The 2016 All-Europe Research Team: Specialty & Other Finance, No. 3: Daniel Garrod & team

Runners-up the past two years, Daniel Garrod and his three-person Barclays crew in London advance to third place.


< The 2016 All-Europe Research Team


Daniel Garrod & team
First-place appearances: 0

Total appearances: 5

Team debut: 2011

Runners-up the past two years, Daniel Garrod and his three-person Barclays crew in London advance to third place. “They dig deep in their research on the diversified financials they cover,” attests one money manager, providing “a clear view about developments like retail distribution review in the U.K. and other relevant subjects.” Pointing out that performance in their sector varies by industry, the analysts hold a mixed stance on the wider group. The year ahead “will be positive for stock exchanges, due to structural reforms of the European Market Infrastructure Regulation and Markets in Financial Instruments Regulation and the Target2-Securities” settlement engine, says the 40-year-old Garrod, who also cites “the likelihood of elevated volatility boosting trading activity.” At the same time, they forecast, headwinds will be substantial for certain asset managers — particularly emerging-markets-focused names such as Scotland’s Aberdeen Asset Management and U.K.-based Ashmore Group — owing to investor redemptions and performance issues. Similarly, Garrod says, “specialty lenders face challenges due to attempts to slow [buy to let] lending and increased capital requirements.” He and his colleagues dub two British companies their top picks going forward: Henderson Group and London Stock Exchange Group. They like Henderson’s strong fund performance track record and flow momentum, coupled with corporate leadership’s medium-term targets to double assets under management by 2018. In addition, “valuation remains roughly in line with the through-the-cycle average for the asset management sector,” notes Garrod. The LSE’s strong projected top-line growth informs the researchers’ optimism on that name. “This is as a result of its bias to areas of encouraging structural growth such as index services and central clearing. Cost discipline is good, with synergies coming through from the acquisitions of LCH.Clearnet and the Russell indexes,” he reports, “and valuation is within its previous price-to-earnings range.”