High-profile, large investment trust launches have a nasty habit of not ending well for eager private investors in thrall to the cult of a ‘star manager’ or attracted to an investment story that turns out to be less exciting than first thought.
The stars are aligning – but the pattern forming does not look propitious for developed market equities, particularly the US after its blistering run over the past decade. Meanwhile, long-suffering investors in emerging markets, relative to global developed markets, are set to have their faith repaid.
The asset manager for a changing world” seems a fitting description of BNP Paribas Asset Management, following its recent research paper on renewable energy versus oil. In ‘The death toll for petrol’, Mark Lewis, the investment bank’s global head of sustainability research, sets out a compelling case for long-term investment in renewable energy for transportation, when assessed in terms of the energy return on capital invested – shortened to EROCI.
In early March of this year, when Money Observer first highlighted the worrying issues that would ultimately lead to disaster for investors in LF Woodford Equity Income fund, we listed several reasons for concern, beyond the fund’s (WEIF’s) very poor performance.
By and large, the first three months of 2019 have been very positive for investors in our 2019 Rated Funds. These are split into 15 easy-to-understand asset groups and are comprised of 201 actively managed funds and investment trusts, plus a further 66 passive index-tracking funds.
A decade ago, in early March 2009, the stockmarket equivalent of blood on the streets was in full flow. Hindsight shows it was a very good time to buy bonds or equities, not to mention real assets such as property and infrastructure. It was the nadir of the global financial crisis and, bar a few bumps on the way, stockmarkets of developed countries have not looked back, particularly in the US, where the benchmark S&P 500 index has gained in excess of 400% in sterling-adjusted terms.
Well, that wasn’t much fun for investors: 2018 promised so much but ended up delivering very little, if anything at all. Of all major asset classes referenced by UK investors, only property ended up meaningfully in the black – up around 7%. Cash and gilts returned a little over 0.5%. With a 3.1% loss, global developed markets fared better than commodities, emerging market equities and UK shares, which propped up the asset class performance table with near 10% losses.
What must rank as one of the most hard-hitting, thought-provoking critiques of the investment management industry deserves to be widely read by investors and the firms that serve them. ‘Let’s Talk About Actual Investing’, by Stuart Dunbar, a partner at fund management group Baillie Gifford, explains why the investment industry has lost sight of its original goals; why most “active” investment managers are anything but that; and how short-term business priorities and performance measurements are damaging long-term wealth creation.
An amazing 97 per cent of global stock market returns since 1973 have accrued during the months from October to April each year. However, volatility also tends to reach its peak in October, a fact underlined by famous October crashes in 1929, 1987 and, more recently, 2008.
Timing the market is a notoriously difficult way to make money. You have to be ‘all in’ to win – or stay out of the game if you can’t take the pressure.