In the developed world, government bond markets have suffered from a decade of “financial repression,” meaning the income you receive has not kept up with the rate of inflation. In the autumn of 2018, markets for riskier financial instruments such as equities noticed there was a great big elephant in the room: the bond market.
The NHS is to many akin to a state religion. In the summer, prime minister Theresa May promised to inject an extra £20 billion a year into the NHS by 2023-24, with taxpayers helping foot the bill. However, despite the NHS’s vaunted status, criticism of the service comes daily. The irresistible force of the UK’s ageing population collides with the immovable object that is finite funding, with depressing frequency.
As a fund manager I’ve never been too fond of the idea of “talking up the asset class”, which in my case would have meant extolling the virtues of European equities. I’ve always felt that doing so risks becoming an apologist for a region or an asset class, thereby risking at least some element of self-serving disingenuousness.
But my temporary departure from this way of thinking is due to what we perceive as the prospect of an inflection point on the horizon.
With the rise and rise of index tracker funds and baskets of exchange traded futures, it is now easy and cheap to get broad investment exposure to the UK equity market. A FTSE 100 tracker will give you coverage of roughly 85% of the FTSE All-Share index, yet the IA UK all companies sector still offers a choice of over 250 open-ended general UK equity funds, most of which would call themselves active.
Tumult, turbulence and turmoil are just the words beginning with the letter T used by commentators to describe the behaviour of stock markets in October. I think it’s always good to look at the definition of the words we are being asked to accept. For example: turmoil, noun: a state of great disturbance, confusion, or uncertainty . synonyms: confusion, upheaval(s), turbulence, tumult, disorder.
Despite optimism over global economic prospects, veteran fund manager Peter Spiller has deep concerns. Will investors realise what's happening before it’s too late?
Investors should focus on companies that will not be impacted by political interventions such as privatisations and government subsidies.
After a long period of being ignored by investors, small-cap stocks now offer some of the greatest performance potential.
With the tapering of quantitative easing, UK gilts are set for another poor year in 2014, especially if US bond yields rise once more.
Alastair Mundy of Investec says investors must choose between negative real returns from bonds and unattractively priced equities.