Five years ago, it seemed the future of financial advice had arrived – and it came in the shape of robots and algorithms. With regulators anxious about a financial advice ‘gap’, technological advance paving the way for innovation, and the pension freedoms creating a new wave of demand for help with retirement investments, the time seemed right for automated investment advice to take off.
The global bull market that began back in 2009 appeared to be gaining fresh momentum in the early days of 2020. Having faced myriad threats over the past decade, from terrorism and natural disasters to trade wars and constitutional crises, investors could feel relatively optimistic regarding the outlook for the global economy. Until, that is, coronavirus, or Covid-19, emerged as a potential ‘black swan’ event, sending markets tumbling and prompting the OECD to warn that global growth could be halved as a result.
They have billions of users, are collectively worth more than $3.5 trillion, and play a role in the daily lives of people all over the world. They are also in the sights of lawyers, regulators and politicians on both sides of the Atlantic – a challenge that could leave a dent in millions of investment portfolios.
The ongoing debate over the respective merits of the passive and active approaches to investing is a noisy one. For most investors it is also, to a large extent, irrelevant and unnecessary. That’s because the search for good long-term investment outcomes doesn’t need to involve an either/or choice – both approaches have an important role to play.
However, it helps to understand how active and passive investing differ before we look at how they complement each other.
It’s sometimes said that investing can be so complicated that the best strategy is to keep it simple. One man who might agree is Lord Lee of Trafford, the Liberal Democrat peer and former Conservative MP. He is also known as the first Isa millionaire, having built a portfolio “brick by brick” in personal equity plans (Peps) and then individual savings accounts (Isas).
This piece was written in December 2019.
If geopolitical developments had the effect on equity markets that’s so often feared, recent years might have been much more volatile. But while the investment implications of political and macroeconomic turbulence are frequently overestimated, their impact on commodity prices can be a different matter.
Long driven by the fundamentals of supply and demand, commodity markets are increasingly shaped by factors such as policy change, trade disputes, political tensions and the response to climate change concerns.
With the backing of several Wall Street banks and some of the world’s biggest fashion names, Boo.com caught the eye when it went live in November 1999. Its aim of becoming the first genuinely global online fashion retailer, providing services in different languages and currencies, made for a compelling proposition. Yet six months later it was over, as liquidators were called in and investors were left with burning holes in their pockets.
It’s now 30 years since Nigel Lawson fired the starting gun on the self-invested personal pension (Sipp) revolution. The then-chancellor’s 1989 Budget included a proposal to “make it easier for people in pension schemes to manage their own investments”, with the details following several months later and the first Sipp launching in March 1990.
More than 150 years after the first investment trust came into existence, trusts are still gaining popularity among direct investors. However, the investment environment today is very different from that in 1868 when the Foreign & Colonial trust was launched to offer private investors access to international investment opportunities.
As welcome as a decent bottle of something might be for Christmas, a clinking sound is a bit of a giveaway. But there’s a less predictable way to delight the wine, whisky or beer hobbyist in your life, and for longer than a bottle of red or four-pack of beers usually will – a slice of ownership in their favourite brand.