InPerspective - Volume 3

The backdrop to financial markets has become increasingly challenging in recent months, and the outlook for investors is sensitive to considerable challenges. Will the weakness in recent economic data prove to have been a blip, or a portent of a longer-lasting slowdown? Will politicians succeed in maintaining a firebreak in European sovereign bond markets, or will the flames from Greece ignite other more significant parts of the eurozone, and particularly the banking system? Will U.S. legislators cease squabbling in time to reach an agreement on the country's government debt, or will the slim chance of a U.S. Default become larger? How will central bankers seek to square the conflicting threats of rising inflation and slowing economic activity in their approaches?

In such an uncertain and febrile environment, financial markets seem likely to remain volatile. However, we believe that the prospects for companies, and for investors in their debt and equity, are broadly appealing. In the first article of this edition of inPerspective, we review the performance of our global equity strategy over the 12 months to June 30, 2011. We explain some of the key aspects of the strategy's composition and security selection, and we discuss our use of investment themes in seeking to maintain perspective on the outlook for financial markets.

In our second article, amid the significant upheavals in sovereign bond markets in Europe, we evaluate the outlook for fixed income investors. We explain what we believe to be the advantages of a global approach to bond and currency investing, both in diversifying risks and in seeking to generate positive returns in a rising interest rate environment.

Finally, in relation to our broader thinking about global investing, we have produced a paper on the case for U.S. investors to take a global approach in investing across asset classes.
Please visit newtoncapitalmanagement.com/whyglobal for a copy.

We hope you enjoy this edition of inPerspective.