Effective immediately, Adams will steer the firm’s UK and global equity teams – while retaining management of the UK equity fund – as Kames unifies leadership for its domestic and international operations.
The appointment comes in the wake of the departure of former head of global equities Piers Hillier, with Adams then in the head of UK equities role, which he has held since 2004.
Kames CIO Stephen Jones explained: “Our UK and international equities managers already operate with a shared philosophy, and a unified team under Stephen will strengthen our research capabilities and enhance the sharing of investment ideas.”
The announcement follows a busy few months for the department, which was bolstered by the recruitment of Luc Simoncini in December and Craig Bonthron the previous month.
Having finished assembling its management roster, Jones said that Kames team is planning to take advantage of the depreciating euro and market positivity.
“There is strong demand from investors for cash-plus products coming out of Europe,” he explained. “Interest rates have fallen, holding cash on deposit in Germany and Switzerland now costs money, and nominal retains of 2-4% are pretty attractive.
“A supportive argument for European equity is that there is a stimulus coming from the currency devaluation, and if there is global demand for products, then Europe’s ability to export into that demand is pretty strong with the euro having depreciated as much as it has.
“There is quite a bit of positivity in the European equity market, and if you can put that into an investor base that is willing to get rid of its cash, then you could do well.”
Jones admitted that while there are risks factors, he believes that investor optimism around the potential for ECB quantitative easing can steer the market through any adversity.
“The points of focus in the context of risk are few but very defined, mainly around central bank policy,” he said. “There are a couple of forces at play. Greece is a risk, but there has not been much contagion.
“Also, there appears to be a weakness in and slowing of economic activity in Europe, and therefore company profitability, but the market is prepared to look through that on the basis that Mario Draghi is poised to pour money into the system with QE, and the market believes that will happen on 22 January.”
While Jones remains sceptical on the prospect of QE, he conceded that if Draghi was initially reticent, the pressure of market belief in its imminence will likely force his hand.
“I’m probably in a minority of one in saying it is not clear that is going to happen, and because of that the ECB has got to deliver it,” he said. “Whether it does any good or not, and how it is designed, is debatable.”
So on which areas in particular does Kames have its sights trained?
“In terms of demand for product, there is a deep pool of savings in Germany being penalised by very low cash rates and a bit of spill-over appetite,” said Jones. “QE is designed to get people to take a bit more risk and get more return – that is an area we can access.
“In Spain there has been a strong sense of ability to diversify out of the local and domestic markets into more of a European fund base and investment activity. That has come out of the difficult conditions that domestic markets endured two or three years ago.”
