By Simon Hopkins, CEO Milltrust International Group

It’s been a year of extraordinary paradox. Politically, the world seems to have become a radically more uncertain place with the election of Trump, the UK’s BREXIT vote and the increasingly loud voices of nativism in Europe, the USA and many other parts of the world. Ironically, it was a transformational year for Milltrust International Group, with the launch of a myriad of new investment solutions across the real asset space, an addition to our EM UCITS funds with the launch of the MENA fund (managed by SEDCO Capital), and the continued development of our Singapore-based, regulated fund manager.

In emerging markets, especially Asia, the rise of the demagogue has been no less apparent, with the extra-judicial killings in the Philippines and cozying up of the new President to China and Russia. The blatant disregard for international claims to certain disputed territorial waters by China, and continued acts of bravado that have goaded its neighbours and the US, have proved irrepressible. The Malaysian administration appears to have paid little heed to Western condemnation of the 1MDB scandal, where hundreds of millions of public pension fund assets appears to have been squandered or looted.

In Brazil, the Petrobas scandal, whose tentacles have extended as far as Singapore, has finally engulfed the President in corruption charges and impeachment, although the deeply depressed stock market started its recovery as the story was quickly consigned to the archives and a new Presidential administration swept in.

In Korea, people power has resulted in the impeachment of another President and the discrediting of a system that seems rife with graft and corruption, although to date the families that actually control the country seems to have consolidated their grip. Nonetheless, funds have been flowing into the stock market and we remain quite sanguine for the country’s prospects given the extremely low multiple at which it trades.

In other parts of the emerging markets world, we saw over the summer a rather feeble attempt to overthrow the autocratic government of Turkey met with a hugely overzealous riposte as over 100,000 people were rooted out of the system on the President’s authority. With one fell swoop, Turkey eliminated itself from the running for EU membership (although this may now be inconsequential) and added its name to the increasingly large list of no go zones for those seeking winter sunshine.

With Gambia in West Africa on the brink of martial law, the Sinai peninsula continuing to represent a hotbed of terrorist activity, and North Africa still suffering the aftershock of the Tunisian beach massacre in 2015, India and Sri Lanka look set to take up the slack. We are focused on this next wave for the hospitality industry and we have launched a dedicated investment vehicle advised by East India Capital Management, our Asian affiliate.

Ironically, the fall in the value of sterling has precipitated an increase in interest from Asia in London real estate and accelerated the launch of our Royal Park Suites ICAV initiative, focused on income generating serviced apartment investments.

With worries over European funding for UK’s university research being one of the very real implications of BREXIT, Milltrust launched the British Innovation Fund giving investors exposure to some of the most advanced technologies of the modern world. This will include the next generation of interconnectivity made possible by the Internet, with significant implications for personalised healthcare diagnostics, elderly care, security and increased industrial and agricultural productivity.

In other significant developments for our group, Milltrust Agricultural Investments successfully embarked on the deployment of the its first round of funding, targeting 7 farm acquisitions in Australia and New Zealand across a variety of commodities offering solid income steams. Our Buy & Lease approach looks to deliver a reliable payout to our investors twice annually whilst empowering the farmers to expand their footprint and deliver commensurate economies of scale, and enhance land values through upscaling.

The insidious growth and performance of the ETF industry in 2016 has been driven by the relentless recovery of the US and U.K stock markets. As risk becomes more difficult to presage and Western markets look historically overvalued on any measure, the indiscriminate nature of ETF capital could be as damaging to global savings next year as it as been helpful in 2016. Emerging markets are less characterised by ETF flows however and indeed market volumes in general have provided woefully slim pickings for the brokerage community. Nonetheless, they have not been without their opportunities. The Milltrust approach to market rotation, and focused stock picking through proven local managers, continued to reap rewards with our EM program delivering 32.52% versus 4% for the MSCI EM index since launch in June 2012.

For this coming year, we remain overweight in Latin America, where stocks look cheap and the currency is still historically low versus the USD. We believe Russia will continue to deliver a strong year for the market and the ruble. However, we have cut back exposure to India, still one of the faster growing economies but suffering from the unknown consequences of the recently announced demonetisation.

In the spirit of the season, Milltrust International is making a donation the World Wide Fund for Nature (WWF) in lieu of cards and gifts. The World Wide Fund for Nature is an international non-governmental organization founded in 1961, working in the field of the wilderness preservation, and the reduction of humanity’s footprint on the environment.  If you’d like to learn more about WWF, please visit: https://www.wwf.org.uk. We wish you all a happy and successful 2017.