmental, Social and Governance (ESG) investing.
This is all somewhat depressing and rather makes us women look a bit silly.
But not really when one considers Fidelity research into the ‘gender pay rise gap’, which based on ONS data shows that taking the average salary for a 25 year old women was £25,066 and for men £37,817. Were those salaries to rise by 1% in real terms each year the average pay rise every five years would be £1,284 for women and £2,017 for men. Salaries at retirement would be £49,682 for women and £75,748 for men. The respective pensions at retirement, assuming an 8% salary contribution would be £276,403 and £419,006 – a difference of £142,603. That’s a lot less available to spend on heating, lighting or childcare, on climate change, improving poverty and homelessness and animal welfare.
And of course, these issues impact on all of us, on all our worlds, male or female. Which makes us all look a bit silly. And it leaves the investment industry with a job still to do to attract more investors.
Stephanie Spicer is head of content at Quill PR
Inflation at 10.7%1 is focusing investors on how to protect their investment portfolio. Consensus among Alliance Trust stock pickers is that it’s all about the company pricing power of the underlying stocks within your portfolio.
Bill Kanko, founder and president of Black Creek Investment Management says: “Over the long-term, investing in equities is a reasonable inflation hedge as revenue, cash flows and earnings adjust to the environment of higher input costs. Over shorter periods, this is not necessarily the case given rising inflation tends to be associated with declining stock prices.
“High growth stocks with little or no present earnings and cash flows are much more sensitive to the higher interest rate environment as central banks raise rates to counteract inflation. Companies that are reasonably valued and have current cash flows and earnings should be less affected by rising interest rates.
“In an inflationary environment where real bond yields are higher, investor interest will broaden out beyond the winners of the past decade (i.e., high growth companies) to other areas of the market, including ones that are more economically sensitive.
“In the short-term, stock price movements will react to the impacts of higher inflation and interest rates. However, we take a long-term approach to investing and believe that the winning businesses that we seek should fare better in this environment relative to the broad market.”
Rajiv Jain (pictured above) chairman and chief investment officer at GQG Partners says that during inflationary periods, he attempts to optimize the construction of his portfolios in two ways.
“First, from a sector perspective, we will look to increase our exposure to names that traditionally exhibit strong pricing power, as long as those stocks continue to be reasonably valued. In addition, certain business models such as Visa Inc. have revenue that is partially driven by the dollar amount of transaction volume, which may act as an inflation hedge.
“Second, we may increase our exposure to select countries where the management teams are experienced navigating inflationary environments, particularly in India and Brazil.”
Jupiter’s head of strategy for value equities, Ben Whitmore cautions that while equities have proven a hedge against inflation over time, they react poorly to begin with to unanticipated inflation or a change from low to high levels of inflation. This can be seen in the 1970s and now to a degree.
“Real assets (commodities, property) have historically proven a good hedge against inflation. Furthermore, companies that can raise their prices in line with inflation have also proven a useful hedge. The portfolio can also be protected by the starting valuation. High inflation leads to high interest rates and this tends to favour companies where the value of the business is more determined by near term cash flows rather than businesses that are valued off cash flows a long way in the future. Low valuations tend to triumph as a result over high valuations.”
Jonathan Mills, co portfolio manager at Metropolis Capital agrees: “As part of our quality analysis, we assess whether each company in the portfolio is able to at least offset increases in input costs by raising their own prices. We believe that they are all able to do so, largely because of very strong customer loyalty and lock-in.”
George Fraisse, founder and principal at Sustainable Growth Advisers agrees that a key characteristic he looks for in companies is strong pricing power.
“We want companies that sell products or services that will allow them to protect their profit margins over the long-term,” he says. “Accordingly, our companies should be able to maintain their predictable and sustainable growth better over periods of higher inflation. We avoid commodity oriented companies which are reliant upon more cyclical demand to support the pricing of their products.”
CT Fitzpatrick, founder and chief investment officer of Vulcan Value Partners says: “Companies that have pricing power can often pass through higher costs to their customers, creating some inflation protection for their shareholders. In addition, companies with pricing power may pull forward free cash flow, reducing equity duration, and offsetting the negative effects of higher interest rates, which typically accompany higher inflation.”
Stock selection is key he adds saying that most businesses don’t have pricing power. For those that do: “While rising inflation can have a near-term negative impact on stock price performance those companies with pricing power should not see a negative impact to estimates of intrinsic value.”
An example of a company with pricing power which Vulcan holds is Aerospace manufacture, TransDigm Group.
Sunil H Thakor, research analyst and co-portfolio manager of the Sands Capital Global Leaders and International Growth strategies highlights the sort of businesses that are largely immune or can even benefit from rising inflation.
“Many businesses that meet our criteria are asset-light—built on intangible, rather than tangible assets—and have limited sensitivity to global supply chain disruptions and fluctuating raw materials prices. We seek to own businesses with strong balance sheets and low debt, resulting in muted interest expenses.
“We also seek to own businesses that have market-leading positions, delivering must-have products and services. This often results in pricing power. The best pricing power, in our view, is ad valorem, where businesses capture a transaction fee; this results in a higher fee—and more revenue—as prices rise. Typically, these companies have costs that aren’t directly linked to revenue generation, so an inflationary environment is actually margin accretive.”
1 https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7g7/mm23
Stephanie Spicer is head of content at Quill PR