John Redwood: Evercore is victim of City whispering campaign

John Redwood, the Conservative MP and chairman of Evercore Pan Asset has scotched claims that the firm runs a ‘risky’ operation similar to a hedge fund.

In his latest market update former investment analyst Redwood spoke of unfounded rumours that Evercore has piled too heavily into emerging markets and Asian stocks.

He said: ‘We hear on the grapevine that competitors are spreading false rumours,’ but refused to shed light on the exact source of the claim.

‘We learn that we apparently operate like a hedge fund, which comes as news to us.  We avoid all borrowing and gearing, the concentration of risk and charge modest fees, which is the opposite of hedge fund practise.

'Another has alleged we take big risks by investing too much in emerging markets and Asian equity.  This has been a good way to make money over the past two years, but we have always kept the exposure under prudent limits.’

Redwood pointed out that typically, Evercore Pan Asset has around 25% of its portfolio invested in the two territories.

‘That’s enough to give positive returns, but not enough to constitute a dangerous risk,’ the Wokingham politician explained.

‘Keeping 50% of your client’s money in European and UK equity, on the other hand, has proved to be an unhelpful strategy for the last three years.  Investors should not ignore risks just because they are close to home.’

Westminster MP Redwood, who was the former secretary of state for Wales under John Major's tenure as prime minister, also used his report to offer his take on the economic outlook for 2010 – stating the year had so far endured a difficult first half marked by low returns.

‘Equity investors have had to go far from home to earn a modest return,’ he said, pointing out that managers who backed Continental stocks lost around 10% of their client’s cash, with little prospect of a swift uplift in returns.

Elsewhere, he said Asian economies had accelerated out of the credit crunch.

‘Returns of 6% to 9% on equities have been possible for the half year as India and China have hovered around 10% growth and as Hong Kong, Singapore and other centres have benefited from their work,’ Redwood said.

‘Currency appreciation has been an important prop to these gains, as the Chinese market has fallen in response to monetary tightening.’