The demise of Woodford Investment Management was one the most surprising and saddest stories of 2019.
Chelsea's blogs are written by our research team and, as well as being published here, are all published on other third party investment websites. They are meant for your information and do not constitute investment advice.
The demise of Woodford Investment Management was one the most surprising and saddest stories of 2019.
Investors have fallen out of love with European equities, having seen returns blighted in the past decade by the Sovereign Debt Crisis and, more recently, trade wars, Brexit and the rise of populism.
As recently as ten years ago, the environment didn’t even register in the top risks for discussion at the World Economic Forum. But at Davos last week, climate change and responsible investing dominated discussions. ‘How to save the planet’ was one of the topics and speakers included teenage environmental activist Greta Thunberg and outgoing Bank of England Governor Mark Carney - who is due to take up a new role as UN special envoy for climate action and finance.
It is almost impossible to talk about Asia today, without mentioning trade wars. And, while some progress has been made, China posses such a threat to America’s dominance on the world stage, that any permanent resolution is unlikely to be found this year, or even next.
Globally, 2020 is likely to be dominated by the US presidential elections – and Trump’s actions, tweets and statements during the campaign. In the UK it will once again be Brexit.
I’m not sure where the past 20 years have gone. But here we are, just days away from the end of the second decade of the millennium. And it’s been eventful in the investment world.
I celebrated my first Thanksgiving Day this weekend. Courtesy of an American colleague, I got to sample a Turkey (one of some 45 million that are eaten by Americans on Thanksgiving day alone*), sweet potato and marshmallow mash, cornbread, cinnamon glazed carrots and homemade stuffing… followed by pumpkin pie and apple pie.
Inspired by an Invesco advent calendar we received last week, which suggests the ‘percentage feeling of festivity’ is directly correlated to the daily progression through December to Christmas Day (and some market statistics from Fidelity), we decided to take a quick look at the probability of a Santa Claus rally this year.
Many company CEOs and boards of directors today are exposed to asymmetric profiles: they can achieve psychological and financial greatness if they succeed, but if they fail, their downside is limited with the company’s shareholders, employees and even customers bearing the economic pain. Just look at all the golden parachutes ‘failed’ management has received in recent years.
If we’re completely honest it’s not the clearest of pictures out there for investors as a general election looms, Brexit is still unresolved and trade wars rage.
We thought we may finally be heading for some sort of resolution to the Brexit Saga this weekend. But Super Saturday turned into Setback Saturday and we still have no agreement.
It’s been a tail of doom and gloom on the UK high street for a number of years now. Since 2008 we’ve seen household names like Woolworths, Comet, JJB Sports, Barratts, Blockbuster, BHS, Maplin, Poundland and Toys R Us all become a thing of the past. Thomas Cook looks set to join the list following its recent collapse. Other retailers such as Top Shop owner Arcadia, Monsoon, New Look and Homebase have been forced to seek legal agreements with their landlords to shut stores and slash rent to prevent them becoming insolvent.
Active fund management (where fund managers pick which stocks or assets they will invest in) has come under increasing pressure in the past few years, as an historic decade-long bull market has seen stock markets race higher, while passive funds (those that track a stock market index) have had their own race to the bottom in terms of fees.
Finding a good investment idea at the moment is hard – mainly because, in the short-term, there is so much uncertainty. From the possibility of a hard Brexit to a last-minute deal with the EU, a possible general election, signs of a recession… and that's just here in the UK. Internationally we have trade wars, currency wars… the list goes on.
While this summer feels like it has been a turbulent one, asset classes around the world have held up remarkably well. So much so that investors following the St Leger's day adage, who sold their investments in May, would have missed out on positive returns almost across the board.
For the past 35 years, London Fashion Week – which takes place from 13-17 September - has been the definitive exhibition of British style, with more than 250 designers showcasing their creativity to a global audience of influential media and retailers.
According to the latest Janus Henderson Global Dividend Index* there is both good news and bad news for income investors. The good news is that the total amount of dividends paid to global shareholders reached a new high during the three months of April to June 2019. The bad news is that rate of increase (1.1%) was the slowest for more than two years.
It's August and, between holidays, weekends can often be taken up with weddings. This year, Chelsea has had a wedding of its own: last week, Sarah, our colleague, exchanged vows.
We seem to have been 'late cycle' since 2016, but it has been a long and slow recovery from the global financial crisis and the bull market (now the longest since World War II) has been very unloved – investors have had little faith in it since the word go. So questions about how long it can last have been raised for some time.
One million plastic bottles are bought every minute globally. In Europe, a total 58 million tonnes of plastic is used each year – 40% of which is packing. But only 30% is recycled. Indeed, since the invention of plastic, some nine billion tonnes have been produced globally, but almost seven billion has become waste.
With more than 3,000 funds to choose from in the UK, investors have to make a number of key decisions to narrow the field and make appropriate investment choices.
The UK stock market has been out of favour for some time. As Brexit uncertainty has weighed on the minds of both overseas and domestic investors, our companies and our UK equity funds have been shunned in favour of global options.
The first half of 2019 has generally been a positive one for investors, with every fund sector reporting positive returns on average*.
Next week marks the third anniversary of the EU referendum and the Brexit vote.
Neil Woodford is probably about as close to a household name as you get when it comes to investments. Over more than three decades, he has produced good returns and has a loyal following. However, over the past couple of years, the performance of his flagship Woodford Equity Income fund has been disappointing and, over the past 12 months, the value of the fund has fallen about 18%*.
When Vodafone cut its dividend last week we were reminded once again of the danger of investing in a single company, simply because it has a high dividend yield.
The main reason for investing is to earn sufficient returns to meet your financial goals. These returns will be dictated by a number of factors, but principally by your investment horizon; the risk you are willing to take; your ability to stick to your investment plan; and, finally, your asset allocation.
When Prince Harry spoke to the world's press on Monday afternoon, he could not hide his happiness at becoming a father for the first time. Beaming from ear to ear, he described his elation... before his brother then teased him about becoming part of the 'sleep deprivation society that is parenting'.
Investing in bonds is back on the radar, as a spate of central banks across the world have recently brought an end to the era of rising interest rates - before it even truly got started.
This week marks the anniversary of William Shakespeare's birth (26 April 1564) and death (23 April 1616).
Once a very popular region with investors, Asia has fallen somewhat under the radar in recent years. Hindered by worries of China's slowing growth and possible trade wars with the US, sentiment has been hit and, along with it, investment flows into Asian equity funds.
Whether you’re worried about stock markets or the economic environment, are new to investing, or don't have a lot of spare cash, investing a lump sum can be daunting. After all, no one wants to invest a large amount of money, only to see it fall in value the next day.
It’s the final week of the 2018/19 ISA season which means you only have a few days left to make use of the £20,000 tax allowance.
I'm not sure whether it was the images from last year's Blue Planet 2, or the frightening statistics I see in my research, but I've found myself wanting to make some life changes this year and do 'my bit' to cut down on the waste I generate.
There are 195 countries in the world. While it only took Phileas Fogg 80 days to make the global trip, in reality it would probably take significantly longer and would depend on how long you'd like to spend in each nation. One day per country would equate to just over six months; one week in each would take 3.7 years; a month would take 16 years – and is possibly a very nice retirement plan.
With only two weeks to go until the end of the tax year, time is running for those who are yet to make a decision on what to do with their £20,000 ISA allowance. To get some ideas, we asked the experts at Chelsea how they have positioned their ISAs this tax year and where they believe the opportunities for growth may lie.
20 March 2019 is the first day of spring. It's also just two and a half weeks from the end of this tax year. So what better time than now to spring clean your investments – especially if you have yet to make a choice as to where you will be allocating this year's ISA or pensions allowance?
In 1919, Stanley Baldwin, then Financial Secretary to the Treasury and future Prime Minister, wrote a letter in the Times newspaper. In it, he called on the rich to make donations to help pay off the national debt accumulated during the first World War.
A recent report from the International Monetary Fund* says the global economy is set to grow at a modest 3.5% in 2019 (down from 3.7 last year). However, when we look closer, we can see that almost all of this growth is set to come from emerging economies with the financial institution forecasting growth of 4.5% for them compared to only 2% for the developed world.
by Stuart Rhodes, manager of M&G Global Dividend fund
The ISA is twenty years old this year. I know, time flies, right?
We've had the Golden Globes, the Grammys, the BAFTAs and the Brits. Now the film industry is gearing up for its biggest night of the year - the Oscars.
When it comes to dividend payments, the UK has a strong heritage: not only are our companies committed to paying them, but investors also understand their importance. And we've recently a great example of their power.
The last decade has been a challenging one for income investors, especially those who prefer not to take too much risk with their money.
LF Lindsell Train UK Equity is the most consistent fund of the past decade*. The fund, run by Nick Train, has beaten its peer group sector average in each of the past 10 calendar years.
In 1969 the 50p coin replaced the 10 bob note, as part of the decimalisation of the UK currency.
We can only surmise what may happen in the coming weeks, as the UK fast approaches the date we leave the European Union. No one knows exactly what may happen, but as long as you have a diversified portfolio, any big movements one way or another in the pound or the UK stock market should be tempered to a degree.
Having threatened to quit TV if he won 'I'm a celebrity' recently, many Noel Edmunds fans were no doubt relieved he made an early exit – perhaps even voted him off in an effort to keep him on our screens.
2018 turned out to be a roller-coaster year. The FTSE 100 began January at a level of 7,648 before falling below 7,000 in March. It then soldiered on, shrugging off everything else that was thrown at it (a little like Theresa May, one might say) and reached an all-time high in May of 7,877. At the time of writing it has fallen to 6,744*.
Father Christmas, like the rest of us, is obviously very busy with last minute preparations - a 'Santa Rally' this December is yet to be seen. The adage, which suggests stocks markets generally rise in the build up to Christmas, as people are in better moods and more positive, is either late or not going to happen this year: the FTSE 100 is down 2.89%* since the start of December and the S&P 500 has fallen by 4.56%*. Asset classes around the world have, overall, disappointed in 2018. Of the 37 different sectors for funds only a handful have made any profits: technology & telecommunications (7.5%**), North American and North American Smaller Companies (5.6%** and 3.7**), property (up to 4.3%** depending on whether it's direct or 'other'), UK gilts (1.24%** for those linked to inflation and 0.28%** for those not linked) and cash (0.4%**). Every other sector is in negative territory.
With just three weeks to go until Christmas, and a growing feeling of panic about what to certain relatives, we thought it would be fun to see which Christmas-related stocks some of our favourite fund managers have in their portfolios:
Stock markets move in a series of highs and lows over the years – hopefully with the more of the former than the latter. But trying to time the peaks and troughs is impossible. As I've said many times before, if timing the market was possible, we'd all be very rich and have retired long ago!
As we all know, the value of our investments can go down as well as up – and October was a sharp reminder of this. Of the 37 different fund sectors listed, only eight managed to stay in positive territory*.
Investors could be forgiven for feeling nervous after the events of the past few weeks. Stock markets across the world nosedived, following a relatively benign summer; the UK’s FTSE 100 index is down 6% so far in October, while the S&P 500 has fallen 5.5% in sterling terms.*
"UK Labour not ruling out remain in Brexit vote”, “Flights could cease between UK and EU”, “BMW to shut Mini plant for month post-Brexit”, “Carney makes property crash warning”. That's just some of the Brexit headlines from the past couple of weeks. As the pressure increases on Theresa May and her negotiators and the deadline gets ever closer, there are bound to be more.
It has now been ten years since Lehman's Brothers was allowed to fail. It has been even longer since the UK government had to bail out Northern Rock; an event which led to people queueing on the streets trying to frantically draw out money and worrying whether our economy would ever return to normal.
Shoppers will know that this year has been another terrible one for our high streets with the likes of Toys R Us and Maplin going out of business, and a rescue deal for House of Fraser.
We're now in the throes of the US earnings season: when hundreds of publicly-traded companies release their financial statements for the second quarter of the year. Details of their earnings, expenses and net profits are reviewed by fund managers, analysts and investors and portfolios are adjusted on the findings.
Technology and US equity funds have dominated the best performers in the first half of 2018, while Latin American equity funds have languished at the bottom of the pile.
This coming Sunday will mark two years since the EU referendum, when 52% of the UK population voted to leave the bloc. Everyone knows that markets don't like uncertainty and, in the first few days following the result, UK equities plummeted.
As in every walk of life, fund managers sometimes change role within the same company, change company, take a career break or change career entirely.
In almost every fund update or piece of commentary, there are a handful of market themes which stubbornly rear their heads.
I’m sure we’d all like to think we are balanced and rational investors. In reality, though, as in every walk of life, we are susceptible to behavioural biases that can, at times, influence our decision-making.
When plastic and financial services are discussed in the same breath, we often presume the conversation is about credit cards. But, as the war on plastics intensifies, pollution, waste management and other environmental and social issues are becoming more integral in the investment discussion.
When it comes to fund management, experience can be key – especially when it comes to investing throughout a market cycle. However, the number of funds that have been run successfully by the same manager for a decade or more are few and far between because, as in all work places, fund managers move between jobs and companies.
Making a decision can be difficult and fraught with consequences: which school to apply to for your children, where to go on holiday, which energy provider to switch to... Sometimes the difficulty is down to simply having too many options; sometimes there is no obvious answer and the pros and cons of each option balance each other out.
It's not often the tax man gives us money – or at least doesn't take it – and one of the most generous allowances we receive is that of the ISA. Here are four reasons why we think making the most of this tax-wrapper is a no-brainer:
If you're looking for some ideas on how to generate attractive level of income from your investments, the good news is that there is plenty of choice: from UK dividend paying companies right through to emerging market governments bonds, there is bound to be a fund out there that fits the bill. To make life easier, we've identified four funds which, between them, offer a variety of different income streams.
Sometimes it can be hard to decide where to invest an ISA allowance, particularly if time is running out and the end of the tax year is fast approaching. To get some ideas, we asked the experts at Chelsea how they have positioned their ISAs this tax year and where they are seeing the best opportunities.
With the 5 April end-of-tax-year deadline fast approaching, we look at three different options for those investors still undecided about where to invest this year's allowance:
Leaving things to the last minute is not unusual. Whether it is homework, dissertations, tax returns or topping up your ISA, most of us are guilty of procrastinating in some area of our life and then having to do important things in a rush.
2018 hasn't been great for British companies. Having hit an all-time high in January, the UK stock market has fallen some 10% in the past few weeks, having failed to bounce back from the global stock market correction in early February.
“The new VT Chelsea Managed funds are proving to be the hot favourites this ISA season,” comments Darius McDermott, managing director of Chelsea Financial Services.
A secure financial future can sometimes feel impossible to achieve. But, believe it or not, a couple could become ISA millionaires in just over 16 years.
Over the past decade, exceptionally low interest rates have forced many cash savers into the stock market in the search for a better return. For those needing a decent level of income today, funds with high yields can be a good option. However, for those investing for the longer term, funds that can consistently grow their dividends could be a better alternative. This is because if you can invest in a fund providing meaningful dividend growth, your spending power, and therefore standard of living, should increase in the future – it allows you to keep pace with inflation.
President Trump is once again creating waves - and another vacancy at the White House. Gary Cohn, his top economic adviser, resigned this week having been unable to persuade Trump against imposing import tariffs of 25% and 10% on steel and aluminium, respectively.
When it comes to earning an income from your investments, there are various options you can consider. Firstly, you can look at the different asset classes that yield an income. Then you can look at whether you want to your income to be at a high level or whether you prefer it to be growing. Different investors will have different priorities.
27 February is 'no-brainer' day. It has been observed since 1996 and, as you'd expect, it's a day for doing things that are easy and obvious.
Dividend payments around the world soared in 2017, with 11 out of 41 countries breaking records, according to the latest Global Dividend Index report from Janus Henderson. A huge $1.252 trillion was paid out to global shareholders last year, with underlying growth of 6.8%* and every region of the globe seeing dividends increase on aggregate.
Volatility is back. After more than a year of calm in stock markets, last week was anything but. The FTSE 100 is back where it was in May of last year while the S&P 500 wiped out all its gains since December.
Every investor should know that their capital is at risk – after all, there is no such thing as a free lunch. Another cliché which lends itself to investing is that whatever goes up must come down, and this is certainly true when it comes to stock markets.
Just three weeks ago, the headlines were all about the US stock market hitting record highs. Having already been in an upward trajectory for almost nine years, the Dow Jones Industrial Index took just seven days to rocket from 25,000 to 26,000.
We are now just over a week away from the dreaded self-assessment tax return deadline which, combined with January blues, can make us feel as far away as ever from last month's festive cheer.
Sebastian O'Hara, operations assistant, Chelsea Financial Services
18 months ago, in the immediate aftermath of the Brexit referendum, property funds went through a very difficult time. Investors, worried about the uncertain future, withdrew their money in droves and many funds had to temporarily cease trading.
Hopping on the scales in the first week of the new year is no-one’s favourite task but the January weigh in is an opportunity to reassess more than your exercise and diet plan. When was the last time you ran a health check on your portfolio?
It's that time of the year again. The fairy lights have been arduously untangled, Michael Buble's dulcet tones are resonating throughout every single shopping centre in the UK and clothes which fitted perfectly just a couple of months ago are suddenly feeling snug.
In today's Autumn Budget, Philip Hammond, Chancellor of the Exchequer, declared that the world was on the brink of a technical revolution, with Britain at the forefront.
The Autumn Budget is now just a week away. Whether it's the excitement of playing along to 'buzzword bingo', guessing the colour of the Chancellor's tie, or you want to know whether filling up the car or going to the pub is going to cost you more... it’s one of the most highly-anticipated events of the year for anyone genuinely interested in their finances.
Inflation rose to its highest level in five years last month. At 3%* it was a whole percentage point higher than the Bank of England's target rate of 2%.
I recently learnt that the first day of Diwali, the Hindu festival of lights, is dedicated to celebrating prosperity. This is an official holiday in India, where I think they have good cause for celebration. Despite the impact of de-monetisation and the introduction of the Goods and Services Tax (GST), which have both had a short-term negative impact on GDP, India remains one of the fastest-growing major economies.
If your children use Instagram or 'follow' the famous in some way, you'll no doubt be aware that 'grillz' are a bit of a craze amongst celebrities. Justin Bieber recently splashed out $15,000 on a pair: 'rose gold adornments, studded with light pink sapphires' – or teeth braces to you and me.
Investment processes – important as they are – can be very dull and repetitive. Indeed, if I had a pound for every time I'd heard a fund manager describe themselves as 'bottom-up contrarian' or a 'pure growth stock-picker' I'd have likely retired by now and be sitting on a beach somewhere sipping a cocktail, rather than writing this blog on a grey day in Fulham.
First impressions can be deceiving. Looking at the table below, investors could be disappointed at the performance of the UK stock market in recent history – particularly over three and ten years.
Despite appeals from foreign leaders, the CEOs of some of the world's largest companies (including Exxon, Apple, Alphabet and Tesla), and even his own children, President Trump decided to walk away from the Paris Climate Change Agreement last month.
Brexit negotiations begin this week, almost exactly a year to the day since the UK voted to leave the European Union.
You think we’d be used to surprise political outcomes by now, but I don’t believe anyone looking at the polls six weeks ago when Theresa May called a snap election expected today’s result.
On 5th March 2009, the Bank of England moved interest rates to 'emergency levels' and began quantitative easing in the UK. In what was the sixth cut in six months, the Bank of England base rate had fallen from 5% to 0.5% - its lowest level since the central bank was founded in 1964.
After more than 20 years of stagnant growth and deflation, the Japanese economy has now experienced its longest period of expansion in more than a decade*.
Last Friday, 21 April 2017, Chelsea's staff hosted a 24-hour dart-a-thon for CASCAID - an asset management industry charity initiative to raise £1m for Cancer Research UK in 2017.
I'll admit that I'm not new to the concept of accessorising, but having just spent the past couple of weekends looking for a new car with my husband, I have to say I hadn't realised it extended to automotives. Who knew that BMW has partnered with Montblanc to make the “'next generation in luxury wearable technology”? Certainly not me. Apparently having a stylish key you can wear on your wrist that will open car doors and start the engine for you is a good reason to pick the new 5 series! I think not. I just need a bigger boot.
We live in an increasingly unpredictable and changing world. Last year in particular was full of surprises and, as one fund manager pointed out recently, if you are participating in a pub quiz in 10 years’ time and are stuck for an answer, just shout out '2016’ and there will be a decent chance that you get the question right.
According to the Office of National Statistics, consumer price inflation (CPI) rose to 1.6% in November 2016, its highest level since July 2014. Although this is still below the Bank of England's 2% target (the level they think is a sign of a healthy, growing economy), it suggests that inflation is finally starting to make a come back.
According to the Office of National Statistics, consumer price inflation (CPI) rose to 1.6% in November 2016, its highest level since July 2014. Although this is still below the Bank of England's 2% target (the level they think is a sign of a healthy, growing economy), it suggests that inflation is finally starting to make a come back.
The festive season is well and truly upon us and my childrens' Father Christmas list had been growing at an exponential rate, so I'm rather glad that it has now been posted. On the whole they've been nice this year, so Christmas morning should be fun.
At this time of year we are usually asked to give our 'outlook' for investments over the coming 12 months. Most years there is at least one area that seems to stand-out as having some potential.
You may have seen the news last week that OPEC (Organisation of the Petroleum Exporting Countries) members have agreed to reduce their oil production for at least the first six months of 2017. Unexpectedly, non-OPEC oil producers such as Russia have also agreed to lower targets. So will this mean a higher oil price in 2017?
As the Junior ISA celebrates its 5th anniversary, we asked around at the Chelsea offices to see what's popular among our staff:
I'm lucky enough to be going to the O2 this weekend to watch the boxing match between Kell Brook and Gennady Golovkin. Hopefully it will be a good fight, with no fewer than three titles up for grabs.
As parents around the country make last minute trips to the shops, spending what seems like a small fortune on new school shoes, uniform and stationery, ahead of the return to classrooms next week, it's perhaps sobering to consider that by the end of their education, many children will have debts of £44,0001
Our investment portfolios can, and should, change a lot over time. When we are younger we can afford to take more risk. After all, we have decades in which to save and time to recover from any stock market crashes. As we get older and start approaching our retirement, we then start to 'de-risk' as we can't take as many chances with our money. But what does de-risking actually mean and how should we go about it?
We're definitely at the pointy end of the Brexit debate. Bookies have the odds at around a 70%‒80% chance we'll remain in the European Union, although the polls are closer on whether we stay or split.
Uncertainty over China has put some people off Asia in recent years, but long-term investors ignore the region at their peril. In my view, recurring themes of young populations, growing middle classes and well-educated masses make the potential returns worth a bit of extra risk.
The US remains the world’s single largest economy. Indeed, at the end of 2014 its nominal gross domestic product (GDP) was more than US$17.4 trillion, according to the World Bank. That’s more than the total GDP of France, Germany, Japan and the UK put together.
The oil price is something most of us probably only ever think about as we're filling up the car. Figures of US$30, $40 or $50 a barrel on the nightly news are all well and good, but it's the 102, 105, 108 pence per litre at the pump that really gets our attention.
The arrival of the new Lifetime ISA in April 2017 seems likely to be a harbinger of wider change in the UK’s approach to long-term, and indeed retirement, saving. The creation of the new ISA has been widely acclaimed by the popular press, but will it do more harm than good as it seems poised to impact on existing policies, such as Automatic Enrolment into pension saving?
Having peaked at 7,103 on 27th April 2015, the FTSE 100, the leading UK share index, fell as low as 5,536 earlier this month – a drop of 22%. It has since risen slightly and, at the time of writing, is around the 6,000 mark.
This time last year, the price of oil had fallen to a six-year low, Europe was having deflation issues, the UK government was trying to woo voters and Aberdeen was the worst offending company in the Chelsea RedZone – our regular review of the most consistently underperforming funds – with 10 funds on the list.
The hunt for income is on. Dividend sustainability at some of the largest firms on the FTSE 100 is in doubt as profits waver and future revenue streams remain unclear, also sending share prices tumbling.
Last week, the price of a barrel of oil fell below $30 – a fall of almost 80% from its peak of $147 in July 2008, with most of the fall coming in the past 18 months. Some analysts have suggested it could fall as low as $10 per barrel, at which point oil would become cheaper than some bottled water!
Hopping on the scales in the first week of the new year is no-one’s favourite task but the January weigh-in is an opportunity to reassess more than your exercise and diet plan. When was the last time you ran a health check on your portfolio?
2015 wasn't a great year for investments. Despite the UK stock markets hitting an all-time high in April, the FTSE 100 ended the year almost flat. Other develop markets fared a bit better, but emerging markets continued their downward path, losing almost 10%. Bonds, on average, made nothing either*. Can we expect a better 2016? Personally I'm quite cautious and think the year could be just as volatile. In no particular order, here are six reasons why:
The US market has been a great place to invest since the financial crisis began in 2008. It has outperformed Europe in six of the past eight years. From 1st Jan 2008 until now, the European market is up just 17.39% compared with a rise of 107.9% in the US. A remarkable difference.
Schroder are seeking shareholder approval to merge the £29m Schroder Japan Alpha Plus fund with the £2.1bn Elite Rated Schroder Tokyo fund.
2016 could be volatile. The US has finally started raising interest rates and the UK could be next. No one expects the four usual 0.25% increases in short succession, which usually mark the start of a rate rise cycle, but markets don't like the unknown and that is what we are facing as quantitative tightening (QT) begins.
The festive season is well and truly upon us and my childrens' Father Christmas list had been growing at an exponential rate, so I'm rather glad that it has now been 'posted'. On the whole they've been nice this year, so Christmas morning should be fun.
You'd think it would be simple, wouldn't you? Identify a long-term trend, invest your money in a company (or companies) that is playing this theme, and sit back and wait for the next 30 years or so. Unfortunately, that's not the case.
Fossil fuel investing, and ultimately divesting, has been national news this year, and, as world leaders convene at the end of this month to discuss climate change, they are likely to gain even more column space.
It's a well-known fact that it's difficult to find a good, actively-managed US equity fund, which consistently outperforms the index. It's even more difficult to find a good US equity fund that produces a decent yield. Most struggle to pay 2%, which is approximately half the amount of many UK equity income funds.
If you are anything like me, you get too many emails every single day and, in a futile attempt to keep on top of them, have a 'to read later' file on your computer. So it's always good when one hits your inbox that has an interesting enough title that it gets read immediately.
I've spoken to a lot of fund managers about China, and the general consensus is that China will be OK, but the contrarian in me can't help feeling a bit uncomfortable that fund managers don't seem more worried. Nobody really wants to consider the possibility that the situation in China might deteriorate. Unemployment in China is never mentioned and, even though many agree the growth data may be exaggerated, I've never even heard anyone consider the possibility of a Chinese recession at some point. There seems to be a natural unconscious tendency to support the view that China is all right, perhaps because the alternative is too discomforting to consider.
In the third and penultimate blog in my mini-series on frontier markets, I will be looking at Vietnam – a country many still think of in terms of its eponymous war with the US in the 1970s, or the destination of choice for 'gap years', rather than as an investment opportunity. However, for many reasons, it is now being dubbed the 'new China' of the Southeast Asia region. So what is drumming up such adulation?
My day job is basically interviewing fund managers, trying to identify the ones I think will do the best for my clients. Without wanting to sound too cocky, I'm not too bad at it either – with the help of the other guys on my research team, the funds chosen for our Core Selection list (the funds we think should be at the heart of people's portfolios) have, on aggregate beaten the benchmark (the IA Flexible sector) by more than 60% over the past 14 years*.
It might come as a surprise to some people that Poland is still considered to be an emerging market, let alone a frontier market. It's the sixth largest economy in Europe, has low levels of public debt and has experienced stable growth throughout the past decade - in spite of the global recession and ongoing eurozone woes. But a frontier market it is.
Well it's been an exciting few days in global stock markets - if rollercoasters are your entertainment of choice, that is. If you're not so keen then you would be forgiven for replacing the word 'exciting' with 'worrying'. It's never nice to see your investments fall in value. Even less so, when they drop by 10% seemingly overnight.
With China imploding, Latin America in heavy decline and Russia seemingly on a path of global exclusion, the emerging market growth of yesterday is looking increasingly unattractive. So where could emerging market managers turn to now? What is the next generation of countries to move into the investment spotlight? In the first of a new series, we look at the next generation of emerging markets and see what opportunities lie ahead for investors hoping to get to the frontier of the investment world.
Since the financial crisis, countries have secretly been trying to devalue their currencies to make their economies more competitive. For a long while China was the punching bag in a secret currency war. The United States, UK, Europe and Japan all engaged in quantitative easing (QE) and devalued their currencies versus China. This helped their economies stay competitive and enabled them to export billions of pounds worth of goods to China. Chinas internal growth was able to absorb the deflationary weakness of the rest of the world for the past few years. Now that’s no longer the case and China is fighting back. A week or so ago, China shocked world markets by devaluing its currency. Stephen King, an economist at HSBC, warns that the Yuan devaluation breaks the last line of global economic defence. 'World authorities have run out of ammunition as rates remain stuck at zero'.*
Investing isn't easy. Even the best fund managers hit bad patches and their investors have had to show immense mental strength in the face of some heavy losses. Despite this, over the long term, funds with certain characteristics can do extremely well.
20th July 2015 - In just over three weeks $3 trillion has been wiped off Chinese stock markets. The horrific collapse follows a 150% gain in the Shanghai composite, after the Chinese government encouraged people to invest in the stock market.
Active management is a way of running a portfolio in order to try to outperform an index or benchmark. It is characterised by relying on a manager's stock-picking skills, believing they have the abilities to identify the best stocks available and generate a higher return from them, thus outperforming a benchmark. These funds often have higher management fees and ongoing charges than passive/index fund managers - those who aim to match the benchmark - in order to justify the more frequent trading and deeper analysis needed.
A guest blog from Malcolm Small, a well-respected expert in the field of Pensions and Investments policy.
In the asset management business there's a lot of competition to attract star fund managers. A fund group will do just about anything to steal a great manager from their rival. This means fund managers often move from one group to another. That's fine if you're the fund manager but it makes it very difficult for investors to keep up. In the past month two star managers have announced they are leaving their existing funds.
Investors are increasingly being encouraged to buy tracker funds which only seek to match a stock index, rather than trying to beat it. Academics and passive investment companies have been pushing the idea that we would all be better off in these funds because of their lower charges. A YouTube documentary, advocating passive investing, now has over a 100,000 hits. The result of this marketing push and lower costs has been a surge in tracker investments. Passive funds now account for 25% of the US market and 11% of the UK market.*
Interest rates are at all time lows and investing for income has never been harder. It wasn't so long ago that you could achieve 6 or 7% in a cash ISA. Today you'll be lucky to get 1.5%.
We have been backing Japanese equities for the past two or three years, since Prime Minister Abe’s “three arrows” of fiscal stimulus, monetary easing and structural reforms began. Arrows one and two have proved effective and, after decades of false dawns, a stimulus-pumped Japanese equity market has finally started to deliver strong returns.
With June seeing the limit on Premium Bonds rising from £40,000 to £50,000, we look at the merits of investing in them and see what sensible alternative investments there are.
The surprise majority win of the conservatives last week has resulted in a number of key roles changing hands. Some have yet to be decided, whilst others are already known. One of which is the appointment of Ros Altmann, a familiar commentator in our industry, and a champion for pensioners, who has been appointed pensions minister.
In today's low interest rate environment, investors need to make maximum use of all available asset classes when they construct their portfolios. One, often under appreciated asset class are convertible bonds. A convertible bond is simply a bond which can potentially be converted to shares.
According to the Office of National Statistics (ONS) one in three children born today will live to be 100. Those readers with a 'glass half full' attitude, or those who are familiar with the eight wonder of the world, compounding, might say that this gives our children longer to save a decent retirement pot.
After assessing many outlooks for 2015, we can say that many of the forecasts for equity market returns for 2015 have been reasonably positive.
Many ordinary people dislike the idea of investing in the stock market and it's not hard to see why. Over the past 15 years we've seen constant negative headlines. We've witnessed two huge market crashes, with the end of the tech bubble in 1999 and the recent financial crisis of 2008. Both resulted in almost a 50% decline in the UK stock market. Every few months we hear of another story of companies blowing up. The latest examples are Tesco, Balfour Beatty and Quindell, and there have also been the Madoff and Enron fraud scandals!
The changes announced in the March budget were good news for investors, and the Savers' Revolution looks set to continue. George Osborne's latest move was to scrap the 55% death duty currently levied on pensions. So, where has this left investors? Should we be putting our money in an ISA or a SIPP? The wrong choice might cost you thousands of pounds, so it's worth researching.
Property has become fashionable once again over the previous 18 months. The once maligned sector, which was characterised by large drawdowns and daily liquidity being suspended, in some cases, during the financial crisis, has two funds in the top 10 for net inflows in the seven months up until the end July of 2014.
Emerging market equities make up an important part of my investments. They’ve offered investors some exceptional returns over the long term, all be it at higher volatility. For the past few years the asset class has struggled, however, as money has flown back to the developed world after the US began tapering its quantitative easing programme. It has done better recently; whilst the UK stock market has been almost flat for the year, emerging markets have returned 10.73% year to date.*
Fund managers have had a bit of a battering recently. Not a single weekend seems to go by without some report or another claiming that actively-managed funds are expensive, fund managers fail to deliver and offer no value for investors.
I wouldn't be a true Brit if I didn't mention the weather in a blog. We complain about it all the time – it's too hot or too cold, too wet or too dry. Whatever it is, it is notoriously difficult to predict and we often get it wrong.
On 26th July 2012, amidst worries about a eurozone breakup and countries being forced to exit the euro, Mario Draghi, president of the European Central Bank (ECB), announced that he would do ‘whatever it would take’ to save the euro.
A study by the Cass Business School recently claimed that just one in a hundred fund managers consistently beat their benchmark. It suggested that investors would be better off investing in passive index trackers, which charge lower fees.
Until recently, the price of crude oil had enjoyed one of its most stable periods, with tensions following the toppling of Gaddafi in 2011 abating and both demand and supply remaining steady in the years following. However, with rise of ISIS in Iraq threatening to push one of the world's biggest oil producers into civil war, the oil price has moved out of its recent trading range and has led to market commentators taking another look at the asset class, both in terms of the oil price itself and oil equities.
On 1st January this year, Obamacare came into effect and, with it, the potential to bring more than 20 million more people into the US healthcare system. At the time, I asked a number of healthcare specialist managers, and more generalist US equity managers, if they thought Obamacare would be the 'cure-all' for the sector.
Just under two years ago, Mario Draghi, President of the European Central Bank, promised he'd do whatever it would take to save the Euro. His words alone seemed to be enough for markets and until now, he has not been tested. Last week, however, he started to make good on his promise.
Opinion on where equity markets are headed is really quite divided at the moment. On the one hand, Richard Buxton of Old Mutual, a very experienced and successful UK equity manager, whom I rate highly, has said he believes we are at the beginning of a long-term bull market. The guys at Neptune are equally bullish.
The hunt for yield is getting even harder for investors seeking income. Any hope that the recovery in the UK economy would encourage the Bank of England to raise rates was blown away last Wednesday as it was made it clear that rates would not rise until next year at the earliest.
There has been some talk in the media in recent months of a “bubble” forming in the high yield end of the bond market. I thought now would be a good time to evaluate the outlook for high yield bonds going forward and what it means for UK investors.
Despite the squeeze on budgets, caused by rising inflation and slow wage growth, consumers have been the major driving force behind Britain's rapid economic recovery. Figures out today (29th April) show that the UK economy has grown by a further 0.8% in the first quarter of this year, fuelled by unexpectedly strong consumer spending in March. While in general this is good news, it has raised concerns that the recovery remains too dependent on unsustainable growth in consumer spending. The recovery needs to broaden out.
The media and Hollywood constantly sell us the idea that investing in smaller companies is dangerous, risky and even foolish – but I think differently.
Investors' obsession with China and Japan has meant many of us have overlooked the potential of the ASEAN region, the association of South East Asian nations, made up of Indonesia, Malaysia, the Philippines, Singapore, Thailand and now also Brunei, Bangladesh, Burma (Myanmar), Cambodia, Laos and Vietnam.
There are now just a few days left to take advantage of your annual ISA allowance (£11,520 investment ISA allowance for 2013/2014). With the paltry rates on offer for cash ISAs, many investors are looking to invest in funds instead.
I'm often asked about China as an investment opportunity. Mainly because its economy has such an impact on both emerging and Asian equities, but also increasingly more on global equities.
ISAs are approaching their 15th anniversary and, over the years, any tweaks to the wrapper have generally been disadvantageous. The 2014 Budget has finally reversed that trend and the ISA has become a formidable tool for savers and investors.
This time last year markets were swooning over the Japanese prime minister, Shinzo Abe's, package of reforms, known as Abenomics. In fact, the Nikkei 225 was the top-performing developed market index in 2013 and, coming into 2014, many market commentators, including Chelsea, tipped the Japanese market for further gains. However, the Nikkei has traded sideways for the last few months and there is now talk that the big asset allocators, such as global macro hedge funds, are starting to lose patience. I thought now would be a good time to re-evaluate the prospects for Japanese equities and analyse what might be the catalyst to push the Japanese market higher.
For much of 2013 the world's big stock markets had a spring in their step, with America's main index, the S&P 500, and Japan's Nikkei 225 leading the way, with gains of 30% and 57%* respectively. However, the story in emerging markets was somewhat different, with the sector posting a loss for the year, and some markets seeing steep declines, with the MSCI Brazil, for example, down more than 20%*.
As Albert Einstein once said, compound interest is the eighth wonder of the world. He who understands it, earns it.... he who doesn't pays it. I couldn't agree more and, in my opinion, it is possibly the most important concept people can learn about when it comes to their finances.
As we head into ISA season, I always think it is interesting to see what our investors are buying. The last couple of years have seen a slight swing away from bonds to equities, but in general, the trend has been pretty similar: UK Equity Income funds have been the most popular, followed by UK All Companies and Strategic Bond, then Asia Pacific ex Japan and Global equity funds making up the top five selling sectors.
The technology sector has always been one of quite rapid change and exciting opportunities. Just 10 years ago, in 2004, many people still didn't have a mobile phone and the thought that within just a few years you would be able to use one for surfing the internet, taking photos and paying bills, was beyond most people's comprehension.
2013 saw the start of a full recovery in the UK housing market. The government has done everything possible to resuscitate the market and last year its efforts finally worked. According to the Nationwide prices rose by 8.4% in 2013, that compared to a 1.1% fall in 2012. Price changes continue to vary widely across the country. London prices rose over 15% last year compared to a rise of just 1.9% in the North of England where the increase was lowest.
With interest rates still at record lows, and tapering in the US set to begin this month, the worries over bonds and rising yields leave income investors in a bit of a quandary: higher yields mean more income but could result in capital losses. So what other options do they have?