Cherry Reynard

Strong returns from many of our Fund Award selections

Just in case investors had forgotten what volatility felt like, markets issued a sharp reminder over the past 12 months. It was the type of environment in which good active managers should thrive, as share price performance grew more differentiated – but there were plenty of traps for the unwary.

The US was both the easiest place to make money and the toughest to beat the index, and that was reflected in the annual performance of our 2018 fund award selections.

Innovative Finance Isas: don’t let rewards blind you to the risks

On first assessment, peer-to-peer Isas – known officially as innovative finance Isas – appear to fill a hole in the Isa market. They are hybrids that operate between the relatively high-risk/high-return sphere of the stockmarket and the lacklustre but safe zone of cash. They offer a handy route to a reliable and diversified income stream. At the same time, investors can enjoy the feeling of disintermediating those nasty banks.

Have mid-cap firms had their moment?

Medium-sized companies used to be the favoured stomping ground for active managers. Small and nimble enough to grow, but large enough to withstand the ebb and flow of the economic tide, they were seen as the sweet spot for investors. Respectable academic studies backed up this view and for many years, mid-cap-focused UK equity funds headed the pack in performance terms.

How to get your investments into shape ahead of retirement

Wobbly markets may have given those contemplating retirement pause for thought. In recent years, managing a retirement portfolio has been like falling off a log: as long as the portfolio is invested in financial markets rather than cash, it’s been going up. However, recent volatility suggests this ‘in it to win it’ approach may not be as effective in future.  

Valuation bright spots amid the gloom

These are seat-of-the-pants times for investors. When the global economic and political environment is so fragile that it imperils the pro­fitability of global titans such as Apple and Samsung, it is a time for everyone to take note. The start of 2019 may have brought more realistic stock valuations, but everything from the US/ China trade war to Brexit to the rise of global populism casts a long shadow over ­financial markets.

Have VCTs lost their allure?

In its 2017 Patient Capital Review, the government made its position clear – tax incentives would only be on offer where capital was genuinely at risk. This has seen the venture capital trust (VCT) sector undergo a number of key changes in recent years, designed to steer it towards smaller, higher-risk companies.

How to tackle and profit from volatile markets

Investors in the stockmarket used to recognise that they had to take the rough with the smooth: stockmarkets could be a rocky ride. But investments usually worked out well if they were held for long enough. There has, however, been so much ‘smooth’ in recent years that many investors have forgotten about the ‘rough’ bit. The past year has been an abrupt reminder that stockmarkets are not without risk.

To buy or not to buy: are bonds more work for less return?

For an area that is supposed to be the stable asset, ballast for a portfolio, fixed income has looked pretty rocky in 2018. Ten-year gilt yields have been as low as 1.15% and as high as 1.7%. The corporate bond market has bounced around with increasing unpredictability. If investors needed reminding that this is a new environment for bonds after a lengthy bull run, the past 12 months have provided ample proof.