There’s no denying that global markets throughout this year’s Isa season have been susceptible to shocks, what with Brexit uncertainty and the ongoing US-China trade tensions. However, if history has taught us anything, it’s that markets can have good days and bad.
View of the Day
Fees have become a thorny issue for the asset management industry in recent years.
As low-cost tracker funds have flooded the market, active managers have come under increasing scrutiny to demonstrate their value. Regulators expect firms to justify their fees.
With the end of the 2018-19 tax year approaching, time is running out for people to make the most of the various tax allowances available to them before midnight on 5 April.
One of the biggest conundrums savers face is whether to prioritise Isas or pensions as a home for their long-term investments.
Twenty-one years ago, the world’s biggest companies produced oil, gas, soft drinks and pharmaceuticals. Just one was tech - Microsoft. In 2019, all five of the world’s biggest companies – Apple, Amazon, Microsoft, Google and Facebook – are tech-related.
Donald Trump’s trade negotiator, Robert Lighthizer, was in talks with Chinese officials last week. Speaking in front of the Senate finance committee, he admitted that trade talks have entered their “final weeks”.
What a week it has been for drama in UK politics with the Brexit Withdrawal Agreement rejected again and Parliament voting to rule out the possibility of leaving the European Union without a deal.
Political uncertainties have undoubtedly had a corrosive effect on investor sentiment, a fact borne out by a very prolonged pattern of net outflows from both UK and European equity funds.
Chancellor Philip Hammond’s Spring Statement confirms that, despite Brexit uncertainty, the strength of the underlying economy means that there are great opportunities in the UK for equity investors.
Don’t be put off by Brexit
While it is understandable that people are worried about the uncertainty that Brexit and other short-term political dynamics are creating for stockmarkets, it is important to remember that there is a difference between putting money into your Isa and actually investing it.
The annual Isa allowance is a use it or lose it tax break. You can’t roll it over to other years like the annual pension or capital gains tax allowances.
China’s market is policy driven and policy right now is pumping up liquidity provision and fiscal spending, boosting Chinese and emerging market stocks.
Indeed, emerging market assets are in a sweet spot. EM currencies are the cheapest they’ve been in at least two decades relative to the US dollar.
Dramatic price elasticity is defining a new era of heightened volatility. As spectacular as the fall in markets was late last year, so was the rebound in January. This whipsawing of markets can be very uncomfortable for investors, but for dynamic multi-asset managers it presents allocation opportunities, particularly as gloomy macro-economic conditions weigh on sentiment.