Share buybacks by US companies have rocketed following president Donald Trump’s tax cuts. The windfall the cut provided has allowed firms to dedicate record-breaking amounts to buying back their own stock. Almost $437 billion in buyback plans were announced in the second quarter of 2018, up from $242 billion in the previous three months, according to investment research firm TrimTabs.
When the Bank of England’s Monetary Policy Committee meets on 2 August it seems highly likely that they will decide to raise interest rates from 0.5 per cent to 0.75 per cent.
For the past few years, so called FAANG stocks (Facebook, Apple, Amazon, Netflix and Google, owned by Alphabet) have seemed unstoppable. Despite the warnings from bears that we were in a new tech stock bubble and the shares were trading far above fair price, valuations continued the rise. This year too, FAANG stocks have been the strongest performers on the US market. Indeed, without the growth of FAANG share prices, the S&P500 would be in negative territory in the first half of 2018.
Asia has not historically been a place for income investors to hunt. Over recent decades, the region’s economies and businesses have emphasised rapid growth and capital investment, often at the expense of returns of capital and rewarding shareholders.
Likewise, corporate governance in the region has traditionally been weak, and corporate culture not conducive towards shareholder payouts.
In our era of ultra-loose monetary policy, retail bonds have become increasingly popular with savers, but launches are few and far between. With rates on cash abysmally low, for many people they offer relatively high and safe returns.
The latest retail bond to launch is from Regional Reit, an investment trust with a property portfolio composed primarily of office space outside of the M25.
Pay TV business Sky was one of the best performers in the FTSE 100 index of blue-chip companies in June, gaining 8.5 per cent as the result of a bidding war for the company between Rupert Murdoch’s 21st Century Fox and US cable company Comcast.
As the name suggests, Murray Income trust focuses on dividend paying companies, aiming to provide shareholders with strong, reliable income growth; it prides itself on the fact that it has a 44-year track record of dividend growth. The current yield is around 5.1 per cent. The trust attempts to provide income primarily through investing in UK-listed shares, although it is able to hold up to 20 per cent of its portfolio outside of the UK.
By all accounts, business investment should be booming. Profit margins are above long-run averages and credit, thanks to loose monetary policy, is still cheap. The labour market has tightened and government policies such as the National Living Wage and pension auto-enrolment have upped the cost of labour. At the same time, many firms are at or near capacity after nine years of economic expansion.
As we enter the third quarter of 2018, there are three main areas of concern for investors, according to JPMorgan Asset Management’s latest quarterly Guide to the Markets.
The first: how long can the US economic expansion last?
Scottish American Investment Company was founded by William Menzies in the 1870s, after a series of visits to the US left him impressed by the wealth and opportunities the rapidly industrialising country presented. Being the most exciting emerging market of its day, America, it was hoped, would provide strong returns for investors in the UK.