Corporate Vision March 2017

CORPORATE VISION / March 2017 5 NEWS , Xero, the beautiful cloud accounting software company, asked small business owners about what it will take for a business to survive and thrive in 2017 in its Make or Break report, and ‘encouraging a healthy work-life balance’ was ranked second in a list of produc- tivity boosts. Almost half (49%) of business owners say that emotional wellbe- ing is vital for business success. Physical wellbeing is also key, with 63% saying it is important to get enough sleep, a balanced diet (57%) and exercising regularly (49%). Business owners recognise that regularly recharging their physical and mental batteries can have a major effect on both the body and the bottom line with 85% saying it is important to take a break, and more than half (52%) planning to take more time off in 2017 than they did in 2016. Marking the beginning of a new era of business management, the research also found that small business owners are rejecting the concept of work taking place within a 9-5 office structure, with 42% hailing remote working and flexible hours as the biggest driv- er of productivity for themselves and their employees. Female respondents were particular- ly positive about the benefits of flexible working, with 48% stat- ing that it powered productivity in their business compared to 37% of men, and the research found that almost half (47%) felt that cloud technology allowed them to escape from traditional office routines, also citing paperless systems and simplified software management as a benefit. Josephine Fairley, Green & Black’s co-founder and serial entrepreneur commented: “Your own health and wellbeing is of paramount importance as a small business owner and it’s great to see that small business owners are seeing the connection be- tween personal health and their bottom line. It’s no surprise that small businesses said remote and flexible working was their Anthony Rayner, man- ager of Miton’s mul- ti-asset fund range comments said that headlines were ablaze in late February / early March with the glory of the Dow Jones achiev- ing record highs for 12 consecutive days. “This is the first time in 30 years this has happened, but then 1987 did see some serious volatil- ity in markets, with the Dow Jones falling 34% in October, despite man- aging to finish up over the calendar year” he went on to Say. “There has been some serious mo- mentum to equity markets. No doubt a combination of the following should take some of the credit: decent cor- porate earnings growth, strong global economic growth and still low interest rates. The ‘Trump trade’ is also in the mix with expectations of tax reform, a reduction in regulation and an in- crease in infrastructure spend all buoying markets, but this also comes with a lot of noise around policy for- mulation and implementation risk. “Looking beyond the headlines, the story is more nuanced. The behaviour of equity markets had indeed been consistent with risk- on positioning for some months. For example, cyclical sectors had been outperforming defensive, and emerging markets had been out- performing developed. Meanwhile, high yield credit had been outper- forming investment grade credit. “However, this reversed in February this year and was accompanied by a rally in safe haven markets. Cycli- cals have been outperforming de- fensives since the middle of 2016. The trend became less clear cut around year end and, in February this year reversed, although it’s too early to call it a new trend. “The outperformance of cyclicals has been closely linked with bond yields moving higher. Going back further, this relationship holds pret- ty well, with bond markets and de- fensives (aka equity bond proxies) tending to move in tandem. “Since the beginning of February, core government bonds have rallied, especially German bunds and UK gilts, reflecting regional differences such as heightened political risk in France (benefiting German bunds) and, in the UK, reduced expecta- tions of a rate rise, with some signs of economic momentum slowing. US Treasuries have rallied less so, perhaps countered by stronger eco- nomic fundamentals and growing ex- pectations of US interest rate hikes. “So, asset classes are behaving in a broadly consistent way (with the exception of gold, which has rallied from the end of December, but gold does tend to do its own thing). The question is, why has there been a switch in market dynamics? It might simply be that markets are digesting the sharp rise in risk assets, with a healthy bit of mean reversion. Or that economic momentum is per- ceived to be slowing. Or that Trump needs to deliver more than a Twitter promise now and then. “We can’t know the answers yet. So far, the economic data remains con- sistent with reflation, but that doesn’t mean that economically sensitive equities aren’t stretched short term. If bond yields move materially lower, or stay close to these levels, then it will likely mean that cyclicals will struggle to lead markets higher, as they have done for most of the peri- od since the middle of 2016. “For our part, we retain our reflation base case, and are broadly con- structive on markets, with a bias to economically sensitive businesses and a preference for short duration, good quality corporate bonds. We also continue to add to our themes, such as technology healthcare, which helps to diversify our funds.” www.mitongroup.com biggest productivity driver either; I know how much my team gets done at home when they can fit their roles into their daily lives.” Gary Turner, UK co-founder and managing director commented: “Our report reveals that small business owners are actively encouraging a healthier work- life balance for themselves and their staff, being rewarded with increased productivity as a re- sult – particularly vital considering Britain is second last of the G8 nations in the productivity table. Running a small business can be all-consuming but it’s great to see that small business owners are taking a holistic approach to their mental wellbeing and are ensur- ing that the health of their busi- ness doesn’t come at the cost of their own.” To help small businesses, Jo Fairley shares her top tips for a healthier workplace: 1. Encourage time off – some companies discourage their employees from taking their full holiday allowance in fear of hav- ing fewer hands on the job. This is poor management, as you will always get more out of your staff when they are well rested and have re-charged their batteries. That goes for the business own- er, too. 2. Aim for 10,000 steps a day – research shows that we spend too much time sitting down at our desk jobs, but this can be difficult to address. Investing in devices like Fitbits help you and your em- ployees keep track of your steps, and taking the stairs, going for a stroll at lunchtimes and walking the long way home can get you to your 10,000 steps while clearing your head at the same time. 3. Focus on your mental health as much as your physical health – Stress is a huge issue in today’s society, and it’s easy to forget that your brain needs to relax in the same way your body does. I find daily meditation and yoga class- es once a week help to keep my stress levels under control and I encourage my employees to do the same. www.xero.com/uk Keeping up with the Joneses Miton’s Anthony Rayner recently commented on the record highs mask tug of war inmarkets, how the perceptions of slowing economic momentumare changingmarket dynamics and why we remain broadly constructive onmarkets, with a bias to economically sensitive businesses.