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In this week's magazine | The jihadis among us

A first look at this week's magazine.



16-22 January 2015 issue


Cover story: “The jihadis among us”

Andrew Hussey and Shiraz Maher consider the long-term consequences of the Paris attacks, in France and Britain.



Appreciation: Martin Rees pays tribute to his colleague and Cambridge contemporary Stephen Hawking.

Shahidha Bari on how there can be no simple, comforting narrative to explain the terror attacks in France.

“Offensive weapons”: eight NS cartoonists memorialise those murdered at Charlie Hebdo.

Mehdi Hasan: “As a Muslim, I’m fed up with the hypocrisy of the free speech fundamentalists.”

Politics column: George Eaton on how the run-up to the election has brought unity to Labour and the Conservatives - but it will not last.


Letter from Paris: Divided by an invisible wall

Andrew Hussey writes from Paris, considering the immediate impact of the Charlie Hebdo attacks on the city:

By this stage, to be living in Paris was like being trapped in some kind of weird nightmare. The killers were on the run. Helicopters buzzed over the city day and night. Nobody could speak of anything else and, when they did talk, it was in a muted way.

Hussey also explores their historical context, including the Goldenberg’s deli attack in 1982, which occurred during one of Hussey’s first visits to Paris:

Goldenberg’s was at the heart of the Jewish district on the rue des Rosiers - which was a lot scruffier then than it is today. Two attackers, who have never been captured, threw grenades and fired with machine guns into the restaurant, killing six people and injuring 22 more. The killing was attributed to the Palestinian terrorist Abu Nidal and his Black September group but no one is certain who did it. The slaughter convulsed Paris - this was, it was said at the time, the worst attack on Jews in France since the Second World War.

Finally Hussey considers how France can move on from these attacks, while “the ghosts of French history” are still “very much present”:

Although the level of violence gets worse, from 1995 to 2012 to 2015, it feels as if there is nothing new in Islamist terror: variations of the same thing keep happening over and over again. It is 32 years since my first encounter with terror at Goldenberg’s deli. In the intervening period, I have researched and travelled widely in what was French North Africa (Morocco, Tunisia and Algeria), trying to work out the complicated love-hate relationship between France and its former Muslim territories. Very quickly, after this month’s killings, I grew tired of the media arguments about censorship, the ignorant statements about Islam and the misunderstanding about the French-speaking world.

There are no easy answers; but what is certain is that the same political and cultural problems are being handed down from generation to generation. For all these reasons, much as we all wanted it to be the case at the march on Sunday, it’s not yet over.


The NS Essay: The mutating terror threat

Shiraz Maher argues that the jihadi threat to Britain is real. He details the worrying responses of British extremists to the Paris attacks:

Abu Qaqa, originally from Manchester, tweeted that what mattered was not who murdered the Charlie Hebdo cartoonists, only that they had been killed.

Talking to me on Kik, a chat application for smartphones, Omar Hussain, 27, a former Morrisons security guard from High Wycombe, said: ‘I’m not fussed whether it’s done under the banner of Aqap or Isis. As long as the kafir [infidel] has been killed, that’s what counts. Killing a kafir who insults the Prophet is a praiseworthy deed.’


These are precisely the sentiments that worry Andrew Parker, director general of the Security Service (MI5). In a speech to the Royal United Services Institute in London on 8 January, Parker outlined the tangible and significant threat that Islamist terrorists continue to pose.

Maher also argues that the threat of extremism in Britain is not only growing but changing in a way that makes it difficult to predict:

And while the terrorist threat is intensifying once again, it is also mutating. Jihadi groups are now favouring less sophisticated attacks than before: these are harder to detect and require fewer participants. The most significant strikes on western soil in recent months - in Canada, France and Australia - have all involved gunmen operating either alone or in small groups.

It is almost impossible to stop such attacks. They do not require much preparation and demand little reconnaissance. Guns are also unnecessary; so the relative difficulty of acquiring them in Britain, compared to some other western countries, is no guarantee of security.

Maher insists that we must “learn from the Paris attacks”. He attempts to “analyse the nature and origin of the jihadis’ beliefs”.


Appreciation: A triumph of intellect over adversity

Following the release of The Theory of Everything, Martin Rees, the Astronomer Royal, pays tribute to Stephen Hawking, the scientist who received his “death sentence” more than 50 years ago:

Soon after I enrolled as a graduate student at the University of Cambridge in 1964, I encountered a fellow student, two years ahead of me in his studies; he was unsteady on his feet and spoke with great difficulty. This was Stephen Hawking. I learned that he had a degenerative disease - amyotrophic lateral sclerosis - and might not live long enough even to finish his PhD degree. But, amazingly, he has lived on for 50 years longer. Mere survival would have been a medical marvel, but of course he hasn’t merely survived. He has become the most famous scientist in the world - acclaimed for his brilliant researches, for his bestselling books about space, time and the cosmos and, above all, for his astonishing triumph over adversity.

Rees documents Hawking’s achievements, both scientific and personal:

Stephen’s ‘eureka moment’ revealed a profound and unexpected link between gravity and quantum theory, which predicted that black holes would not be completely black but would radiate in a characteristic way.


Stephen is far from being the archetypal unworldly or nerdish scientist - his personality has remained remarkably unwarped by his frustrations and handicaps.

Rees concludes by considering Hawking’s legacy, which extends beyond the achievements explored in The Theory of Everything:

Tragedy struck Stephen Hawking when he was only 21. He was diagnosed with a deadly disease and his expectations dropped to zero. He has said that everything that has happened since then is a bonus. And what a triumph his life has been. His name will live in the annals of science; millions have had their cosmic horizons widened by his bestselling books; and even more, around the world, have been inspired by a unique example of achievement against all the odds - a manifestation of astonishing willpower and determination.

“It is a great thing that some phases and facets of Stephen’s life have been so well portrayed in The Theory of Everything. Let’s hope that some time there will be another film that depicts his later life and his scientific achievements.


Offensive weapons: eight NS cartoonists memorialise those murdered at Charlie Hebdo:

Regular NS cartoonists respond to the attack on the satirical magazine Charlie Hebdo with poignancy, wit and sincerity, including this from Becky Barnicoat:


The Guest Column: Shahidha Bari insists that we must reject the “us v them” narrative of liberal democracy and radical Islam

Bari argues that we should take our time to analyse and consider the events in Paris last week:

The drama of the past week unfolded in the kind of hyperreal time that is impossible to decelerate and in which it is hard to think clearly. The accumulation of breathless analysis is indicative of how desperately we seek clarity in moments of crisis and how difficult that is to secure. While the ground of the debate has shifted back and forth (from absolute claims of freedom of speech to discussions of the merits of #JeSuisCharlie, to how we distinguish between Islam and Islamism and how best to rebuke Rupert Murdoch), the names of the dead and the voices of their families have remained a sobering reminder of how unequal we are to the task of understanding these events.

She also makes the case for embracing contradiction, instead of seeking a simple but ultimately insufficient response to terror:

If we accept the possibility of contradiction and complexity, we might assert the absolute right to speak without threat of violent reprisal while also drawing attention to the variegated history of freedom of speech, which is never really ‘free’, even in France, from its historical and social contexts. It is possible to take pride in a society that privileges freedom, but also to refuse to labour under the illusion that free expression is always in the service of good, when often enough it has served the purposes of diminishing different groups of people, not because they warrant it, but because they are somehow undeserving of a shared nationhood.


The Politics Column: George Eaton on how the coming election has unified both Labour and the Conservatives - but it will not last

The NS politics editor, George Eaton, argues that although both David Cameron and Ed Miliband seem to have unified their respective parties ahead of the next election, divisions would soon return once in power:


A party divided against itself cannot stand. In these uncertain times, David Cameron and Ed Miliband cleave to such traditional wisdom. Both men have signalled to their backbenchers that the moment for debate has passed and that they are to act as campaigners rather than as commentators in the months ahead.

Their edicts have so far been heeded. With the exception of the enjoyably intemperate feud between Jim Murphy and Diane Abbott over Labour’s proposed ‘mansion tax’, MPs have fought their opponents, not each other. But the truces are uneasy. Instead of resolving the arguments, Cameron and Miliband have postponed them.


Neither Cameron nor Miliband has succeeded in building up the reserves of strength required to guarantee their survival. For this reason, they should cherish the unity induced by the election. It would not likely survive contact with office.



The Media Column: Peter Wilby asks what our newspapers should do with the Charlie Hebdo cartoons.

Anoosh Chakelian speaks to Middle Eastern cartoonists about the dangers they have faced.

Drink: Nina Caplan wonders what Turner drank after a day of sketching carnage on the battlefields of Waterloo.

Will Self: “Halfway across Westminster Bridge, I witness two men duelling - with selfie sticks.”

Nicholas Lezard: Most people had no idea that 2014 was the “Year of the Bus”. Let’s do it all over again!

The Fan: Meet John, the accountant with 3,000 Bradford City programmes. 


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Artemis Monthly Distribution Fund: opportunities in volatile markets...

The Artemis Monthly Distribution Fund is a straightforward portfolio that combines bonds and global equities with the aim to deliver a regular income. It is run by James Foster and Jacob de Tusch-Lec. James also manages the Artemis Strategic Bond Fund whilst Jacob also manages the Artemis Global Income Fund. Whilst past performance is not a guide to the future, the Monthly Distribution Fund has returned 76.7%* since launch in 2012. Its current yield is 3.9%. It is also the top performing fund in its sector.*

Political uncertainty and the actions of central banks continue to create market volatility. In this article, James Foster talks about the opportunities this has provided and which areas of the market he considers most attractive.


The approach of the European Central Bank (ECB) has been both broad and radical. The increase to its quantitative easing (QE) programme has helped to push the yields on an even wider range of government bonds into negative territory. The cheap financing it offered to banks was less expected. To date, however, it has done little to ease fears that European banks are in trouble. The performance of bank shares across Europe (including the UK) has been abominable. Returns from their bonds, however, have been more mixed.

Bonds issued by banks and insurers are an important part of the portfolio. We increased our positions here in February but reduced them subsequently, particularly after the UK’s referendum on the EU in June. Our insurance positions have increased in importance. New Europe-wide solvency rules were introduced at the beginning of the year. They make comparisons easier and give us more comfort about the creditworthiness of these companies.

As part of its QE programme, the ECB announced that it would start buying corporate bonds with the aim of reducing borrowing costs for investment-grade companies. After months of preparation, the purchases began in June. The mere prospect of the ECB buying corporate bonds proved as significant as the reality. The implications, however, could be even more profound than they initially appear. Bonds of any investment-grade issuer with a European subsidiary are eligible.

Moreover, the ECB has changed the entire investment background for bonds. Companies are more likely to do their utmost to retain their investment-grade ratings. The financial benefits are so great that they will cut their dividends, issue equity and sell assets to reduce their borrowings. We have already seen RWE in Germany and Centrica in the UK undertaking precisely these policies.

High-yield companies, meanwhile, will do their utmost to obtain investment-grade ratings and could also lower their dividends or raise equity to do so. This creates a very supportive backdrop to the fund’s bonds in the BBB to BB range, which comprise around 28% of the portfolio.

The backdrop for higher-yielding bonds – those with a credit rating of BB and below – has also been volatile. Sentiment in the first quarter of 2016 was weak and deteriorated as the risk of recession in Europe increased. These types of bonds react very poorly to any threat of rising default rates. With sentiment weak in February and March, they struggled. However, the generosity of the ECB and stronger economic growth readings helped to improve sentiment. Default rates are higher than they were, but only in the energy sector and areas related to it.

We felt the doom was overdone and used the opportunity to increase our energy related bonds. Admittedly, our focus was on better quality companies such as Total, the French oil company. But we also increased positions in electricity producers such as EDF, RWE and Centrica. In a related move, we further increased the fund’s exposure to commodity companies. All of these moves proved beneficial.

One important area for the fund is the hybrid market. These bonds are perpetual but come with call options, dates at which the issuer has the option to repay at par. They have technical quirks so they do not become a default instrument. In other words, if they don’t pay a coupon it rolls over to the following year without triggering a default. In practice, if the situation is that dire, we have made a serious mistake in buying them. These hybrids have been good investments for us. Their technical idiosyncrasies mean some investors remain wary of these bonds. We believe this concern is misplaced. For as long as the underlying company is generating solid cashflows then its bonds will perform and, most importantly, provide a healthy income, which is our priority.


In equities, our response to the volatility – and to the political and economic uncertainties facing the markets– has been measured. We have been appraising our holdings and the wider market as rationally as possible. And in some cases, the sell off prompted by the Brexit vote appeared to be more about sentiment than fundamentals. We will not run away from assets that are too cheap and whose prospects remain good. We retain, for example, our Italian TV and telecoms ‘tower’ companies – EI Towers and Rai Way. Their revenues are predictable and their dividends attractive. And we have been adding to some of our European holdings, albeit selectively. We have, for example, been adding to infrastructure group Ferrovial. Its shares have been treated harshly; investors seem to be ignoring the significant proportion of its revenues derived from toll roads in Canada. It also owns a stake in Heathrow Airport, which will remain a premium asset whose revenues will be derived from fees set by the regulator whether the UK is part of the EU or not.

In equities, some European financials may now be almost un-investable and we have lowered our risk profile in this area. Yet there are a handful of exceptions. Moneta Money Bank, for example, which we bought at the initial public offering (IPO). This used to be GE’s Czech consumer lending business. The Czech Republic is a beneficiary of the ongoing economic success of Germany, its neighbour, and unemployment is low. The yield is likely to be around 8%. And beyond financials, prospects for many other European stocks look fine. Interest rates that are ‘lower for longer’ should be seen as an opportunity for many of our holdings – notably real estate companies such as TLG Immobilien  and infrastructure stocks such as Ferrovial – rather than a threat.


For high-yield bonds the outlook is positive. For as long as the ECB continues to print money under the guise of QE it will compel investors to buy high-yield bonds in search for income. The US economy is also performing reasonably well, keeping defaults low. Despite the uncertainty created by Brexit, that oil prices have risen means we can expect default rates to fall.

At the same time, there are a number of legitimate concerns. The greatest, perhaps, is in the Italian banking system. A solution to the problem of non-performing loans needs to be found without wiping out the savings of Italian households (many of whom are direct holders of Italian bank bonds). Finding a solution to this problem that is acceptable both to the EU and to Italian voters will be hard. Other risks are familiar: levels of debt across Europe are too high and growth is still too slow.

* Data from 21 May 2012. Source: Lipper Limited, class I distribution units, bid to bid in sterling to 30 September 2016. All figures show total returns with dividends reinvested. Sector is IA Mixed Investment 20-60% Shares NR, universe of funds is those reporting net of UK taxes.

† Source: Artemis. Yield quoted is the historic class I distribution yield as at 30 September 2016.



Source: Lipper Limited, class I distribution units, bid to bid in sterling. All figures show total returns with net interest reinvested. As the fund was launched on 21 May 2012, complete five year performance data is not yet available.


To ensure you understand whether this fund is suitable for you, please read the Key Investor Information Document, which is available, along with the fund’s Prospectus, from

The value of any investment, and any income from it, can rise and fall with movements in stockmarkets, currencies and interest rates. These can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. This could mean that you won’t get back the amount you originally invested.

The fund’s past performance should not be considered a guide to future returns.

The payment of income is not guaranteed.

Because one of the key objectives of the fund is to provide income, the annual management charge is taken from capital rather than income. This can reduce the potential for capital growth.

The fund may use derivatives (financial instruments whose value is linked to the expected price movements of an underlying asset) for investment purposes, including taking long and short positions, and may use borrowing from time to time. It may also invest in derivatives to protect the value of the fund, reduce costs and/or generate additional income. Investing in derivatives also carries risks, however. In the case of a ‘short’ position, for example, if the price of the underlying asset rises in value, the fund will lose money.

The fund may invest in emerging markets, which can involve greater risk than investing in developed markets. In particular, more volatility (sharper rises and falls in unit prices) can be expected.

The fund may invest in fixed-interest securities. These are issued by governments, companies and other entities and pay a fixed level of income or interest. These payments (including repayment of capital) are subject to credit risks. Meanwhile, the market value of these assets will be particularly influenced by movements in interest rates and by changes in interest-rate expectations.

The fund may invest in higher yielding bonds, which may increase the risk to your capital. Investing in these types of assets (which are also known as sub-investment grade bonds) can produce a higher yield but also brings an increased risk of default, which would affect the capital value of your investment.

The fund holds bonds which could prove difficult to sell. As a result, the fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.

The historic yield reflects distribution payments declared by the fund over the previous year as a percentage of its mid-market unit price. It does not include any preliminary charge. Investors may be subject to tax on the distribution payments that they receive.

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Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.

Any forward-looking statements are based on Artemis’ current expectations and projections and are subject to change without notice.

Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Conduct Authority.