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UK investors pulled money out of domestically-focused stocks and shares-based funds for the third year in a row, and for the 31st consecutive month to December last year, Andrew Michael writes.
According to the fund flow index of global fund network Calastone, investors withdrew £8 billion from the UK equity budget in 2023, an amount higher than last year, marking the third year in a row that the sector has experienced a net cash outflow.
Despite this, Calastone reported that “UK investors were brimming with confidence” at the end of 2023, with inflows through the share budget in December reaching £1. 2 billion, its month since April.
However, last year’s turmoil was not enough to prevent the entire equity fund from experiencing a net outflow of £1. 24 billion over the course of 2023.
These figures reinforce the sense of pessimism in the UK stock market. Down 4% in 2023, the FTSE 100 primary stock index is particularly lagging behind its US rival, the S.
The City of London has yet to receive initial public offerings from companies, including that of PC chip designer Arm, which was effectively listed on the U. S. generation exchange Nasdaq last September.
Calastone described money market funds as the “big winners” of 2023, attracting as they did a record £4.4 billion of investors’ cash. This figure was more than the sector’s total for the previous eight years.
These budgets invest in money deposits and short-term bonds, with the aim of offering a point of stability and liquidity similar to liquidity to investors making capital investments, as well as higher returns than bank deposits or construction companies.
In terms of sector high-spots, Calastone said US equity funds enjoyed record inflows last month worth nearly £1 billion. European funds, which experienced net outflows every month between January 2022 to November 2023, reversed that trend by attracting £476 million in December, their second-best month on record.
The environmental, social and governance (ESG) budget posted an eighth consecutive month of sales, leaving the sector in a worse position of £2. 4 billion than at the start of 2023.
Edward Glyn, head of global markets at Calastone, said: “The money market budget is working well for two reasons. Firstly, they are a safe haven, and secondly, the return is much higher than coins deposited in a bank. In doing so, they withdraw coins from the banking sector that would otherwise have been dormant in instant savings.
Separately, according to a report from the London Stock Exchange Group (LSEG)/Lipper, the majority of actively managed funds and exchange-traded funds globally were unable to beat their respective benchmarks over the course of 2023.
Active fund managers choose the stocks that make up their portfolio, with the aim of outperforming a stock market index such as the FTSE 100.
Detlef Glow, Head of Lipper EMEA Research at LSEG, said: “It’s fair to say that 2023 will be a year where active fund managers could have demonstrated their asset allocation skills and at the right time. Overall, the effects of this study show that active equity fund managers have not achieved this goal.
Investors with a China-oriented budget performed abysmal in 2023, in stark contrast to those who favored tech portfolios, writes Andrew Michael.
A study of the fund’s functionality in 2023 highlighted many other fortunes experienced in the two investment sectors.
Referring to the Investment Association’s universe of 50 investment sectors, representing £8. 8 trillion controlled through AI members in the UK, Quilter Cheviot found that of the 43 poorest investment sectors were invested in China.
Bottom of the pile came abrdn’s China A Share Equity fund which, according to Quilter Cheviot and Morningstar data, produced a negative 29.2% return over the course of 2023. The next nine worst-performing funds also came from the China sector, with each one registering losses of more than 25% (see Table 1).
Nick Wood, head of fund research at Quilter Cheviot, said: “China has pulled back in a year when its Covid reopening was expected to produce big returns. Abrdn China A Share Equity has found itself at the bottom of the functionality rankings, given that 42 of the last 43 budgets are Chinese, it is evident that the country as a whole has faced abundant headwinds.
In contrast to the unrest that has hit investors in China, last year proved to be particularly more successful for generation investors, with several budgets in this sector ranking among the top 10 performing budgets of the entire AI universe in 2023 (see Table 2).
The top performer was Nikko AM ARK Disruptive Innovation managed by ARK’s founder, Cathy Wood, a firm that is synonymous with investing in the US. Other managers that produced returns in excess of 50% on the year included Liontrust, T. Rowe Price, and Legal & General.
Quilter’s Nick Wood said: “It is clear technology stocks are very much back in vogue, despite the high interest rates that were supposedly going to hamper them. The ‘Magnificent Seven’ stocks [including Microsoft, Apple and Nvidia] have brought tech funds back to the fore, with the top 10 performers being almost exclusively focused on this sector.
“Obviously, the AI boom of 2023 has helped pull those budgets out of the doldrums they were in early last year and will have rewarded investors who were patient and invested in this difficult time.
Wood added that the dominance of the generation sector last year was such that only one non-tech-dominated fund, Lazard Japanese Strategic Equity, is among the top 20 most sensible funds.
Ben Yearsley, director at Fairview Investing, said: “From a fund perspective, there were only two stories in 2023, generation and China. The generation was great, China was terrible.
“China has been the big loser at the back of the fund industry charts, with an average fund squandering more than 20% in 2023. Actually, sentiment will have to be replaced at some point, with ridiculously cheap stocks. “
The FTSE 100 index, the UK’s stock market barometer of leading shares, celebrates its 40th birthday today (3 January) at a time when London’s reputation as a financial centre has arguably never looked more vulnerable, writes Andrew Michael.
Also as “the Footsie”, the FTSE 100, along the S
Such indices provide equity investors with an indication of how markets are behaving, as well as how individual companies are performing. They are also the bedrock on which passive investment vehicles, such as index tracking funds, rely.
The UK Blue Chips Index is made up of the hundred largest UK corporations by length or market capitalisation, indexed on the London Stock Exchange. “Market capitalization” is calculated by multiplying the percentage value of a company by the number of outstanding percentages.
Currently, the Footsie’s two largest companies, each with market caps of around £167 billion at the start of January this year, are the oil producer Shell and the bio-pharmaceutical business AstraZeneca.
Launched in 1984, the FTSE 100 has succeeded the FT 30 index, which dates back to 1935, as the leading stock market indicator for major UK-listed companies.
The Footsie’s arrival pre-empted a new generation of individual investors who flooded into the market following the privatisations of formerly state-controlled businesses such as British Gas and British Telecom.
Today, the Footsie is overseen by data firm FTSE Russell, which reviews the index quarterly. Companies can move up or down the index depending on their size, as dictated at the end of the trading days of the year.
Last autumn, after a break of 14 years, the high street retailer Marks & Spencer returned to the Footsie following a considerable turnaround in performance at the company.
Rob Morgan, lead investment analyst at Charles Stanley, said: “Some of the original 100 companies, such as M
“There has been a low out-and-out failure rate considering the rapid technological change we have seen over the past four decades, which illustrates the benefits of investing in blue chip companies. Although they are often not the most exciting of investments, extinctions tend to be rare among larger businesses and their staying power can be a source of cash flows and dividends to investors.”
The Footsie’s 40th birthday takes place at a time of considerable tumult for the City of London. Nowadays, British stocks make up about 4% of the global developed market as measured by the MSCI World Index, down from 10% a decade ago. Over the past year, London has also been swerved in favour of the US as a home for several company flotations.
One of the accusations levelled at the index itself is that its make-up is now showing its age. Critics say that its composition is too top-heavy with ‘old economy’ stocks including banks, insurers, and mining companies, while it lacks the technology businesses that have propelled rival indices, notably the S&P 500 and the Nasdaq, to dizzying stock market heights in recent years.
Jason Hollands, CEO of Bestinvest, said: “The Footsie has become a concentrated index, ruled by its biggest beasts. The five largest corporations now account for about one-third of the index. While they are primary corporations worth considering, investors deserve to bear in mind that across all UK markets, adding up the Alternative Investment Market, there are over a thousand index companies to invest in and therefore there are many more opportunities beyond the FTSE 100. “
“Although many consider the FTSE’s hundred types of corporations to be ‘boring’ compared to the US market’s expanding dynamos, strong corporations that pay decent dividends can remain hot in uncertain times and the FTSE’s existing valuations are indeed very reasonable. Compared to these, the story may simply be a smart hotspot.
Richard Hunter, Head of Markets at Interactive Investor, said: “There is no doubt that the index has fallen out of favour with institutional and foreign investors lately, driven by a backlash to Brexit, in which the UK as a whole has failed as an investment destination. “. Get over it.
“At a time of wonderful enthusiasm for high-growth stocks, especially technology stocks in the U. S. , the U. S. In the U. S. , where the prospect of synthetic intelligence has led tech corporations called the ‘Magnificent Seven’ to stellar returns, especially last year, the tech sector’s FTSE100 apparent lack of exposure has been a hindrance.
“Investors seeking growth have moved away from the UK’s main index as its parts are seen as beyond the expansion phase. Although they are more reliable, cash-generating, and stable, many of their businesses are considered to have modest expansion prospects. as representatives of the “old economy”.
Laith Khalaf, head of investment research at AJ Bell, said: “Looking at old functionality data, it’s hard to avoid the conclusion that Footsie’s peak productive days are these. An annualised decline of 5. 2% since its launch is already smaller than its European and US counterparts, but it also belies the fact that most of this expansion has occurred in the first two decades of the FTSE 100’s existence. An idyllic youth has given way to an austere adulthood for the British index.
“Since 2000, the FTSE hundred index has deteriorated, while other evolved market indices appear to have advanced. Since the turn of the century, the FTSE hundred index has risen just 0. 4% on average annually, to 6. 1 % annualized rise in the price of S
Countering this viewpoint, Bestinvest’s Jason Hollands says it’s important to remember that index growth makes up only a small component of the return figures achieved by the Footsie over time: “Measured in percentage point terms, the FTSE 100 has risen 447% since its inception and over the last five years it has seen a mere increase of just 15% which is particularly pedestrian compared to the US S&P 500 which has risen 90% over the same period.
“While it is undeniable that the FTSE 100 index has been outperformed particularly by the functionality of US stocks, the functionality of FTSE 100 issues is a very partial picture of the returns achieved, with the vast majority of total returns being earned in the UK. In fact, virtually all genuine returns, once inflation is taken into account, come from dividend payments.
“When these are included and reinvested, the total return from the FTSE 100 over the last 40 years is 2,219% and over five years it is 39%.”
The Financial Conduct Authority (FCA) is undertaking a sweeping overhaul of UK stock exchange board regulations after a number of companies shifted from the City of London to New York, writes Andrew Michael.
Listing rules set out standards that a company is obliged to comply with if it wants to list its shares for public sale.
The UK’s financial regulator has set out proposals which, it claims, will “make the UK’s listing regime more accessible, effective, and competitive”. The move comes after the FCA published a consultation document in May this year on what a new listing regime could look like.
This included the merger of the popular and high-end segments of the market and the requirement that corporations discharge shareholder approval for primary transactions. The FCA said the adjustments were intended to “encourage more firms to register in the UK and compete on the global stage”. “.
The FCA claimed that the amendments could simply lead to the collapse of more UK-listed groups, but responded that this was justified by continued economic activity.
The regulator said: “The proposals may simply lead to a higher likelihood of bankruptcies, however, the proposed adjustments would better reflect the risk appetite that the economy desires for growth. “
Over the past year, the London market has experienced a series of setbacks as several companies, including well-known chipmaker Arm, took their business overseas, primarily to the U. S. market.
There are concerns about the UK’s existing board regime, which critics say has deterred corporations from listing on the domestic market. In the discussion paper accompanying the May consultation paper, the FCA described the existing regulations as “too complicated” and “burdensome”.
Sarah Pritchard, executive director, markets and international, at the FCA, said: “We are working to strengthen the attractiveness of UK capital markets and supporting UK competitiveness and growth. As we do so, it is important that others consider what they in turn can do, to make sure the UK remains an attractive place for companies to raise capital.”
Bim Afolami, Treasury Secretary for the Economy, said: “The UK is Europe’s leading investment platform, but it is a globally competitive country and we are not complacent in any way. We need to make the UK the capital of the world, attracting the world’s brightest and most corporations.
Online investing platforms and self-invested personal pension (SIPP) services have been ordered to stop charging interest on customers’ cash holdings if a platform fee is already imposed, writes Andrew Michael
Millions of retail investors use investment platforms to buy and sell shares of corporations and mutual funds.
In a letter to the platforms’ CEOs this morning, the Financial Conduct Authority (FCA) called on companies to “immediately stop the practice of double deduction,” saying it is not in line with the recently adopted rules on customer obligations, designed for customers to get a smart monetary policy. results. decisions.
A “double deduction” occurs when platform providers withhold accrued interest on customers’ money and also qualify an account payment or management payment on the same amount. The regulator said it expects the companies to finalize the procedure by the end of February 2024.
AJ Bell is the first platform to unveil adjustments to the interest rates it will pay in money following the FCA’s warning. It has announced increases in its spot rates, as well as a series of value cuts worth £14 million. The adjustments will come into effect from next April with a higher interest rate paid on pension withdrawals, 3. 45% for balances below £10,000 and 4. 45% for balances above £100,000. Provisional balances will yield 3. 95%.
For gigantic amounts deposited in individual savings accounts (ISAs) and pension accumulation accounts (pension budget in the process of being created), new monetary rates of 2. 7% and 3. 95% respectively will be introduced. Currently, ISA clients with holdings worth less than £10,000 get 1. 95%, while those holding between £10,000 and £100,000 get 2. 45%.
The platform also announced that fees for customers for buying and selling investments, adding shares, foreign exchange industry funds, investment trusts and bonds from the AJ Bell D2C platform, will be reduced from £9. 95 to £5 according to the industry. Transaction fees for common industries, explained as customers who have done 10 or more industries in the last month, will also be reduced from £4. 95 per industry to £3. 50 next spring.
The FCA notes that the amount of interest earned through some firms has increased as rates have risen over the past two years.
An FCA survey of 42 platform providers found the majority retain some of the interest earned on customers’ cash balances which, according to the regulator “may not reasonably reflect the cost to firms of managing the cash”.
He added that, in June 2023 alone, suppliers who retained their interests collectively made £74. 3 million in profits from the practice.
For more information, read our article on which investment platforms are paying interest rates to their clients lately.
The FCA told CEOs that it expects firms to “ensure that the withholding of interest on money balances provides a fair cost and is understood by consumers, in accordance with the duty to the consumer, in particular the effects of value and cost tax and consumer understanding. “”.
He adds: “We are also very concerned about the practice of some corporations withholding interest and charging account fees or fees from customers’ money. This practice will most likely cause confusion among customers and we do not do this to demonstrate that a company is acting with intelligent faith, is acting honestly, calmly, and openly, and is acting in a manner consistent with moderate customer expectations.
Sheldon Mills, FCA’s executive director of clients and festivals, said: “Higher rates mean higher returns on investment. Investment platforms and SIPP traders will now have to ensure that the percentage of interest they withhold and, for those who deduct twice, the amount that customers who hold cash qualify for translates into fair value.
“If they can’t make their case, they want to make changes. If they don’t, we will intervene.
Foreign investors have acquired a record share of the U. K. stock market, while Americans and U. K. institutions such as insurance and pension companies have noticed the proportion of domestic inventories they own falling sharply, writes Andrew Michael.
According to figures from the Office for National Statistics (ONS), shares of UK-based companies indexed on the London Stock Exchange amounted to £2. 42 trillion at the end of 2022.
Of this, the proportion of UK shares held by overseas investors, including global investment funds and sovereign wealth funds, stood at a record high of 57.7%, up from 56.3% two years earlier.
By comparison, Americans living in the United Kingdom saw their holdings of British stocks rise from 12% in 2020 to 10. 8% last year.
According to data from the Investment Association, about £44 billion has been withdrawn by investors from funds exposed to UK equities since 2016.
If we look back over a longer period, the share of UK shares held through the pensions budget and insurance corporations has fallen significantly further, from 45. 7% in 1997 to 4. 2% last year, the lowest figure on record.
While insurance companies and pension budgets have been big backers of the domestic stock market, they have declined especially in recent years due to factors, coupled with changes in pension regulations, that have pushed investment strategies more toward “safer” assets such as bonds.
Performance contributed to performance, with a stock market index such as the S
Heading into 2024, there appears to be little appetite among professional investors to increase their exposure to the UK equities market.
Offering their thoughts on investment prospects for the year ahead, a panel of commentators told Forbes Advisor that retail investors should consider increasing their exposure to the fixed income sector to stay on top of what could be a challenging time on the markets.
When asked about the best way investors could position themselves against a backdrop of “higher for longer” interest rates, the panel was unanimous in suggesting a move into fixed income, especially via government bonds, or ‘gilts’.
Laith Khalaf, head of investment research at AJ Bell, said: “The UK stock market is increasingly adapting to the control of foreign investors and, in a globalised market economy, this is perhaps not a surprise. However, the United Kingdom accounts for a declining percentage of the MSCI World Index due to its poor functionality relative to the S
“UK investors are obviously also facing life pressures, which have understandably reduced their propensity to invest in UK stocks. This scenario is compounded by the fact that in recent years UK investors have increasingly sought and selected to sell their UK equity funds, largely in favour of global offerings.
“Pension funds and insurance companies have also been retreating from UK shares. The thing that will really prompt pension schemes and other investors to plump for UK shares is the prospect of superior returns.”
An American share trading app that helped spark a share buying frenzy is launching in the UK after failing three years ago, writes Andrew Michael.
Robinhood, which has been propelled to the forefront of the GameStop stock trading saga known as “meme inventories” in which small individual investors take on giant financial institutions, has opened a waitlist for UK customers, the first step in its expansion into the UK.
Share dealing apps and online investment trading platforms allow retail investors to buy and sell shares, funds, and other investments directly, instead of using the services of a financial advisor.
A boom in the rise of DIY investing over the past decade, partly boosted by the lockdown period during the Covid-19 pandemic, means the market has become increasingly competitive and crowded.
US rival share dealing services Public.com and Webull have also launched into the UK market this year.
Robinhood plans to roll out its brokerage in the UK, giving its customers the opportunity to buy more than 6,000 US-listed stocks, adding Amazon, Apple and Tesla. The company announced that it will come with a feature that will allow 150 of the most traded stocks. US stocks are available to buy and sell 24 hours a day, Monday through Friday.
Robinhood is one of the many platforms that offers its consumers commission-free trading and collects exchange fees. The company says it will pay its consumers 5% interest on money held on the platform.
With different approaches adopted from one provider to another, navigating and comparing the charges associated with the share dealing app and online investment trading platform market can be complicated. For more information about provider chargers, read our in-depth look here.
We also look at investment platforms that pay cash interest rates lately.
Robinhood’s second foray into the U. K. market follows an earlier attempt that failed following operational issues in the U. S. The outbreak of the pandemic in the U. S. and the outbreak of the pandemic.
In 2021, the company played a pivotal role in the meme market frenzy that saw the price of some outdated stocks, including the GameStop store, reach its highest point in years.
Vlad Tenev, CEO and co-founder of Robinhood, said: “Since we introduced Robinhood ten years ago, our vision has been to expand overseas. As a hub for innovation, global finance, and more no-nonsense tech talent, the UK is an ideal place to launch our first foreign brokerage product.
Robinhood said it was aiming to offer the ability to hold stocks within an individual savings account in the future, as well as non-US stocks.
Mr Tenev added that he was engaging “enthusiastically” with the UK’s financial regulator, the Financial Conduct Authority, to obtain the licences required to offer those services.
The Financial Conduct Authority (FCA) announced a package of measures to fight so-called “greenwashing”, writes Bethany Garner.
Greenwashing is the practice of making false or misleading claims about a product’s environmental effect to attract investors.
According to government data, investors are concerned about sustainability when choosing their investments, and annual investments in low-carbon sectors more than doubled in real terms between 2018 and 2023.
But according to studies conducted by the FCA, investors are convinced that the sustainability claims made through companies about their investment products are genuine.
The FCA’s new regulations target investor confidence and will require all authorised firms to ensure that any sustainability claims they make are “fair, transparent and not misleading”.
The regulator is also introducing sustainability labels, with the aim of helping investors understand what their cash is used for, based on a transparent set of targets and criteria.
These regulations aim to prevent corporations from labeling or marketing monetary products as “sustainable” when in fact they are not.
Sacha Sadan, head of environmental, social and governance (ESG) at the FCA, said: “We are implementing an undeniable and easy-to-understand regime for investors to judge whether the budget meets their investment wishes; This is a step for client coverage as the popularity of making sustainable investments grows.
“By gaining confidence in the sustainable investment market, the UK will be able to position itself at the forefront of sustainable finance and reap the benefits of being a leading foreign investment hub. “
The anti-greenwashing rules will come into force on 31 May 2024 and companies will be required to use the new investment labels from 31 July 2024. The naming and marketing rules will be implemented from 2 December 2024.
Fintech specialist Saxo has introduced an online trading platform that offers UK investors thousands of funds, writes Andrew Michael.
Trading platforms allow retail investors to buy and sell budgets and other investments, such as stocks, directly instead of a money advisor.
Saxo, which already offers equity trading to its UK clients, said it had compiled a list of more than 6,000 global fund manager budgets that included Baillie Gifford, BlackRock, Fidelity, JP Morgan and Vanguard.
The fund line-up includes over 500 equity funds and 2,000 fixed income portfolios, along with a range of specialist funds focusing on sectors including biotech, energy, mining, healthcare, technology, telecommunications and utilities.
In common with a handful of its trading platform rivals, Saxo said investments can be bought commission-free and without incurring a platform charge on fund purchases.
In comparison, AJ Bell’s trading account charges a transaction payment of £1. 50, while the investor’s interactive trading account costs £3. 99.
Saxo’s annual “custody” fee, i. e. the amount charged to clients for holding and managing their investments on the platform, is calculated based on the length of the portfolio and is applied according to 3 levels.
The ‘classic’ account charges 0. 4% on holdings between £0 and £160,000, while the ‘platinum’ account charges 0. 2% on amounts between £160,000 and £800,000. The charge is reduced to 0. 1% for VIP accounts over £800,000.
In comparison, Hargreaves Lansdown, the UK’s largest fund platform, charges a fee of 0. 45% on the first £250,000 invested and 0. 25% on holdings between £250,000 and £1 million. Fees drop to 0. 1% between £1 million and £2 million, while wallets over £2 million are exempt from custody fees.
Although consumers are under pressure from the ongoing cost-of-living crisis and inflationary pressures, investment fund providers attracted a net inflow of £1. 2 billion in the third quarter of 2023, according to the Investment Association.
The biggest sales budget came from the steady-source sector, adding British bonds, corporate bonds and other government debt.
Charlie White-Thomson, chief executive of Saxo, said: “The release of Saxo’s fund offering coincides with an era of market volatility and geopolitical tensions.
“I have consistently supported active management including funds as an important part of any well diversified portfolio. We should tap into some of the finest brains within the asset management world, via funds, to assist and boost performance and help us navigate these volatile financial markets.”
NatWest shares will be put up for public sale, in a move reminiscent of the privatisation of the British public sector in the 1980s, writes Andrew Michael.
Chancellor Jeremy Hunt, in his autumn speech yesterday, said the government was seeking to return the taxpayer-funded bank to personal property through an advertising campaign that will echo the “Tell Sid” campaign used to publicise British Gas’ moves in 1986.
British taxpayers are the largest shareholder in the NatWest Group, whose retail brands include NatWest, Royal Bank of Scotland, Ulster Bank and Coutts, when the government prevented the company from collapsing with a £45 billion cash injection after the 2007 financial crisis.
This financing gave the State an 84. 4% stake in the company. Despite transferring blocks of shares to institutional investors, such as the corporate pension budget, in recent years, taxpayers are the largest investor in NatWest with a 39% stake.
All percentage disposals to date have resulted in a loss to the taxpayer. NatWest’s percentages are trading lately at around £2. 04, particularly below the £5. 02 paid through the government at the time of the initial bailout.
A percentage sale to the retail investing public would likely be presented at a lower value than the existing percentage value to inspire demand. The NatWest Group recently lost its chief executive, Alison Rose, who resigned in July following a dispute sparked when her personal bank, Coutts, closed the accounts of former UK Independence Party leader Nigel Farage.
Paul Thwaite, interim chief executive of NatWest, welcomed the government’s announcement. He said, “I’m very focused on getting the bank back. “
Laith Khalaf, head of investment research at AJ Bell, said: “The ‘Tell Sid’ crusade was iconic in its time and, for some, will evoke memories of their first pleasure in owning shares and acquiring a stake in UK plc by making an investment in British Gas when the company was privatised.
“The sale of part of the government’s stake in NatWest to retail investors will most likely strike a chord with some of the original Sids and Sidesses, as their appeal will most likely lie with an older population that is focused on their source of income rather than growth.
“Collectively, we all already own a percentage of NatWest thanks to the bailout, and the government will move from mandatory participation for the many to a voluntary position for the few. »
Will Howlett, currency analyst at Quilter Cheviot, said: “The government has committed to selling its 39% stake in NatWest until 2025/26 and will now explore features to release a percentage sale to retail investors over the next 12 months.
“We see the government reducing its stake to 0 as more symbolic than having any implication on the bank’s strategy. As such, we believe it is the company’s fundamentals that are most vital in determining the functionality of the stock. percentage than any technical factor caused by a percentage that cut its share.
“In 2015, the government did propose something similar with regard to its stake in Lloyds, but these plans were shelved. It will be interesting to see if this ends up going ahead or not.”
Banking stocks tend to be a good source of dividends and can also provide an investment portfolio with diversification, with financials offering an ‘old economy’ counterpoint to portfolios featuring fashionable tech stocks.
Investors who don’t have the time, experience, or inclination to study individual banks, but still need exposure to the sector, could buy specialized exchange-traded funds (ETFs) focused on finance, adding exposure to the banks.
Read our in-depth feature on bank ETFs to learn more.
Retail investors deserve to broaden their exposure to the steady source of income sector to stay on top of what could be a challenging era in the markets next year, according to a panel of investment experts, writes Andrew Michael.
This is a component of Forbes Advisor UK’s investment outlook for 2024, which asked them about the retail investment landscape.
When asked how investors can position themselves more productively in the face of “higher and longer” interest rates, the panel was unanimous in suggesting that they move into the fixed income sector, specifically through government bonds, also known as gilts, or by expanding existing holdings.
Jason Hollands, managing director of investment platform Bestinvest, said: “Many investors have ignored government bonds since the [2007/08] global currency crisis and focused solely on stocks. We now live in a different environment and bonds can offer welcome diversification. .
Kasim Zafar, chief investment officer at EQ Investors, said: “Bonds are now delivering high yields, so they are back high in portfolios with a bias, for now, towards short-term maturities. »
Justin Onuekwusi, chief investment officer at St James’s Place, said: “Rising interest rates have been worth revisiting the steady source of income sector, which has been straightforward with more than a decade of near-zero base rates. Within a steady source of income, some portfolios in the high-yield bond market produce low double-digit returns, while investment-grade bonds are between 5% and 10%, which should not be mentioned.
When asked which region could perform well for investors in 2024, most stakeholders pointed to the United States as the market to watch.
EQ Investors’ Kasim Zafar said: “The US economy seems the most insulated from various shocks that could occur next year and is already further along in its monetary cycle than most other regions.”
Karen Lau, chief investment officer at JM Finn, said, “The U. S. remains the ultimate serious contender to get us out of the current economic climate. “
Claire Bennison, Head of Investment Solutions at Tatton Investment Management, said: “Regionally, it’s difficult to bet too much against the US, but emerging markets remain a key opportunity. “
In terms of the sectors that could produce those goods next year, the panel highlighted synthetic intelligence as a sector to be reckoned with. Arlene Ewing, Division Director, Investec Wealth
Against a backdrop of persistently high inflation, emerging debt prices and geopolitical shocks in the Middle East and Ukraine, next year is shaping up to be another challenging year for markets. This could be further affected by the UK and US entering a political “supercycle” with primary elections in the country.
When asked what recommendation they could give investors the maximum recommendation, the panelists emphasized that they want to continue investing in the market, remain diversified, and have long-term goals in mind.
Bestinvest’s Jason Hollands said: “Investors should stay focused on their long-term goals and not allow themselves to get blown-off course by short-term noise and news events. When the headlines are bad, it’s usually a great moment to invest, but it never feels like it at the time.”
Justin Onuekwusi, of St James’s Place, pleaded with investors: “Hold on to your investments and avoid the temptation to ‘time’ the markets, [because] even professionals can’t get it right.
He added: “Remember that the biggest risk to maintaining and building wealth is inflation.”
Corporate dividends distributed worldwide fell 0. 9% to £346 billion between the second and third quarters of this year, thanks in part to massive cuts by oil producers and mining companies, he writes Andrew Michael.
Dividends are invoices to shareholders that are paid twice a year through corporations on their annual profits. According to fund manager Janus Henderson’s Global Dividend Index, the most recent headline figure is higher than expected, despite its decline from last quarter.
Taking into account aspects such as one-time/special dividends and currency movements, the company said underlying dividend expansion in the third quarter was 0. 3 percent, adding that nine in 10 companies increased their distributions or maintained them stable during the period.
But it adds that two significant dividend cuts have limited the overall core expansion rate, which would otherwise have been 5. 3%.
Brazilian oil maker Petrobras cut its third-quarter dividend payments by £7. 9 billion year-on-year, just as it has cut payments. Australian mining corporation BHP cut its payments by £5. 6 billion due to a sharp drop in profits due to lower commodity prices.
Dividend payments from UK companies, which account for around 7% of payments worldwide, stood at £22.4 billion in Q3, down by 4.8% compared with the same period in 2022. Janus Henderson said “lower mining payouts largely balanced increases from banks and utilities”.
Fortunes were combined in the regions. In North America, dividend expansion slowed for the eighth consecutive quarter, but still generated £133 billion. In Europe, payments rose by almost a third over the same period to £21 billion in the third quarter.
Looking ahead, Janus Henderson has lowered its overall dividend forecast for 2023 from £1. 34 trillion to £1. 33 trillion to reduce special dividends.
Ben Lofthouse, head of global equity revenue source at Janus Henderson, said: “The obvious weakness in global dividends in the third quarter is not a cause for concern, given the significant impact a handful of companies have had. In fact, the sense and quality of the expansion looks greater this year than it did a few months ago, as payouts are now less reliant on one-time special dividends and volatile exchange rates.
“Corporate dividend expansion sometimes remains strong across a wide diversity of sectors and geographies, with the exception of commodity-related sectors such as mining and chemicals. However, it is not unusual, and investors understand well, that commodity dividends rise and fall with the cycle, so this weakness does not recommend broader malaise.
Wealth manager St James’s Place (SJP) has suspended trading on its £924 million asset fund and deferred requested redemptions on two of its budget that also invest in traditional retail, writes Andrew Michael.
The move comes less than a week after rival investment firm M&G announced it would make permanent its flagship asset fund.
SJP’s decision means investors are not allowed, for now, to withdraw or contribute money to its main property fund, which owns a portfolio of offices, warehouses and shops. The company said it would be applying a temporary reduction of 0.15 percentage points to the fund’s annual management charge.
At the same time, repayments will be deferred across two other SJP real estate portfolios, one of them a £563 million life fund and the other an £838 million superannuation fund. Deferrals mean that investors can still request their cash back, but requests can be deferred. It just takes longer than business as usual to accomplish it.
SJP described the suspension of the fund as a “proactive measure to protect clients’ interests,” adding that the overall strategy is designed to “manage potential dangers and stability” of the three funds.
The company attributed the move to the difficult situations seen in the advertising real estate sector, adding to the drop in demand, the space that was left vacant after Covid due to workers fleeing home and the fact that “customers have increased their withdrawals or limited their investments”.
Since the beginning of last year, UK property funds have suffered outflows of nearly £1 billion, according to data provider Calastone.
M&G Investments is winding down its main £565 million property fund, saying investors are less keen on so-called ‘open-ended’ property funds offering units of ownership because of the relative illiquidity of property assets when compared to stocks and shares and bonds.
Tom Beal, chief investment officer at St James’s Place, said: “A combination of points led to our resolution to suspend transactions at the Real Estate Investment Trust and defer bills at pension and life insurance funds. This action also points to the challenge of having to sell homes temporarily to generate cash. Selling homes under such pressures would possibly result in the fund manager promoting them for less than their true market value, which can also result in monetary losses for the fund and its investors.
“During this period of suspension, we will be assessing market conditions and monitoring valuations of properties within the fund. We are committed to resuming dealing as soon as we are satisfied that conditions are right.”
Separately, St James’s Place has announced that it will waive the fees it charges consumers for withdrawing their investments from the business. It indicated that it would also limit the amount charged for the initial and ongoing monetary recommendation, as well as what clients pay to invest in their funds.
The series of changes, which will come into force from 2025, were introduced in July by the Financial Conduct Authority in the regulation on customer obligations.
Oil’s skyrocketing price has helped London regain the crown of Europe’s largest stock exchange from rival France, according to Bloomberg data, writes Andrew Michael.
Last autumn, the London Stock Exchange lost its most sensitive position to Paris in terms of market capitalisation. But a year later, calculations show that the length of the London Stock Exchange now stands at $2. 888. 4 billion, compared to $2. 887. 5 billion for Paris.
London has been boosted in recent weeks by its heavy exposure to “old economy” stocks, adding energy giants Shell and BP. The wholesale value of oil has risen due to cuts from sources across Russia and the Organization of the Petroleum Exporting Countries and, more recently, developing geopolitical turmoil in the Middle East.
In contrast, the Paris market has lost about $270 billion since its peak in April, with luxury brands in the country’s flagship index under pressure due to China’s economic slowdown.
The three largest companies in the CAC 40, the French stock exchange of London’s Footsie (LVMH Moët, Hennessy, Louis Vuitton, L’Oréal and Hermès International) are down 21%, 5% and 10% respectively.
Market commentators said the news that London has regained the top spot does not worry investors. Russ Mold, chief investment officer at AJ Bell, said: “From a prestige point of view, it would possibly make a difference and the same goes for a liquidity point of view. In other words, the ease with which You can buy and sell stocks and shares.
“But from a basic point of view, not really. If investors individualize stocks because they look at those companies’ competitive position, their control acumen, their monetary strength, and their operational performance, none of those points are affected by whether London’s market capitalization is higher than Paris’s, or vice versa.
Jason Hollands, chief executive of Bestinvest, said: “While this is making the headlines and will likely stoke a ding-dong on social media among others with strong criticism on both sides of the Brexit debate, it has no effect on investors. .
“The relative sizes of equity markets will jostle around, with the two major factors being exchange rate movements and differences in the mix of sectors that each market is exposed to and how they are performing at any given time.
“The UK market has a significant weight in energy and commodities, so the recent spike in oil costs has helped bolster its value. This is ultimately due to production cuts in Saudi Arabia and Russia, not domestic factors. “
In terms of global ranking, the World Federation of Stock Exchanges places London in ninth position and the New York Stock Exchange in first position with a market capitalization of $25 trillion. It is followed by the tech-focused Nasdaq index, with a price tag of $22 trillion.
China’s Shanghai Stock Exchange ($6. 7 trillion) and Japan’s Stock Exchange ($5. 9 trillion) are also among the top five.
Last month, British investors abandoned the “actively controlled” stock budget in favor of “passive” investments controlled through computers rather than human inventory pickers, writes Andrew Michael.
According to the most recent fund flow index from the global fund network Calastone, investors dumped £206 million from an actively controlled equity budget in September 2023, who prefer passively controlled portfolios, adding up the index’s budget.
Calastone said algorithm-based investments such as index funds attracted £1. 1 billion of investor inflows last month “as volatility in bond markets over the summer forced a review of stock market valuations. “
In recent days, in reaction to fears that loan prices will continue to rise for longer globally, a sustained sell-off in sovereign debt (adding UK bonds and US Treasuries) has seen some of those investments earn returns at degrees never seen before. currency crisis.
So far this year, entries to the passive budget amount to £5. 35 billion, a stark comparison to the £7 billion that has disappeared from the equity budget.
Across geographical sectors, equity funds that invest in the UK were the worst performers in terms of the largest outflows, according to the network. Last month, investors offloaded UK funds worth £448 million, the 28th consecutive occasion that portfolios invested in domestic stocks and shares suffered from net redemptions.
The environmental, social and governance (ESG) budget has also been hit by investors in months. September saw the fifth consecutive month of capital outflows, which Calastone described as a “clearly emerging trend. “
On a more positive note, the global budget remains the sector of choice for investors, attracting £981 million last month. In addition, the emerging market budget, which focuses on making investments in emerging economies, continued its most productive functionality since Calastone’s record for nine years. behind.
Edward Glyn, Head of Global Markets at Calastone, said: “Displeasure with UK equities is a structural trend that domestic and foreign investors are unwilling to break, despite demanding valuations. At the same time, capital flows to emerging markets in 2023 reflect hot prices after very steep declines from their 2021 peak. “
U. K. investors dumped the stock-exposed budget last month at its highest rate since last fall, opting to divert their cash to investments with cash-like characteristics, writes Andrew Michael.
According to the latest fund flow index from global fund network Calastone, investors dumped £1. 19bn worth of equities budget in August this year as the flight towards lower risk investments such as the market budget.
Calastone said the equity budget outflows in August were the seventh-worst month on record in nine years of recordkeeping. To fill this gap, the network said the species ended up in the so-called refuge budget.
These come with all-cash investments in the market, with the sector benefiting from an inflow of £673 million last month, the most on record since March 2020, which coincided with the start of the coronavirus pandemic.
Money market funds invest in portfolios of short-term cash deposits and high-quality bonds due to reach maturity within one or two years. They are promoted as a haven for investors to park their cash in times of market uncertainty.
While not risk-free, coin market funds are designed to provide a peak point of stability and liquidity, making them easy to sell, while also providing a return that is likely higher than that of a short-term coin deposit. Available from a bank or loan company.
Calastone reported that the U. K. ‘s stock budget took the lion’s share of withdrawals last month, with investors fleeing £811 million, the most since February this year. He added that August 2023 was the 27th consecutive month in which investors withdrew money from the UK-centric budget. .
Environmental, social and governance (ESG) budget outflows also reached £953 million net, the fourth consecutive month of outflows and bringing the overall outflows for May this year to £1. 96 billion. To put this sector in context, prior to 2023, a month had seen capital outflows since the start of the so-called ESG boom in early 2019.
Edward Glyn, head of global markets at Calastone, said: “Fear will be a big motivator in August. Discouraging economic data from the UK showed that core inflation proved resilient to interest rate increases.
“This has caused investors to turn to coin protection and coin market budgeting. With interest rates on savings and budget returns from the safe-haven coin market at their levels since 2007, it doesn’t take much to cause a rout.
“The move away from ESG budgeting has accelerated, a reversal of the boom of recent years. Four months of capital outflows signal the emergence of a new trend that fund control corporations will have to work to counter.
Brands
FTSE Russell, the global provider of stock indices, showed (Wednesday, August 30) that Mr.
As a result of the redesign, which adjusts the parts of the index according to their length measured through market capitalization, M
As part of the rebalancing, four companies leaving the FTSE 100 to join the second-tier FTSE 250 index are homebuilder Persimmon, fund watchdog Abrdn, insurer Hiscox and chemical company Johnson Matthey.
The redesign comes into effect at the close of business on Friday, September 15. From that point on, the so-called passive investment funds, intended to follow the functionality of the “Footsie”, will retire their holdings in the shares of the relegated and reposition their portfolios when the new additions officially come into force on Monday, September 18.
Originally dropped from the FTSE 100 in September 2019, M&S is enjoying a new lease of life following a recent transformation of the company. Boosted by its traditionally strong food business, in recent months the signs have also been positive for its revitalised clothing and home division.
Victoria Scholar, Chief Investment Officer at Interactive Investor, said: “Despite the cost-of-living crisis and feeling the pressure, M
“The company has effectively embarked on significant change under the leadership of Stuart Machin, involving the restructuring of its store fleet and investment in generation and e-commerce. ”
After being relegated from the Footsie at the height of the currency crisis in 2008, the company returned to the blue-chip index in 2013. But more recently, Persimmon found himself in the eye of the storm.
Richard Hunter, Head of Markets at Interactive Investor, said: “The asset structure industry as a whole has been in a shaky situation lately, and Persimmon’s specific exposure to first-time buyers offers further pressure. The company’s shares have fallen 19% in 2023, 39% in the following year, and 70% from the pre-pandemic high of £32. 30 in February 2020. “
UK-listed companies paid dividends of more than £26 billion ($31 billion) in the second quarter of this year, down about 12% from the same period in 2022, according to the most recent figures from investment company Janus Henderson, writes Andrew Michael.
Dividends are invoices to shareholders that companies typically pay twice a year from their profits. They are a vital source of income for investors, as part of a retirement plan strategy to supplement state pension entitlements.
Despite a drop in UK corporate payouts, the latest Janus Henderson Global Dividend Index indicated that overall global dividends reached a record high of £490 billion ($568 billion) between April and June this year, an increase of 4. 9% overall. to the runner-up quarter in 2022. Taking into account one-time special dividends and other factors, the investment company said the underlying expansion stood at 6. 3%, adding that most corporations (88%) either increased their bills or kept them strong at the time. fourth quarter of this year. (Read more here about why corporations pay dividends. )
Thanks to record payouts from companies in France, Germany and Switzerland, dividends from European companies increased overall by around a tenth in the second quarter of this year, reflecting strong profitability in 2022.
The most important driver for this region came from the higher dividends contributed by the banking sector, followed by those paid out by vehicle makers.Contributing to the figures, the UK banking giant HSBC restored its quarterly dividend for the first time since the start of the coronavirus pandemic in 2020 and at a higher level than many commentators had expected.
According to Janus Henderson, the bank is currently the world’s second-largest dividend payer, one position ahead of the Mercedes-Benz group and yet Nestlé, the Swiss-based food producer.
Looking ahead, and amid an expected slowdown in the global economic expansion for the rest of the year, the investment company expects payouts to reach $1. 64 trillion over the course of 2023.
Ben Lofthouse, Head of Global Equities at Janus Henderson, said: “Most regions and sectors are delivering dividends in line with our expectations. Markets now expect global earnings to remain flat this year, after hitting record highs in 2022. When communicating with corporations around the world, they are now more cautious about prospects.
Bitcoin’s value jumped more than 7% to roughly $28,000, after a U. S. court ruled that Bitcoin was not allowed to go to $28,000. The U. S. Supreme Court ruled that the country’s monetary regulator should reject a request through a virtual fund manager to release an exchange-traded fund (ETF) that tracks the value of the cryptocurrency Bitcoin. flagship token, writes Andrew Michael.
Asset watchdog firm Grayscale (Tuesday) obtained a landmark court ruling opposing the Securities and Exchange Commission (SEC) to convert its flagship vehicle, Grayscale Bitcoin Trust, into an ETF.
ETFs have become increasingly popular among investors in recent years, as they combine the features of buying stocks and shares directly with the benefits of holding more diversified mutual funds.
In Washington, D. C. , a federal appeals court ruled that the SEC, the U. S. equivalent of the U. K. ‘s Financial Conduct Authority, should dismiss Grayscale’s claim.
A panel of appeals court judges said the SEC’s rejection was arbitrary because it fails to distinguish the settlement difference between Bitcoin futures ETFs and spot Bitcoin ETFs. Futures are part of a broader diversity of complex investment and trading products known collectively as derivatives. ETF is an open-ended fund that can factor or redeem shares on demand.
The court case has come under scrutiny from the asset control and cryptocurrency industries that have long been seeking to convince the SEC to approve a spot Bitcoin ETF.
Both argue that such a fund would allow investors to gain exposure to Bitcoin, but without having to own it. But the regulator is concerned that Bitcoin ETFs may simply be vulnerable to manipulation.
The latest move puts pressure on the SEC after it introduced a series of enforcement actions this year against cryptocurrency providers Coinbase and Binance, the world’s largest cryptocurrency exchange.
The SEC said it was reviewing the court’s ruling and now has forty-five days to accept the ruling, seek review or appeal to the U. S. Supreme Court. Despite recent events, if Grayscale decides to file any further filings, lawyers said there is no guarantee of good luck as there is an option for the SEC to reject it on other grounds.
British retail investors are increasingly turning their backs on regionally-focused funds in favour of global equity portfolios, writes Andrew Michael.
Investors have funneled more than £50 billion into the budget whose blueprint has enabled them to invest in the world since 2015, while avoiding portfolios from the same era that are limited to holding UK stocks and holdings.
The most recent data from Calastone, the global budget network, has shown that over the past eight years, the global budget has recorded net inflows of £51. 3 billion.
By contrast, all other geographic fund sectors (adding up the recently undervalued UK-focused portfolios as well as those invested in Europe and Asia-Pacific) attracted a total of just £909 million of new capital.
Calastone said that, since the beginning of 2015, the global budget industry has noticed net outflows of money on average only once every 11 months. This compares to once every two months for the budget known across all other regional methods combined.
The trend in favour of global funds started to accelerate dramatically two years ago and, in part, has been fuelled by the popularity in ethically styled environmental, social and governance – or ESG – funds.
Since July 2021, global funds have experienced a net inflow of cash worth nearly £19 billion, while funds with a regional focus shed more than £21 billion over the same period.
Aimed at making an investment around the world rather than in a single country or region, the global budget will also offer investors the merit of potentially greater diversification.
In practice, however, global funds are often skewed to the US which has grown at roughly double the rate of the UK economy over the past 15 years, helped partly by the success of companies such as Apple, Microsoft, and Alphabet.
Calastone’s figures confirm recent trends that have seen domestic investors outside the UK looking for investment opportunities elsewhere.
Separate figures from the Investment Association (IA) show that a decade ago, the price of the budget allocated to an investment in UK corporations was double that invested in the overall budget. By May this year, the scenario had changed, with £166 billion retained in the global budget. , compared to £140 billion exposed in domestic portfolios.
Edward Glyn, Director of Global Markets at Calastone, said: “There is a clear logic in opting for a global budget. Many of the world’s most successful corporations operate globally, so it does not matter where they are listed. The global budget allows investors gain exposure to those stocks.
“They also prevent investors from having to pick and choose winning regions: retail investors lack the time and expertise to know which regions of the world are emerging and which are growing. “
Online payments company PayPal will sell cryptocurrencies on its platform for at least 3 months starting October 1, writes Mark Hooson.
In a message to consumers today, Aug. 15, PayPal said it will resume cryptocurrency sales until an anonymous date “in early 2024,” while taking steps to comply with new Financial Conduct Authority (FCA) rules.
In the meantime, PayPal says, consumers will continue to sell or hold their cryptocurrencies on the platform while introducing more steps in the procurement procedure to comply with regulatory requirements.
The post refers to a set of measures through the FCA and the Advertising Standards Authority planned for Oct. 8, under which crypto firms will have to introduce transparent threat warnings and allow a 24-hour cooling-off period to give new consumers time to think. your decision.
Last week, PayPal announced the upcoming launch of its own U. S. dollar-pegged stablecoin, PayPal USD (PYUSD), which will allow U. S. consumers to send and transfer PYUSD to others and pay for secure online purchases.
PYUSD is a stablecoin, meaning its price is pegged to a fiat currency, in this case the US dollar. Therefore, the price of one PYUSD deserves to be the same as the price of 1 dollar.
The stablecoin is issued through the Paxos Trust Company, an authorized limited target that is accepted as valid for the company.
PayPal, which has allowed users to trade other cryptocurrencies such as Bitcoin on its platform since 2020, says PayPal USD will be available in the coming weeks. It is unclear if or when PYUSD could be introduced in the UK.
Today’s announcement from PayPal shows how the industry is responding to what has been a year of increased regulatory scrutiny and influence over cryptocurrencies.
Several banks have this year imposed limits on how much their customers can spend each day on crypto exchanges. In some cases, payments have stopped altogether. For example, Nationwide will block payments to Binance.
HSBC, Nationwide, NatWest and First Direct are among the banks that have imposed limits on cryptocurrencies in direct reaction to the warnings issued by the FCA. However, limits can be as high as £5,000 per day.
Introducing its daily limit of £1,000 in March, NatWest said £329 million was lost due to crypto scams in 2022, with men over the age of 35 at most at risk.
Online investment service Bestinvest has flagged an investment budget of around £50bn as consistently underperforming “dogs”, writes Andrew Michael.
The company learned of an underperforming budget value of £46. 2 billion in total, a significant increase over budget value 44 of just under £20 billion revealed through previous Bestinvest searches six months ago.
The firm’s Spot the Dog research defines a “dog” fund as a fund that fails to outperform its investment benchmark for 3 consecutive 12-month periods and also underperforms its benchmark by 5% or more over a 3-year period.
A benchmark is a stock index such as the UK’s FTSE 100 or the S
Global equity markets are off to a better start to 2023 than last year’s poor performances. But Bestinvest said it has squeezed more budget into its “niche” because most of the profits come from a handful of very giant corporations that profit from the burgeoning synthetic intelligence sector. than a broader resurgence of business performance.
The global budget sector recorded the number of dog budgets, with 24 lagging, compared to 11 reported six months ago. These were budgets that were either not exposed to the successes of the “mega-caps” or had a lower weighting relative to the benchmarks against which they are measured.
Bestinvest said: “Even if experienced investors are content with short-term markets being affected by existing economic challenges, i. e. emerging interest rates and peak inflation, they will be less accommodative if they later realise that their investments have performed even worse than the markets. in which it invests its budget. ‘
Bestinvest rated Baillie Gifford’s Global Discovery fund as the worst-performing portfolio overall, having posted a three-year record underperformance of -70%. St James’s Place has been described as the worst acting director with a budget of almost £30 billion “with his footprints on six depressing dogs”.
Jason Hollands, Bestinvest managing director, said: “Every fund manager will go through weaker periods, whether that is a run of bad luck, or they are sticking to a style or process that may be temporarily out of fashion. Identifying whether these are short-term or structural factors is key and investors should ask some questions before deciding to stick with a fund or switch.
“This includes if a fund is too large, which can limit its agility, or if sophisticated but significant adjustments have been made to the control equipment. Also, is the manager moving away from an approach that was once effective, or is it now?burdened with more responsibilities? »
Global equity stocks and equity budgeting were definitely held in the first six months of this year, with a portfolio benefiting in particular from the existing synthetic intelligence (AI) boom, writes Andrew Michael.
According to the most recent figures from FE Fundinfo, the five best-performing global equity budgets generated returns of more than 28% between January and June this year, with L’s synthetic intelligence fund generating returns of more than 28% between January and June this year.
The prospect of AI (computational processes that mimic the movements of humans) has sparked a race among American tech giants to be at the forefront of this technological revolution.
The other global stocks that performed were: PGIM Jennison Global Opportunities (31. 7%); Xtrackers MSCI World Consumer Discretionary (28. 7%); SSGA SPDR MSCI World Consumer Discretionary (28. 7%); and MS INVF Global Opportunity (28. 3%).
FE Fundinfo said other fund sectors that have performed well so far this year are global emerging markets, where the most productive operating fund was Artisan Emerging Markets with a six-month return of 14%, and UK All Companies, where Liontrust UK’s focal fund was the most productive with a 12. 9% recovery.
The knowledge provider added that the sector with the best performance was the generation and technological innovation, whose budget produced an average decline of 24. 8% between January and June of this year. He said, “This sector has demonstrated remarkable expansion and has outperformed other sectors in this era. “thanks to the AI revolution. “
Next came Latin America, where funds achieved an average return of 11.9%, followed by North America with 8.3%.Charles Younes, head of manager selection, FE Investments, said: “Throughout the first half of 2023, the top-performing funds have consistently demonstrated their expertise in their respective investment categories. These funds have delivered impressive returns, showcasing their strong performance, robust strategies, and ability to generate substantial growth for our investors.”
The Financial Conduct Authority (FCA) is tightening regulations governing the promotion of monetary and social media products, adding a crackdown on influencers, writes Andrew Michael.
The FCA says social media has become an increasingly important channel for companies looking to promote their products and communicate with their customers more speedily and effectively.
But he cautioned that the complex nature of money means that low-quality, large-scale promotions on social media, particularly in relation to investment and credit products, can lead to “significant harm to consumers. “
To counter this, it has launched an eight-week consultation to determine tougher guidance, saying that Brits searching social platforms for financial advice are likely to have found “unfair, unclear, or misleading marketing”.
Finfluencers (Americans or accounts with a large following) have become increasingly popular as families struggle with the challenge of the burden of life. The most productive influencers have a large follower base of hundreds of thousands on platforms like TikTok and YouTube.
The FCA said: “Often those influencers have little wisdom about what they are promoting. This lack of expertise is reflected in the sheer number of promotions that are illegal or shoddy, making it more likely that consumers will see poor quality data on social media.
Last year, the regulator ordered companies to replace or remove nearly 10,000 promotions, nearly 15 times more than in 2021. During the same period, it also issued 1,900 customer alerts related to potential scammers, an increase of more than a third from the past. 12 months. Womb
The regulator has also highlighted examples of misleading or unclear adverts failing to communicate the risks of a product. This included the use of TikTok to promote debt counselling and a buy-now-pay-later Instagram advert that failed to explain the risks associated with unregulated credit.
According to the FCA, nearly 60% of under-40s who invested in high-risk products in 2021 said they had based their decisions on social media posts. Research from consultancy MRM shows that almost three-quarters of young people say they trust information provided by social media influencers.
Lucy Castledine at the FCA, said: “We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm. We want people to stay on the right side of our rules, so we’re updating our guidance to clarify what we expect of firms when marketing financial products online.
“And for those who promote products illegally, we will take action against you. “
Myron Jobson of interactive investor said: “The advent of finfluencers is a headache for the regulator. The credentials of many finfluencers are weak at best, if they exist at all. But there are also a number of well-versed and highly qualified financial professionals on social media offering solid guidance.”
The regulator’s latest initiative aimed at shoring up protection for consumers comes in the wake of a multi-pronged strategy touching all aspects of the financial services market.
From July 31 this year, the FCA will introduce a broad “duty to consume” for money service providers in the UK, with the aim of helping consumers make “sound money decisions”.
Venetia Jackson, a financial services attorney at Pinsent Masons, says, “Consumer duty puts consumers at the center of a company’s thinking. If implemented effectively, it means consumers will have the same confidence when they buy their monetary products as they do when they do. “purchases for their homes.
Later in 2023, the watchdog will also implement a new set of advertising regulations targeting crypto corporations that market to UK consumers.
Starting Oct. 8, this will involve banning incentives to invest in crypto assets, such as “refer-a-friend” bonuses. Crypto corporations are also introducing transparent threat warnings and a 24-hour era of reflection to give investors time to think about their decision.
The FCA regularly describes crypto assets as “risky”, warning would-be investors that they could lose all their money when speculating in this sector.
The UK’s monetary regulator, the Financial Conduct Authority (FCA), has written to dozens of investment platforms to find out how much of the interest they get on money and bank deposits is passed on to their customers, writes Andrew Michael.
The FCA’s letter to “some 40” self-invested investment platforms and pension providers was described by the regulator as a “request for specific knowledge”. The correspondence included asking vendors about the main points about “changing visitors’ interests. “
It is the difference between the interest that providers pay to their consumers who have deposited coins in them and the amount that providers earn after making an investment in coins in the currency markets.
Platforms typically pay interest between 1% and 2% on clients’ cash balances in general investment accounts. But with the Bank of England’s Bank Rate currently standing at 5%, analysts say that providers in this sector can retain hundreds of millions of pounds for themselves from the practice over the course of a year.
The regulator’s resolution to touch investment platforms follows a broader initiative that saw major banks summoned through the watchdog to justify the low interest rates paid through their easily accessible savings accounts.
The regulator said that consumers are feeling the squeeze from rising prices and regular increases to the cost of borrowing. It added that customers should be treated fairly when it comes to the interest they receive from financial products and that this applied as much to cash being held on investment platforms as it did to bank accounts.
An FCA spokesperson said: “We’re currently in a climate of rising interest rates. What we’re trying to do here is put in place a series of measures to ensure that customers receive both value for money from providers and a fair amount on their cash – whether that’s held in bank deposits or via investing and pension accounts.”
The spokesperson added that the FCA would analyse the data it received from platform providers and “could use a number of metrics to determine whether the amounts being passed on to consumers are fair and offer value for money”.
In recent years, there has been a significant increase in the number of independent investors in the UK managing their investments and pensions, online investment platforms, and mobile trading apps. That number now stands at around nine million users.
Later this month, on July 31, the FCA will impose a broad “consumer duty” on money service providers in the UK that will “focus on supporting and empowering their consumers to make sound monetary decisions. “
The regulator asked the platforms how they would manage retained interests in light of the new rules. It is believed that providers had until July 27 this year to respond to the data request.
Given the proximity of the new client obligation regime at that date, the FCA rejected the claim that it had been slow to address the investment platforms factor and the amount of interest they pay to clients.
The Treasury is consulting on plans to create an environment that paves the way for virtual securities, such as the long-debated central bank virtual currency (CBDC).
The Digital Securities Sandbox (DSS) would allow developers to test new infrastructure for digital assets under temporary modifications to existing legislation, and with the power to change legislative frameworks as the tests proceed.
The sandbox would be the UK’s first Financial Market Infrastructure (FMI) sandbox, made possible by the recently passed Financial Services and Markets Act.
A CBDC is a state-issued virtual currency that does not use coins or banknotes, with transactions recorded on an encrypted ledger. As a state-backed currency, a CBDC would be exactly the same price as physical silver. So, £10 in the form of CBDC would be the same price as a £10 note.
According to a survey conducted by the Bank for International Settlements (BIS), 93% of central banks are powered by a CBDC.
Treasury has perspectives on the DSS consultation (located here) over the next month.
Meanwhile, British multinational bank Standard Chartered has revised its outlook for Bitcoin. In April, the bank predicted that BTC would reach $100,000 (£77,000) by the end of 2024, but now predicts that the leading cryptocurrency will reach $120,000 (£93,000) by that time.
According to Reuters, a report through Standard Chartered Bank said this week that bitcoin miners who are lately minting the 900 new bitcoins produced each day will soon have to sell less to cover their energy and IT costs.
One of its top currency analysts, Geoff Kendrick, estimated that even if miners sell 100 percent of their new coins, they could start owning 70 to 80 percent of the coins if the value reaches $50,000.
Bitcoin is trading lately at $30,418 (£23,556), down from last week’s high of $31,395 (£24,313).
Speculations about the long-term price of Bitcoin have been increasing as time runs out until next year’s “halving. “Starting in April 2024, the amount of BTC awarded to miners for effectively adding a block to the blockchain will be halved, from 6. 25 BTC to 3,125 BTC.
The effective compression of Bitcoin’s origin rate is expected to increase costs until then.
Last month, UK investors exited the budget exposed to stocks and equities at their fastest rate since last year’s debatable mini-budget, replacing them with fixed-income investments and those with cash-like characteristics, writes Andrew Michael.
According to the latest fund flow index from global fund network Calastone, investors ditched the equity budget to £662 million in June this year, as the flight to lower-risk investments such as bonds and market budgets accelerated.
Calastone said last month’s exit from the equity budget was one of the worst on record. He added that the coins collected “went directly to the constant source of revenue budget, which saw net inflows of £880 million, and the coin markets, which saw net inflows of £503 million. “
Fixed-source income investments tend to have a lower risk profile than the classic stock budget and come with assets such as bonds: loans made through investors to governments and companies in exchange for interest payments and, possibly, a repayment of principal.
Money market funds, which invest in portfolios of short-term cash deposits and high-quality bonds due to reach maturity within one or two years, are also promoted as low-risk investments and are regarded as a haven for investors to park their cash in times of market uncertainty.
Calastone reported that UK equities bore the brunt of withdrawals last month with investors pulling out £612 million, the 25th consecutive month of net-selling. Outflows from environmental, social and governance, or ESG-themed funds, also cranked up to a net £369 million – the worst month on record for the sector, and only the third month of outflows.
Edward Glyn, Head of Global Markets at Calastone, said: “The fixed-source budget and its cash market cousins haven’t looked this attractive since before the global currency crisis. At the same time, recession fears are weighing on inventory and real estate markets. “Investors are nervous, and the result is a flight to safety.
“Money markets currently enable investors to earn an income of 5% or more at very low risk, while fixed income funds, which invest in longer-dated bonds than money market ones, offer the chance to lock into the highest yields in years.”
Litecoin (LTC), one of the world’s largest altcoins, hit a 12-month high in recent days before major adjustments to the way its miners are rewarded.
Altcoins are coins other than Bitcoin, the major cryptocurrency. Miners earn coins in return for validating transactions in the respective blockchain.
LTC reached £87.50 yesterday, 2 July, up more than 122% on the same date last year and beating its previous peak of £85.39 in February.
The altcoin, which has a market capitalisation of £6 billion, began to emerge in mid-June when it was trading at £57. 74. Over the next two weeks, LTC jumped about 51%.
The reason for this recent rally is that we are about a month away from Litecoin’s next “halving,” an event that only happens once every four years.
Like many cryptocurrencies, Litecoin miners who take part in validating transactions and adding them to the blockchain are in with a chance of earning a reward for their time and effort.
Litecoin miners are currently rewarded 12.5 LTC for every block of transactions they add to the blockchain. However, this will change between 4 and 8 August (depending on network conditions). From that point onwards, the reward will be halved to 6.25 LTC.
With next month’s halving of Litecoin’s origin fee, this will most likely disappoint the balance between altcoin source and demand and put upward pressure on its price.
A similar trend emerged ahead of Litecoin’s previous halving, in August 2019. In the seven months prior to that halving, the altcoin went from trading at around £25 to around £107 in July of that year. However, LTC had fallen back down to around £30 by the following January.
U. K. government bond yields hit their levels since 2008 earlier this week as investors bet that U. K. interest rates would continue to rise, writes Andrew Michael.
UK government bonds, known as gilts, are loans issued by the government when it needs to borrow money. The nominal interest rate is fixed at the time the bond is issued, but because the value of the bond itself can fluctuate, the actual yield varies. .
For example, a £100 bond might have an interest rate, called a coupon, of 5%, meaning the bondholder receives £5 per year. If the holder will pay less than £100 to get the bonus, the return is well above 5%.
This applies the other way around if the acquisition costs £100, so returns can be said to move in the opposite direction to the price.
Yields have risen in recent weeks as costs have fallen. On Tuesday, yields surpassed a point recently reached after last September’s controversial mini-budget, announced through then-Prime Minister Liz Truss.
At the time, the Bank of England was forced to take emergency action in the bond markets, amid turbulence that led to a sharp increase in the public debt burden.
On Tuesday, the yield on two-year government bonds rose by 19 core issues to 4. 83% as the value of government debt fell. Last fall, the yield on two-year bonds peaked at 4. 64%.
The rise in returns came after ONS data showed annual growth in wages and bonuses rose 7. 2% in the year to April, up from 6. 8% the previous month.
The strong wage data is mainly due to 8. 7% inflation in the UK in April, suggesting that UK value inflation is slowing down to return to headline levels more slowly than the Bank of England had predicted.
The figures also showed that employment rose to 250,000, up from a forecast of 162,000, confirming the view that the UK economy is not slowing enough for the Bank of England to halt the speed of its financial tightening.
Susannah Streeter, head of markets at Hargreaves Lansdown, said wages “risk deepening inflationary fires and reinforcing expectations that the Bank of England will want to keep raising interest rates. “
Yael Safin, lead economist at KPMG, said: “If there was any doubt about the direction of financial policy, this knowledge would warrant another interest rate hike from the Bank of England next week and most likely more in the coming months. “
The Bank’s rate-setting resolution will be announced on Thursday, June 22.
Shilen Shah, head of steady income at Investec Wealth & Investment, said: “The rise in bond yields is not unforeseen given recent data releases implying underlying inflation pressures remain elevated. We continue to see prices on short-term government bonds, given the traditionally maximum yields available.
James Lynch, steady source of income manager at Aegon Asset Management, said: “The cases for why two-year bond yields have more or less the same diversity as they did in September last year are completely different. [In 2022] the British pound collapsed less than £1. 07 per US dollar as investors lost confidence in the UK’s sense of fiscal responsibility.
“The explanation for why two-year government bond yields have risen has to do with the market’s knowledge and interpretation of the Bank of England’s reaction [to inflation], not with fiscal responsibility. The knowledge was more powerful in the measures that the Bank is most interested in: inflation and salaries. The salary knowledge of the ONS was surprising, with personal sector salaries reaching an annualized rate of up to 10% in the last 3 months.
The s
Boosted by gains in major technology stocks, the index – a bellwether reflecting the wider US stock market – closed up 0.6% at 4,293.93. The tech-heavy Nasdaq 100 index also enjoyed a good day, with a rise of 1.3%
The recent performance of the S&P 500 has been in stark contrast to the two-year closing low of 3,577.03 to which the index sank on 12 October last year, when the country, along with other major economies, was gripped in a period of stubbornly high inflation and challenging trading conditions.
Yesterday, the S.
Markets have remained buoyant in recent months, with investing sectors such as tech and media having rebounded from a disastrous 2022 on the hope that the worst is over.
Russ Mold, chief investment officer at AJ Bell, said: “After a dismal 2022 for US equities overall, investors are pleased to have returned to their previous form. After all, this component of the market has made many rich. other people in the ten years since the global currency crisis, it is very likely that many portfolios in the UK will have maximum exposure to the United States.
In recent months, the advancement of synthetic intelligence (AI) has given further impetus to generation stocks that dominate the S.
From self-driving cars to surgical robots, AI is helping primary spaces in people’s lives. The potential opportunity created through this high-growth, multi-billion pound market has sparked a wave of investment and corporate interest in corporations operating in this area.
Investment funds specialising in AI are also attracting increasing interest from investors.
Russ Mould, investment director at AJ Bell, said: “The US index has now risen 20% from its most recent low, driven by the likes of Nvidia which is seen as the ultimate play on artificial intelligence and Meta Platforms which has stripped out costs through job cuts and enjoyed stronger than expected earnings.
“The key question is what happens next. With many signs suggesting that we may soon see a recession, investors will be wondering whether they should rely on the recent gains in U. S. stocks or stand still and hope that any economic crisis is only superficial and quick to resolve.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “If you look at where the market is right now in absolute terms, it’s not too hard to show that it’s justified at existing levels. The fear lies in the speed at which it grows and the concentration on a small number of decided names. A pause in rates with an option for further hikes in the future.
New cryptocurrency investors will have a 24-hour cooling-off period during which they can replace their brain about their trading, according to new regulations issued through the UK’s currency watchdog, writes Mark Hooson.
The Financial Conduct Authority (FCA) has set strict new marketing regulations for crypto corporations that will come into effect on Oct. 8. The FCA’s crackdown, which falls short of fully regulating the crypto sector, aims to make certain buyers aware of the dangers involved.
The watchdog wants people to have “the wisdom and pleasure of investing in cryptocurrencies” and expects those selling crypto assets to set risk warnings and for their ads to be clear, fair and not misleading.
Another regulator, the Advertising Standards Authority (ASA), has already banned several crypto classified ads because they are irresponsible or misleading. This includes posters from crypto exchange Luno, which told consumers in 2021 that “it’s time to buy Bitcoin” without transparent warnings. about the risks.
From October, the FCA says marketing material must include risk warnings to the effect of: “Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.”
Under the new rules, crypto marketplaces will no longer offer monetary incentives to consumers who refer them to a friend.
The new cooling will mean that consumers will have to wait 24 hours after the directory on an exchange before they can make their first trade.
The FCA’s Sheldon Mills said: “It’s up to other people to buy crypto. But studies show that many regret making a hasty decision. Our regulations give other people the proper time and warnings about the dangers to make an informed decision.
“Consumers deserve to be aware that cryptocurrencies remain largely unregulated and high-risk. Investors deserve to be prepared to lose all their money.
Dan Moczulski, head of trading platform eToro in the UK, said that regulation of the crypto sector wants to strike the right balance: “We want to make sure that efforts to ensure that clients don’t have the accidental result of making offshore business more available and attractive. . This would not be for British customers.
The FCA announcement keeps the regulatory spotlight on the crypto market, after a Treasury select committee of MPs last month recommended the industry be regulated in the same way as gambling, saying it has “no intrinsic value” and serves “no useful social purpose”.
David Ostojitsch, spokesperson for the Personal Investment Management & Financial Advice Association, said there is a danger that the new rules will create a ‘halo effect’ that benefits the crypto market: “There is clearly a future role for crypto assets, but only if they are marketed appropriately and to the right people.
“Crypto assets are unregulated, highly volatile, and therefore pose a huge threat and only deserve to be invested through complicated investors who perceive the threat they are taking, not through mass-market investors. Here there is a significant threat that consumers will assume that crypto assets are crypto assets because they are advertised through an FCA-regulated user or company. Again, we must emphasize that this is not the case.
The US Securities and Exchange Commission (SEC) has filed a lawsuit against crypto exchange Coinbase for violating securities laws, a day after launching legal proceedings against its rival Binance, writes Mark Hooson.
Today’s filing in the Southern District of New York alleges that Coinbase never officially registered as a broker-dealer, national stock exchange, or clearing agency, and presented its consumers with unregistered securities its staking program as a service.
The filing reads: “Since at least 2019, Coinbase has made billions of dollars by illegally facilitating the purchase and promotion of crypto-asset securities.
“The SEC alleges that Coinbase interweaves the classics of an exchange, a broker-dealer, and a clearing firm without having registered any of those purposes with the Commission as required by law. “
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said: “You can’t forget about regulations because you don’t like them or because you prefer others – the consequences for taking an investment public are too great. »
The SEC’s lawsuit seeks “injunctive relief, return of ill-gotten gains plus interest, consequences, and equitable relief. “
In response, Paul Grewal, Coinbase’s legal counsel and general counsel, said: “The SEC’s reliance on a purely coercive method in the absence of transparent regulations for the virtual asset industry hurts the economic competitiveness of the United States and corporations like Coinbase that have a demonstrated commitment to compliance.
“The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual”
Binance, one of the world’s crypto exchanges, is being sued for allegedly mishandling visitor deposits and lying to investors.
The U. S. Securities and Exchange Commissionaccuses Binance of combining billions of dollars of visitors with the company’s revenue, in violation of U. S. currency rules. U. S.
The Commission also claims that Binance, which has around 100 million users worldwide, secretly sent its customers’ budgets to a separate organization, Merit Peak Limited, controlled through Binance founder Changpeng Zhao.
The 136-page filing additionally claims the exchange misled both investors and regulators about its ability to detect manipulative trading, and did not do enough to restrict US investors from accessing Binance’s unregulated, international platform.
U. S. consumers are expected to use their local, regulated platform, Binance. us
The lawsuit, filed in Federal District Court in Washington, says the exchange and Mr Zhao “enriched themselves by billions of US dollars while placing investors’ assets at significant risk.”
The thirteen counts in the case relate to the restitution and disqualification of Zhao from serving as an officer or director of any registered entity that issues securities.
Binance responded to the filing in a blog post, writing: “We are disappointed that the US Securities and Exchange Commission chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief.
“From the start, we have actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns.”
Arguing that the allegations justified coercive measures, Binance accused the Commission of undermining the United States’ role as a global hub for monetary innovation.
It’s been a tumultuous year for Binance. In March, The US Commodity Futures Trading Commission (CFTC) said Binance had failed to properly register with relevant authorities and had broken rules designed to tackle money laundering.
The legal filing said Binance operated using an “intentionally opaque” global corporate structure to minimise regulatory scrutiny and maximise profits.
Laith Khalaf, head of investment research at AJ Bell, said: “The physically powerful language used through the SEC, coupled with the long list of allegations, suggests that this new fiasco aimed at gobbling up the crypto market will continue for some time. Bitcoin’s value has plummeted in the wake of the news, and right now, it looks like the crypto bubble is dying after thousands of punctures.
“Cryptocurrencies are a very volatile asset in a loosely regulated market, so investors want to be prepared to accept a variety of threats before jumping in. Cryptocurrencies pose threats to consumers. Frauds and scams are common, however Even if you are purchasing valid cryptocurrencies, the greatest apparent threat is the possibility of significant losses.
“The UK Financial Conduct Authority suggests it’s seeing increasing evidence of addictive behaviour from some crypto traders, and there may be some lessons that can be learned from the gambling industry in terms of how to manage this, for instance identifying such behaviour and potentially putting transactional limits on some accounts.
“But the golden rule for crypto buyers remains not to invest money that they are not willing to lose in full. “
IMI, the Birmingham-based engineering firm formerly known as Imperial Metal Industries, joins the FTSE 100’s list of UK index companies, writes Andrew Michael.
Conversely, the British Land real estate company has lost its position in the UK’s blue-chip primary stock index.
The new quarterly reshuffle, announced through index compiler FTSE Russell, will begin at the close of trading on Friday, June 16 and will take place when markets open on Monday, June 19.
WE Soda, the world’s largest manufacturer of herbal laundry detergents, will be listed on the London Stock Exchange in a bid to enhance the market’s reputation to attract giant companies.
London’s largest IPO is expected to take place later this year. If that move comes to fruition, the valuation of likely between £5 billion and £7 billion would put the company among the 80 or so largest UK companies indexed on the stock exchange and propel it straight into the FTSE 100.
Changes in major stock indices, such as the FTSE 100 in London and the S
From mid-June, index trackers and ETFs – both designed to mimic the performance of the ‘Footsie’ – will withdraw their positions in the relegated company’s stock and adjust their holdings to accommodate the new incumbent.
Each quarter, FTSE Russell analyzes each of the indices it compiles to see if any of the companies are declining or rising.
For a company to join the FTSE 100, it has to have a market capitalisation – the number of its shares multiplied by share price – that would place it in the top 90 by size.
To exit the FTSE 100, a company’s market capitalisation would have to be less than that of the 110th largest company on the UK stock market.
These widened barriers prevent corporations from continuously bouncing between the FTSE 100 and the FTSE 250, which represents the UK’s next 250 largest corporations.
Susannah Streeter, Head of FX and Markets at Hargreaves Lansdown, said: “IMI has noted its percentage value by more than 23% year-to-date and raised its full-year earnings forecast after strong functionality in the first quarter of 2023. . »
The Financial Conduct Authority urges young people to adopt the same method for investing as for dating, writes Andrew Michael.
An FCA study of 1,000 investors aged 18 to 40 who also use online dating found that when it comes to dating, they think longer-term and are less influenced by social media than when it comes to investing.
Nearly a portion (48%) of respondents said they were dating a potential life partner, but the same group said their investment clients were significantly lower.
According to the FCA, only 2% of respondents said they had worked for an investment period of more than five years, while one in seven (14%) said they had invested some period of time in mind.
The FCA also found that other people were 18% more likely to be influenced by social media when making investment decisions in their dating choices.
The study, conducted as part of the FCA’s InvestSmart campaign, also looked at how young investors would react to a “red flag” on the date and timing of investing.
Potential red flags include someone on a date either arriving late or being rude to waiting staff, while in the context of investing, this applied to having difficulty withdrawing money from an investment, or where an investment opportunity was only available for a short time.
The FCA said men would be more likely to go ahead with a date despite a red flag (49% vs. 39% of women) and would also be more likely to go ahead with an investment, even after identifying a cautionary sign (39% of men vs. men). 28% of women).
Browsing a prospective date’s social media proved to be the most popular way to prepare for a date (57%), although a third (33%) said they could forget about hype about a potential partner’s social profile. . By contrast, only a fifth of respondents (20%) said they might forget about the buzz around investing.
The findings come a week before the FCA is due to partner with Celebs Go Dating’s Anna Williamson to host an occasion for young investors Swipe Left, Invest Right: How Dating Principles Can Be Applied to Investing, to inspire them to adopt the same principles. principles as they do in meetings.
Lucy Castledine, director, consumer investments at the FCA, said: “We have seen the temptation of high-risk investments increase as consumers balance stretched household finances against the immediate thrill of a quick return. But this may mean investors are ignoring the red flags.
“We need investors to rethink their approach by spotting similarities to their own love lives and applying the same mindset, thinking long-term, doing research, and prioritizing values that align with theirs. “
Vanessa Eve, investment manager at Quilter Cheviot, said: “The advance of technology and the fact everything is now just a touch of a button away means we interact with our love life in a very similar way to our investments.
“What is quite evident from this knowledge is the fact that only 2% of young investors have a time horizon of more than five years to invest, while 14% have none. Investing is long-term and not a way to get rich. Quick plan. In fact, returns can be life-changing if someone is willing to take a break for at least five years, but preferably much longer to see the true effects of compounding.
The International Organization of Securities Commissions (IOSCO), the international financial markets watchdog, is aiming to protect investors with a global approach to the regulation of crypto asset and digital markets, writes Andrew Michael.
Its consultation procedure proposes an 18-point plan that would place barriers around the crypto investment sector. The UK’s regulator, the Financial Conduct Authority, is a member of IOSCO.
Today’s announcement comes on the heels of last year’s collapse of major cryptocurrency exchange FTX. In March of this year, FTX founder Sam Bankman-Fried was accused of bribing Chinese government officials in the amount of $40 million.
The bribery charge came on top of a dozen counts already faced by the former FTX boss, whose company failed last November after it was unable to meet a wave of withdrawal demands from customers.
FTX’s demise sent shockwaves not just through the crypto industry but also the wider financial system as the large number of diverse firms owed money by the exchange became apparent.
At present, the global crypto industry operates with a patchwork of regulations where other jurisdictions impose their own rules.
In the UK, for example – where 1 in 10 adults is estimated to hold crypto assets – the Financial Conduct Authority takes a dim view of the sector, issuing regular warnings to consumers about the potential for total loss in connection with any investments they make.
Last week, lawmakers on the Treasury Select Committee said that cryptocurrency trading had “no useful social purpose,” adding that the asset’s elegance contained “no intrinsic value. “The committee called for the sector to be regulated in the same way as gambling.
Jean-Paul Servais, President of IOSCO, said: “Now is the time to put an end to the regulatory uncertainty that characterizes crypto activities. It’s time for regulators to work together across borders and jurisdictions to make investor coverage and market integrity reputable in crypto-asset markets.
Susannah Streeter, head of forex and markets at Hargreaves Lansdown, said: “This move by IOSCO is aimed at protective investors, but it will also propel crypto into the mainstream. As it turns out, Bitcoin has been boosted by news of this concerted effort for industry, with an increase of more than 2%.
Bitcoin, the most high-profile of all the many thousands of cryptocurrencies, has gained 64% since the start of the year, largely recovering from the sharp falls it suffered in the back half of 2022.
The consultation procedure ends on 31 July 2023 and IOSCO will finalise its recommendations by the end of this year.
Unless Congress reaches a deal to raise the country’s debt limit, the U. S. government is on the verge of running out of money, which could cause global monetary chaos as the world’s largest economy is unable to pay its debts, writes Andrew Michael.
U. S. politicians have been locked in a debate for weeks over whether to lift or suspend the country’s so-called “debt ceiling,” which dictates how much cash the U. S. government can borrow.
Also known as the debt limit, this is effectively a fiscal line in the sand that restricts the total amount of money the US government can borrow to meet its bills. These cover everything from federal workers’ pay cheques, the military, Social Security and Medicare, to meeting interest obligations on existing national debt, to tax refunds.
This limit has parallels with the tax regulations set in the UK by the Chancellor of the Exchequer. In the United States, however, the limit is set from the outside and independently of decisions about the amount of government spending and the level of taxation. .
Currently, the ceiling stands at just over $31 trillion. That figure was surpassed earlier this year, when the U. S. Treasury Department implemented “extraordinary measures” to provide the government with more liquidity and buy time to find a solution.
Treasury Secretary Janet Yellen has warned that if broad negotiations between Democrats and Republicans are concluded quickly, the U. S. leadership will have enough cash to pay its debts as early as June 1.
Political wrangling came to a head this week when the US president, Joe Biden, met with Republican House Speaker, Kevin McCarthy, to continue the high-stakes budget negotiations.
But if “Date
On the one hand, the U. S. would not pay its federal workers or military personnel, while businesses and organizations that rely on state investment would also be in monetary jeopardy.
At the same time, the country would technically default and possibly not be able to fulfill purchases of Treasuries and Treasuries (the United States’ bonds issued by the British government).
Commentators describe a full-blown default as an unprecedented occasion with far-reaching consequences. In theory, if the U. S. defaulted on its debts for the first time in history, it would cause the value of its government-backed debt to plummet.
U. S. debt is widely regarded as the safest asset in the global monetary system. Most of it, just over two-thirds, is held by local establishments such as the Federal Reserve and in the retirement budget and mutual budget.
However, about one-third is foreign-owned, with Japan being the largest holder with around $1. 1 trillion. In addition, China has only about $900 billion in U. S. debt, while the U. K. ‘s figure is about $650 billion.
If the US were to default this could prompt a large spike in borrowing costs in the country which, in turn, would likely have ramifications for borrowing costs around the world.
Ryan Brandham, Head of Global Capital Markets for North America at Validus Risk Management, said: “Many of the problems facing the United States today, such as widening wealth gaps, social unrest, inflation problems, money printing, exploding public debt, and the weakening ability to pay domestic and external obligations have been linked to the fall of difficult empires in the United States. history, going back at least to the Roman Empire, so the threat is real.
The Organisation for Economic Co-operation and Development said: “Failure to reach an agreement would result in more severe macroeconomic shocks given the current duration of the federal budget deficit and the moves needed to close it quickly. “
According to Schroders: “The x-date would mark the point at which the Treasury runs out of funds. After disappointing tax receipts for 2022, much now hinges on how revenue shapes up through May. If this can sustain the government into mid-June, when quarterly tax payments are due, the Treasury is likely to be able to make it through much of July and perhaps even to August.”
In this context, Schroders adds that his message to investors is to hope for success, but plan for failure: “Wherever possible, portfolios deserve to be liquid and diversified to ensure that capital can be temporarily redeployed, given the volatility seen in past episodes of debt limits. . the tightrope. “
Lawmakers on the Treasury Special Committee say cryptocurrency trading “has no intrinsic price and no useful social purpose” and should be regulated in the same way as gambling.
The cross-party organization of parliamentarians said that the cryptocurrency market poses significant threats to consumers, given price volatility and the risk of losses, and is more like gambling than a money service.
They are involved in that regulating cryptocurrencies as a typical monetary service unduly legitimizes the market, giving consumers the impression that cryptocurrencies are protected, which the committee believes is not the case.
HMRC estimates that one in ten UK adults own or have held crypto assets.
Committee chair Harriett Baldwin, an MP, said: “The events of 2022 have highlighted the dangers posed by the crypto-asset industry, much of which remains a wild west.
“With no intrinsic value, enormous volatility of value, and no discernible social good, customer trading of cryptocurrencies like Bitcoin looks more like gambling than a monetary service and should be regulated as such. »
The report notes that the committee recognizes the potential importance of cryptocurrency-enabling generation for the money industry. He also called on the government and regulators to keep pace with developments in the long term.
Ivan Ivanchenko, CEO of crypto trading platform Phinom Digital, criticized the report, saying, “Treating crypto trading as a game would be a step backwards for the UK’s virtual currency aspirations and another demonstration that the country is facing a sea of bureaucracy. . »
Mike Stimpson at financial advisor Saltus said: “Our research shows that interest in digital assets continues to rise at pace, particularly with young investors.
“Nearly a portion (47%) of respondents in our latest Wealth Index survey said they own at least some virtual assets, up from a third six months ago, while among those under 24, this figure is nearly two-thirds (65%).
“But the cryptocurrency sector is incredibly volatile – whether up or down – because it is very difficult to set a fair price for cryptocurrencies. This, combined with the immaturity of the sector and the lack of regulation, means that there is a threat significant for investors.
“As with any investment, crypto investors want advice. A professional advisor will help them expand a monetary plan that invests in a diversified portfolio to generate the returns needed to achieve that plan.
Last month, the European Parliament gave the green light to its Markets in Crypto-Assets (MiCA) bill, which will unite crypto assets alongside classic money services.
EU lawmakers, to be enacted next year, hope MiCA will protect investors and protect them from monetary crimes and market manipulation.
The UK’s monetary regulator, the Financial Conduct Authority (FCA), has called for an overhaul of the UK’s percentage board regulations after several high-profile corporations abstained from the City of London in favour of IPOs on Wall Street, writes Andrew Michael.
In recent months, London’s attractiveness as a place for corporations to list their shares has been called into question after several corporations, including chip designer ARM Holdings, wanted to list New York on a national listing.
Data from the UK Listing Review shows that the number of UK listings has fallen by 40% since 2008. In recent years, continental European exchanges have also attracted increased attention from companies looking to float.
In a consultation paper, the FCA says it needs to reform and simplify regulations to “help attract greater diversity of firms, inspire festivals and choice for investors. “
In practice, this would mean that existing regulations would be more aligned with those in the U. S. At the same time, it would offer a variety of protections for investors, a move that, if implemented, has been described as troubling among commentators.
The regulator has proposed replacing London’s existing “premium” and “standard” scoring framework with a single formula containing fewer rules.
The premium directory imposes compliance and disclosure requirements higher than the minimum EU requirements for an indexed company.
As things stand, only those companies with a premium listing are eligible for inclusion in FTSE indices, the market barometers that are tracked by so-called ‘passive’ investments such as index trackers and exchange-traded funds.
According to the FCA, a single percentage elegance would “remove eligibility requirements that could deter start-ups, be more permissive in double-elegance percentage structures, and eliminate mandatory voting of percentages in transactions such as acquisitions to reduce friction between companies doing their business. “strategies. “
The proposals also come with concessions that allow founders of newly indexed corporations to retain more strength by allowing other categories of shares with other voting arrangements.
There would also be a removal of the rules that require so-called ‘related party transactions’ to be put to the vote of all shareholders – a restriction thought to have prompted Arm’s owner, SoftBank, to choose a New York listing.
It would also remove the requirement for corporations to demonstrate a three-year track record before being indexed, and it would also remove the requirement that indexed corporations that make acquisitions greater than 25% of their own market submit the transaction to a shareholder vote. Repressed.
Removing the existing board regime would constitute one of the biggest reforms to UK securities market regulations since the Big Bang of the 1980s, which revolutionised the way London works and cemented its position as a leading global hub in areas such as investment management.
While broadly endorsing the need for change, commentators expressed fears that the proposals, if implemented, could simply undermine investor protection.
Richard Wilson, head of interactive investment platform Investor, said: “We strongly support principles reforming board regulations to make the UK more competitive, but the erosion of shareholder rights threatens to undermine market standards, and that is not the right response.
“Two-class structures, with differentiated voting rights, erode shareholder rights. Distorted rights distort governance and accountability. One share, one vote is the foundation of shareholder democracy and we are concerned that the spectre of dual-class shares, which we have actively lobbied against, continues to hover.
“The reference to the elimination of mandatory shareholder voting in transactions such as acquisitions is a major red flag. “
Kevin Doran, chief executive of investment platform AJ Bell, said: “The loss of ARM Holdings in the US market has obviously hit the government and the FCA hard.
“As the crown jewel of the domestic technology sector, the fact that the company has chosen the United States as its new headquarters when it returns to the public markets is a sign of how far the United Kingdom has fallen since the company delisted in 2016. “
The FCA closes on June 28, 2023.
Despite understandable concerns, particularly about investor protection, the FCA’s proposals to prevent a flood of corporate exits from the London market from becoming an avalanche have been welcomed in the City of London and beyond, writes Andrew Michael.
The FCA’s intention is sound: to make the UK in general, and London in particular, a more attractive and competitive environment where publicly quoted companies are able to flourish. For that it is to be applauded.
But whether the changes ultimately achieve their desired effect and reinvigorate the domestic market probably requires more than a shift in the UK’s listing rulebook, despite its widely regarded status as the gold-plated blueprint for corporate behaviour.
The proposed reforms come after an era of turbulence for the City, amid rumours that it has lost its appeal as the US takes over, that is, when it comes to companies contemplating an initial public offering (IPO). As stated by Julia Hoggett, chief executive of the London Stock Exchange. , has warned that London has become complacent about its role as Europe’s dominant monetary centre and now wants to compete “scruffy and hungry”. Roger Clarke, chief executive of IPSX, the real estate exchange, said: “The FCA is beginning to recognise that a culture that seeks to completely eliminate threats will succeed in getting rid of yields entirely, reducing the UK’s investor appetite. This benefits no one and will lead to a disastrous long run for retirees and savers.
“An accidental result of years of progressive regulation in the face of the threat of investors has been the disappearance of the entrepreneurial and cutting-edge spirit of money markets that established London’s global dominance.
“Investors can and should be trusted to take responsibility for their investment decisions. Regulated markets are essential, risk-free markets are an illusion.”
People under the age of 40 are more familiar with cryptocurrency as a potential means of making money than stocks and shares, investment funds, or Premium Bonds, according to the Association of Investment Companies (AIC), writes Andrew Michael.
The industry framework conducted a survey of people in their 20s and 40s who said they weren’t investing lately.
The AIC found that 70% are familiar with cryptocurrencies like Bitcoin, much more than those familiar with traditional savings and investment features like stocks (59%), premium bonds (46%), mutual budgeting (23%) and investments. . trusts (18%).
Exchange-traded funds (ETFs), an affordable way for retail investors to access an inventory allocation, fared even worse, clocking in at 12%.
The Financial Conduct Authority, the UK regulator, regularly warns consumers about the unregulated nature of cryptocurrencies, reminding them that crypto assets have the potential to fail with a complete loss of capital.
The investment industry will be dismayed that funds, trusts and ETFs – which are promoted as ways for retail investors to gain a foothold in investing – lack the awareness associated with crypto assets in the eyes of younger potential investors.
Respondents told CSA that the most sensitive barrier to investment (57%) is lack of knowledge. They also see the cost-of-living crisis (53%) and a lack of cash in general (45%) as other obstacles. .
Also on the agenda are concerns about markets and the state of the economy, as well as the concept that making an investment is too risky in general.
Annabel Brodie-Smith, AIC’s Director of Communications, said: “Some of us may find it shocking that young people are becoming more aware of cryptocurrencies as an investment option. But it shows that the investment industry wants to do more to help young people. “People understand the diversity of investment options, the risks involved, and how making an investment can help them save for the future.
Over 300,000 Investors in the collapsed equity income fund run by Neil Woodford are set to receive up to £235 million in compensation following a Financial Conduct Authority investigation, writes Jo Thornhill.
The city’s regulator found that Link Fund Solutions (LFS), the administrator and administrator of the Woodford Equity Income Fund, had made “critical errors and errors” in managing the fund’s liquidity since September 2018.
This meant that investors who withdrew their cash from the fund were disproportionately given access to the maximum liquid (or available) assets, while those who continued to hold assets in the fund were treated unfairly and ultimately suffered monetary losses. despite everything, it was frozen in June 2019.
Link Group agreed to the recovery plan, which will benefit investors who had cash in the fund at the time of its suspension, subject to the sale of LFS and its other assets.
It will also depend on the approval of eligible investors and other creditors of the LFS, and the aid plan itself will want to be approved through the court.
If the proposed £235 million repayment is paid, investors will have recouped around 77 pence in sterling. The solutions presented under the program cover investment losses, but cover losses resulting from LFS’s conduct.
A total of £2.56 billion has already been paid to investors since the suspension of the fund from the distribution of proceeds from the sale of investments.
Therese Chambers, the FCA’s head of enforcement and market surveillance, said: “The FCA’s investigation has raised serious considerations about Link Fund Solutions’ control over Woodford Equity Income Fund’s liquidity.
“LFS’s actions appear to have caused significant losses for those investors who remained in the fund when it was suspended.”
Woodford created the Equity Income Fund in 2014, following 26 years of successful fund control at Invesco. It’s a popular and high-profile pick among investors, and as of mid-2017, the fund held over £10 billion in investor money.
But a series of poor potential investment options and an increasing number of unlisted assets in the fund have led to large losses. Investors began to worry and withdrawals from the fund snowballed. The fund had to be suspended on June 3, 2019, preventing investors from accessing its cash. At the time, the fund had £3. 7 billion at its disposal.
Woodford was laid off through Link Fund Group later that year and the fund closed. Some of the cash was returned to investors through the liquidation of the fund and the sale of assets.
The FCA says that more data on the LFS program will be provided in July 2023 and that formula documentation, which adds the full main points of the FCA’s findings, will be available as soon as possible in the fourth quarter of 2023.
The FCA said that, if approved, the compensation scheme would offer investors far more than they could otherwise get from LFS alone and more than they would receive by any other means, given Link Group’s contribution.
Private equity investment firms are circling companies listed on the London stock market with renewed vigour, encouraged by an improving economic outlook that has improved prospects for potential merger and acquisition (M&A) activity, Andrew Michael writes.
These companies use the money raised through investors to create companies where they can make money by stimulating their expansion and acquisition strategies, or through other means of financial engineering.
In the second half of 2022, M&A activity has still dried up after strong inflation, emerging interest rates, and market uncertainty combined to produce a rise in debt, as well as a widening gap between corporate valuations.
This year, however, the City of London has seen a return to trading as recession customers begin to fade and signs of economic stability emerge.
Apollo Global Management, the U. S. personal capital giant, has stepped up its efforts in London with two measures.
The first was a fifth offer, now in excess of 240 pence on a constant percentage basis, for Wood Group, the FTSE 250 listed oil facilities and engineering company, which values the company at around £1. 7 billion. Wood Group said it had made up its mind. having interaction with Apollo to see if a corporation is offering can, after all, be done.
At the time of the announcement, Apollo took aim at THG, formerly known as The Hut Group, the embattled online retailer. THG, which owns Cult Beauty and other cosmetics brands, stated that it had won a non-binding and “highly preliminary” proposal from Apollo. , the latter did not verify the approach.
Victoria Scholar, chief investment officer at Interactive Investor, said: “THG shareholders have had an incredibly difficult time with this stock, which is down around 90% since its listing on the London Stock Exchange in September 2020. “Buying for personal equity reasons could simply put an end to this bad chapter. Many corporate brands, including LookFantastic and MyProtein, have recently faced high raw material costs, specifically whey protein, which have squeezed their margins.
In a separate announcement, the payment products and the company Network International showed that they had won a non-binding proposal from CVC Advisers Limited and Francisco Partners Management. He said he would back the £2 billion bid from the consortium of personal equity firms.
Elsewhere, Dechra Pharmaceuticals said last week that it was in talks over a potential £4.6 billion cash bid from Swedish firm, EQT.
Hyve, the exhibition company, has been the subject of a £480 million buyout strategy by Providence Equity Partners, while about a third of Industrials REIT shareholders subsidised Blackstone’s £511 million cash offer for the owner of the multi-lease business park.
Twitter, the microblogging site acquired last year through Elon Musk for $44 billion, has partnered with investment site eToro to allow Twitter users to see the real-time costs of stocks, cryptocurrencies and other assets such as exchange-traded budgets (ETFs). commodities, writes Andrew Michael.
Starting Thursday, a new ‘$Cashtag’ feature will be added to the Twitter app that will allow users to view market charts on a variety of monetary tools and click on eToro to see more data about the asset in question. and have the opportunity to invest.
A $Cashtag is a stock market ticker symbol preceded by a dollar sign. The $Cashtag for another Musk-owned company, Tesla, for example, is $TSLA.
Elon Musk recently said at a currency convention that he needs Twitter to be “the largest monetary establishment in the world. “
Twitter added $Cashtags pricing information in December 2022. Since then, according to the company, the feature has been widely followed with more than 420 million searches for the term since the beginning of 2023.
Twitter said that search activity increases around prominent earnings announcements. For example, when the technology giant Apple made public its earnings figures for the final quarter of 2022 – on 2 February this year – searches for $Cashtags jumped to eight million.
Twitter added that the maximum $Cashtag used is $TSLA (Tesla), with $SPY (SPDR S
An eToro spokesperson said the move would eventually cover more than just U. S. stocks. “We expect the association to see thousands of tickers functioning as ‘cash tags’ with access to the eToro platform to be more informed. These are being added gradually. ” The spokesperson also claimed that today’s announcement did not go as planned. “There have been some teething issues, adding the fact that cryptocurrencies aren’t active, something we’re fixing with Twitter. “
Chris Riedy, Twitter’s vice president of global sales and marketing, said: “Twitter is what’s falling and what other people are talking about right now. We believe that genuine replacement starts with conversation, and that finance and investing are becoming more appropriate. vital in this conversation. ” We are pleased to partner with eToro to provide Twitter users with more information about the market and greater access to trading capabilities. Twitter will continue to invest in the progress of the #FinTwitter community.
Yoni Assia, CEO and co-founder of eToro, said: “Financial content on social media has helped teach many other people who felt left out through more classic channels. Twitter has become a hugely important component of the retail investment community — it’s where millions of investors go every day to access financial news, percentage information, and conversation.
“As a social investment network, eToro was built on those same principles: community, sharing wisdom, and greater access to money markets. There is strength in sharing wisdom, and by turning investment into an entrepreneurial organization, we can achieve greater effects and succeed together. .
Zoe Gillespie, chief investment officer at RBC Brewin Dolphin, said: “Although eToro is not incorporated into the social media platform, the Twitter link can potentially gain financial advantage through referrals to the platform. “
Gillespie added: “We advise caution when social media and making an investment are strongly linked. We also inspire investors to determine their sources, making sure that everything they invest in is regulated and that they perceive the dangers related to unregulated systems like cryptocurrencies.
The Financial Conduct Authority (FCA) and the Advertising Standards Authority (ASA) have teamed up with Truth TV star Sharon Geffka to teach monetary influencers – the “finfluencers” – about the dangers of selling products, writes Andrew Michael.
Finfluencers use platforms like Instagram and TikTok to provide financial information and advice (from the basics of a stock trader to how to buy assets) via social media, to hundreds of thousands, or sometimes even millions, of followers.
Strict rules govern the provision of financial advice, with requirements for authorisation, qualifications and continuing professional development before a financial advisor of any kind is allowed to extend his or her knowledge to members of the public.
There are also strict regulations on what corporations can and cannot say when it comes to monetary promotion and advertising.
Earlier this year, the FCA warned against finfluencers offering unauthorised investment recommendations after seeing the number of misleading ads increase 14-fold in 2022.
Many of these were from social media finfluencers who, according to the FCA, are a growing concern.
Today’s announcement from the FCA and the ASA sees the pair partnering with Ms Geffka, a former contestant on Love Island, and a self-styled social media influencer.
The FCA and ASA say they will work with influencers and their dealers, providing them with clear information on what could constitute illegal monetary promotion.
Part of the initiative includes an infographic for influencers that outlines what they want to verify before accepting branded offers for monetary products and services.
The FCA said it would also invite finfluencer brokers and the Influencer Marketing Trade Body to a roundtable discussion on illegal monetary promotions.
Sarah Pritchard from the FCA said: “We’ve noticed more cases of influencers promoting products than they deserve. They do this without knowing the regulations and without understanding the harm they can cause to their followers.
“We need to work with influencers to keep them on the right side of the law, as this will also protect people from scams or overly risky investments. »
Sharon Gaffka said, “When you walk out of an exhibition like Love Island, you’re bombarded with opportunities to advertise branded products and paintings. If, like me, you’re new to these types of paintings, it can be a little overwhelming. “
“This crusade with the FCA and ASA will ensure other influencers stay on the right side of the law and prevent them from unknowingly exposing their fans to scams or high-risk investments. ”
Tom Selby, of investment platform AJ Bell, said: “One of the big demanding situations facing UK regulators is that, when it comes to social media, influencers are unregulated Americans offering unregulated products in a world that is incredibly difficult to track and monitor. In the worst-case scenario, influencers can inspire their fans to invest in fraudulent schemes and end up wasting everything.
“The fact that much of this activity takes place outside of the regulated area is probably why the FCA is focusing on educating those who message their subscribers. “* The FCA ordered discretionary fund manager WealthTek to halt trading and arrested a guy connected to the case.
Today, the regulator said it had taken “urgent action” before the High Court to appoint three representatives from BDO LLP to take control of WealthTek, which also operates as Vertem Asset Management and Malloch Melville.
BDO LLP’s appointment is provisional and pending court hearing.
The equity budget – those focused on equities – regained favour with UK investors last month, even as turmoil in the banking sector threatened to roil global stock markets, writes Andrew Michael.
Investors added £960 million net to their equity fund holdings in March, the influx since December 2021, according to Calastone’s latest fund flow index.
The stock proved popular with investors despite considerations of banking problems in the U. S. and Switzerland, coupled with the collapse of Silicon Valley Bank and UBS’s takeover of troubled banking giant Credit Suisse.
Calastone described this as a “significant shift” in January and February, when investors sold more stock-based budget than they bought. Global budgets, which invest in a basket of stocks, were the main beneficiaries of increased investor confidence, attracting £1. 69mn.
However, Calastone said the UK-focused equity budget was still losing cash, with investors slipping £747 million out of the UK budget last month, the 22nd consecutive month in which the sector has suffered an outflow.
Edward Glyn, Head of Global Markets at Calastone, said: “The strong functionality of UK equities since the start of the bear market just over a year ago has not moved sentiment forward. On the contrary, we have noticed that the outputs are accelerating.
While investors continue to avoid domestic stocks, other sectors were more excited in March, adding index funds, which saw inflows of £909 million, and emerging market funds, which rose to £393 million.
Another sector that performed poorly in March was budget invested in accordance with environmental, social and governance (ESG) principles.
While ESG budgeting continues to generate cash, it did so at a very reduced pace last month: £218 million, around two-thirds less than the monthly industry average over 3 years.
Calastone’s Mr Glyn said: “The ESG gold rush has seemingly passed its peak. A host of factors are at play, including the high weighting of poorly performing technology stocks in ESG portfolios, a ‘greenwashing’ backlash, and a refocusing of marketing activity by fund managers.”
Virgin Money has entered the burgeoning DIY market for investment platforms and trading apps with the launch of a service that provides a narrow range of investment functions across three threat profiles, writes Andrew Michael.
The potential can open a stock Individual Savings Account (ISA) or a non-ISA investment account. Everyone has a minimum contribution of £25.
Investors can choose from three options: cautious growth, balanced growth or adventurous growth.
Virgin says the option, which incorporates a controlled budget through Virgin Money Unit Trust Managers, gives consumers a diversified portfolio invested in corporations with “good environmental, social and governance (ESG) credentials. “
The supplier says they come from corporations that adopt sustainable investment policies and targets, have positive shareholder engagement policies, or supply products and facilities that support the transition to a low-carbon economy.
In terms of cost, the same payments apply to ISA stocks and shares and the non-ISA account, broken down into an annual account payment of 0. 3% on the investment price combined with an annual asset control payment of 0. 45%.
A lump sum contribution of £1,000 would charge an investor £7. 50 in the absence of expansion. Virgin Money has shown that investors who wish to switch, for example, from a balanced expansion option to a conservative expansion option, can do so without penalty.
Customers who open a new Virgin Money ISA or non-ISA stock and stock account of at least £5000 until 30 June 2023 will also get 8000 issues to spend on Virgin RedArray, the company’s rewards club subsidiary.
To be eligible, investors will need to hold onto the cash invested until the end of July this year. Clients will also get the issues if they exit an existing investment before September 29, 2023.
Jonathan Byrne, managing director of Virgin Money Investments, said: “The world of making an investment can be complex and intimidating. That’s why we’ve designed our new investment service to be undeniable and understandable for everyone.
Wealth manager Rathbones to join rival firm Investec Wealth
As the resolution is subject to shareholder approval, the corporations will continue to operate independently of each other for the time being.
However, assuming the deal comes to fruition, money advisers expect a corporate restructuring of this length to result in some administrative turmoil for clients as new business emerges.
It is not yet clear what the possible effect of this agreement will be on the workers of both companies.
The wealth control industry in the UK has become increasingly competitive in recent years, with companies striving to succeed over a significant period while struggling to retain clients attracted through relatively reasonable so-called passive investments, which rely on computer algorithms rather than human administrators.
The combined entity will be known as the Enlarged Rathbones Group and will operate under the logo called “Rathbones. “
Rathbones will issue new shares in exchange for 100% of Investec W&I UK’s share capital. Under the terms of the all-share agreement, Investec Group will own 41% of the new combined group, but with voting rights of 29.9%.
The deal provides Investec with an implied net (a measure of its own) of £839 million.
It includes its investment and wealth control operations in the United Kingdom and the Channel Islands, but omits the business of the Swiss-based Investec Bank and the company’s offshore wealth control operations, all of which are wholly-owned subsidiaries of the Investec Group.
Clive Bannister, chairman of Rathbones, said: “This transaction only makes a compelling strategic and monetary case, but also accelerates Rathbones’ expansion strategy. Operating at scale allows the organization to offer an even more interesting proposition to consumers and colleagues, supporting long-term expansion and creating a meaningful price for Rathbones shareholders.
Fani Titi, CEO of Investec Group, said: “The strategic compatibility of the two corporations is compelling with complementary strengths and functions to the overall proposition for clients. “
Laith Khalaf, Head of Investment Analysis at AJ Bell, said: “The strengthening will enable corporations to cut costs. The reason for the merger lies primarily in the two companies’ shared interests in drawing up money plans and discretionary control of wealth for the wealthy. valued customers. A merger of corporations of this duration will result in adjustments for all parts of any of the corporations. “
Ben Yearsley, investment director at Shore Financial Planning, said: “It probably makes sense for shareholders to combine the two businesses, but there will inevitably be fallout and a period of uncertainty for both clients and staff.”
The company is delaying its plan to sell its stake in NatWest by two years, as volatility has been affecting the banking sector lately following UBS’s acquisition of Credit Suisse and the collapse of Silicon Valley Bank, writes Andrew Michael.
The Treasury still owns 41. 5% of NatWest, having spent around £46 billion to bail out the organisation (then known as the Royal Bank of Scotland) in the wake of the 2008 currency crisis.
With an initial 84% stake, the government has reduced its stake since 2015 through a combination of deals that included large-scale “managed buybacks,” in which NatWest asked to buy its own inventories through the stock market, as well as a trickle-down. Buyback plan. -Introduce NatWest’s inventories to the market.
The reintroduction of percentages to the market, which began in July 2021, recorded a percentage sales value of around £3. 7 billion.
Initially, the government’s plan to move NatWest to personal property would end next August. But the government also said it would only sell its shares “when it represents a smart price for cash and market situations allow. “
Amid turmoil in the global banking sector, UK Government Investments Limited (UKGI), the framework that manages taxpayer ownership at the bank, announced today that the scheme would run for two years.
NatWest shares, which traded at 265 pence for the year, peaked at 310 pence in February before retreating amid a sell-off in bank shares as investors worried about developments in the sector, specifically in the United States and Switzerland.
Earlier today, the bank’s shares were trading at 267p.
Andrew Griffith, economic secretary to the Treasury, said: “We are determined to return NatWest to full private ownership. Today’s extension marks another significant milestone in delivering this, ensuring we achieve best value for the taxpayer as we sell down the shareholding.”
Victoria Scholar, chief investment officer at Interactive Investor, said: “If the banking crisis eases in the coming weeks, we may see opportunistic buyers return to the market, snapping up NatWest and other shares at a discount. However, if new flaws in the formula are revealed, banks could come under additional promotional pressure. “
The government has launched a consultation on the purpose and scope of regulation for environmental, social and governance (ESG) ethical ratings as part of a range of measures in its updated Green Finance Strategy, Andrew Michael writes.
ESG investing, which applies filters to potential inventory selections made through a fund manager, has a familiar strategy in the investment control landscape.
All things being equal, companies that actively replace through a range of measures (as we decide through ESG studies and ratings implemented through consulting organizations) will rank closer to the sensible bottom of a fund manager’s “buy list” than their rivals.
But with the many metrics and ratings available, a long-standing fear in ESG is the lack of standardized criteria for classifying an investment as ethical, green, or sustainable.
Ultimately, this can cause confusion among investment managers’ retail and institutional clients, with the idea that they will allocate their cash to an investment with questionable credentials that has been falsely promoted or incorrectly advertised.
Earlier this week, the Financial Times reported that many budgets would have their ESG ratings revoked and thousands more downgraded, following a review by stock index provider MSCI.
According to the Treasury, ESG scores have become increasingly influential, with 65% of institutional investors employing them at least once a week: “With projections that $33. 9 trillion in global assets under control will have ESG points within 3 years, the importance of having reliable ESG scores data is critical and growing. “ESG scores, which assess companies’ control over ESG risks, opportunities and impacts, are a key component of this. It is right that they play their part by providing valuable data to market component participants. “It will need to be supported and encouraged to promote transparency and generate strong effects to gain advantages from UK markets and end consumers. Developing the market for credible ESG scores is a genuine opportunity for the UK, building on its strengths as an open country and cutting-edge and sustainable global monetary centre.
The Treasury says its consultation sets out a proposed policy to integrate ESG ratings providers into the UK’s regulatory perimeter and will cover ratings provided through UK and foreign corporations to UK users.
The consultation ends on 30 June 2023. You can submit your feedback to ESGRatingsConsultation@hmtreasury. gov. uk
The Treasury has abandoned the Royal Mint’s plan to launch its own non-fungible token (NFT), less than a year after it was tasked with it as part of the UK’s futures strategy for crypto, writes Andrew Michael.
NFTs are virtual assets (i. e. a physical presence) that constitute real-world objects, such as exclusive works of art or memorabilia from memorable sports moments.
Along with cryptocurrencies, such as Bitcoin, NFTs make use of blockchain technology – a multi-point computer ledger designed to safely store digital data.
Among the most well-known NFTs is a series known as the Bored Ape Yacht Club, which allows the user to own an exclusive symbol of a monkey.
In April 2022, current Prime Minister Rishi Sunak, in his former role as Chancellor of the Exchequer, applied to the Royal Mint for an NFT later this summer.
No main points were given on what symbol or object the NFT could represent, or whether the entity would be used to generate budget for the U. K. Treasury.
At the time, the government described the request as one of a series of measures aimed at making the UK “a hub for the generation and investment of crypto assets. “
But the decision appeared to be at odds with the position of the regulator, the Financial Conduct Authority, which issues regular warnings to consumers about the crypto industry, reminding them that cryptoassets are unregulated and high-risk.
According to the Royal Mint, the Treasury’s proposed NFT will be “under review. “
Andrew Griffiths MP, economic secretary, shared the announcement with Parliament yesterday (Monday) in response to a written question from Harriet Baldwin, the Conservative MP for West Worcestershire and chair of the House of Commons Treasury Select Committee, who asked if creating NFTs remained a Treasury policy.
Commenting on the announcement, Ms Baldwin said: “We have not yet seen a lot of evidence that our constituents should be putting their money in these speculative tokens unless they are prepared to lose all their money. So perhaps that is why the Royal Mint has made this decision in conjunction with the Treasury.”
In recent months, the global crypto industry has been rocked by a series of setbacks, adding the collapse of crypto exchange FTX in late 2022 and, earlier this month, the bankruptcy of three banks with crypto or crypto debts in the United States. : Silicon. Valley Bank, Silvergate and Signature.
At the time of writing, it is also possible that Binance, the world’s largest crypto exchange, could be banned from operating in the US after falling foul of the country’s financial regulator (see story here).
NFT prices, which in some cases had reached degrees of millions of pounds, collapsed last year following the demise of FTX.
In recent weeks, the spotlight has been on banks, with the collapse of Silicon Valley Bank followed by the emergency bailout of Credit Suisse through its former rival UBS, writes Jo Groves.
Fears of a widespread banking crisis have prompted a sharp fall in banking stocks on both sides of the Atlantic. The Dow Jones US Banks Index has dropped by 9% in the last week with the FTSE 350 Banks Index decreasing by a similar amount before clawing back most of its losses.
According to investment platform Freetrade, investors looking to “buy on dips” have triggered a record high point in financial trading over the past fortnight. Topping the list of “buys” of rental assets is Paragon bank, with a nearly 1,900% increase in purchases, followed through the FTSE by 100 giants Prudential and HSBC.
Alex Campbell, Freetrade’s head of communications, said: “For many of these actions, this proves to be an ideal opportunity to start a new role or complement an existing one.
“With UK banks trading well below a three-year average price-to-earnings ratio of around 15 times, now is arguably the time for investors to secure an attractive access point and start claiming healthy dividends. “
Looking at the bigger picture, David Dowsett, global chief investment officer at GAM Investments, said: “We don’t think what happened with Credit Suisse will derail the case for making an investment in the European financial sector. This is a painful and historic situation, but it is still widely noted as unique.
“On the banking sector as a whole globally, it is important to stress that this is not a bad asset problem. The [2008/09] global financial crisis was such a problem, where banks had significant assets on their balance sheets that were not worth anything or worth very little. This is not the case this time.”
However, investor confidence in this sector remains fragile, with particular concerns over the knock-on impact on smaller regional banks in the US, which are more lightly regulated.
Danni Hewson, head of economic research at AJ Bell, said: “The forced marriage between UBS and Credit Suisse has eased some of the strains in the global banking sector today, but investor confidence has been severely affected and, despite liberal demands for economic stamping, there are still some visual cracks.
“Trust is very important when you’re asking depositors to stay by your side, and many of them are feeling increasingly confident turning to larger banks that have been under increased regulatory scrutiny, even if liquidity outflows have slowed following last week’s interventions. “
The cancellation of £14 billion of Credit Suisse’s AT1 bonds also sent shockwaves through the banking sector. These bonds are designed to be converted into securities if a lender faces monetary difficulties and were therefore considered a relative safe haven.
While Switzerland is the country where bondholders can take the hit before shareholders, the cancellation has spooked holders of AT1 debt from other banks. This may simply lead to a higher capital burden and stricter credit criteria for the entire banking sector.
There are a number of funds covering the broader financial sector for investors looking for a more diversified portfolio of banking stocks.
These come with the Xtrackers MSCI USA Financials exchange-traded fund, which tracks the MSCI USA Financials index. Alternatively, the actively controlled Janus Henderson Global Financials fund invests in a basket of UK and foreign currency companies.
Looking ahead, it remains to be seen whether recent interventions by the authorities will restore calm to the banking sector or whether more challenging situations lie ahead.
The collapse of Silicon Valley Bank (SVB) in the US that matured last week continues to weigh on banking stocks around the world, as investors worry about the monetary fitness of lenders, writes Andrew Michael.
Shares of several U. S. regional banks, including Phoenix-based Western Alliance and San Francisco-based First Republic, closed sharply lower on Monday despite comments from U. S. President Joe Biden that his management would do “whatever it takes” for depositors.
Shares in Britain’s biggest banks plummeted in London on Monday, with Barclays and Standard Chartered falling more than 6%.
Rob Burgeman, investment manager at RBC Brewin Dolphin, said: “Sentiment has weighed on percentage prices, but, based on the current situation, we do not believe UK banks are classified in the same way as their US counterparts.
“The regulatory regime in the UK and Europe is much stricter and will be relaxed soon. Therefore, this can be a buying opportunity.
Earlier in the day (Tuesday), shares of Japan’s largest banks fell sharply as markets reacted to Monday’s sell-off in the U. S. banking sector amid growing uncertainty over interest rates following the collapse of SVB.
Last Friday (March 10), SVB, a bank that primarily served generation startups, acquired through the U. S. Federal Deposit Insurance Corporation the largest acquisition of the Securities and Exchange Commission. The U. S. Food and Drug Administration (FDIC), which focuses on maintaining monetary stability.
The move came amid growing concerns that the bank, the 16th-largest U. S. bank by assets, represents a systemic element to the U. S. and global monetary system.
Daniel Cassali, chief investment strategist at Evelyn Partners, says: “SVB’s problems are due to insufficient threat management: “To earn higher returns, SVB has invested its customers’ deposits in long-term bonds, but as interest rates have risen more than 12 months, SVB has invested in long-term bonds. Array: the price of these bonds has fallen. Above all, SVB was unable to cover this threat, leaving the bank with gigantic unrealized losses. “
As concerns grew about SVB’s monetary situation, consumers began withdrawing their cash last Thursday (March 9). SVB sold its maximum liquidity bonds to meet deposit demands, which had a negative effect on the bank’s profits and the price of its capital on its balance sheet.
The collapse of SVB led investors to sell US bank stocks last Thursday, with the action spreading across Europe last Friday. Investors have continued to remain bearish on banks this week as the consequences of SVB’s failure are better understood.
Yesterday, following intervention by the government and the Bank of England, HSBC bought SVB’s UK subsidiary for £1, providing relief to many tech corporations that had warned they were at risk of bankruptcy.
Janet Mui, head of market analysis at RBC Brewin Dolphin, said: “Despite the backstop put in place by the Fed in the US and the Treasury in the UK, markets remain nervous about the wider impact from the fallout of SVB. Bank stocks are tanking and investors are flocking to safety.”
Will Howlett, equity analyst at Quilter Cheviot, said: “Although the UK government had to negotiate a deal for the UK subsidiary, the SVB incident is a real exception in the US banking sector.
“SVB failed to adequately hedge its dangers, as evidenced by the large proportion of ‘long-duration’ interest rate assets it held that were purchased in the post-Covid era of very low interest rates, as well as short-term deposits from venture capital funds. Equity-backed tech corporations almost completely exceed the government’s insurance threshold.
“As such, we do not see systemic issues for banks and this is unlikely to trigger a ‘new’ financial crisis.”
Jack Byerley, deputy CIO at wealth manager WH Ireland, said: “We have cautioned that excesses in non-profitable and speculative parts of the technology markets would be vulnerable in a world where money is no longer ‘free’. We have seen that unfold in stock markets over the last 18 months and it is now happening in the broader financial system.”
Quilter Cheviot’s Howlett said: “That doesn’t mean there isn’t volatility for investors – bank stocks have sold off in recent days following the collapse of SVB. The result may simply be that interest rates are not raised through central banks to the point that some expected.
“This will most likely lead to a reduction in banks’ profits as the net interest margin (the amount they qualify for credit, relative to the rate applied to deposits) shrinks. However, this will lead to a challenge on those banks’ balance sheets and “Conversely, the largest U. S. banks are experiencing an acceleration in deposit inflows as a result of those fallouts. “
Commentators acknowledge that this is a difficult time for U. S. banks, but add that bank inventory costs around the world will most likely stabilize once it becomes clearer that this is an isolated incident and that the consequences of the 2008 crisis have been learned. .
The fallout from SVB’s collapse has taken its toll on tech company valuations, with the tech-heavy Nasdaq Hundred Index falling 4% this week.
Baillie Gifford’s Scottish Mortgage Investment Trust suffered an even larger fall of 6%, with its technology holdings including SVB customers Wise and Roblox.
SVB has provided banking services to approximately a portion of all venture capital-backed generation corporations in the United States. SVB’s UK arm had more than 4,000 customers, in addition to customer review site Trustpilot and software provider Zephyr.
There has also been an effect on big tech companies, with Meta and Alphabet among the beneficiaries of ad spend from tech startups.
Alex Campbell, head of communications at Freetrade, commented: “In the wake of this collapse, all eyes will now be on the Federal Reserve and other central banks. This is especially true for tech corporations that have noticed their valuations falling as rates rise to fight inflation and investors have been forced to curb their expectations for expansion.
However, there may be respite ahead for the tech sector, with the possibility of the Fed pausing interest rates hikes, or even cutting rates to restore stability.
Dr Campbell adds: “These stocks would be seen as a significant inflection point and generation stocks promising long-term gains could take advantage of a rally on the back of that subdued acquiescence. “
Major cryptocurrencies rallied days after the collapse of Silicon Valley Bank, the 16th largest bank in the U. S. The U. S. economy has strong ties to the tech start-up sector, which expired last week.
While banking stocks were trading lower on global markets, Bitcoin (BTC) rose from around £17,000 on March 10 to around £20,000 today, up 17%. Ethereum (ETH) rose from around £1,200 to £1,378, an increase of 14%.
Both SVB and Signature, another US bank that failed at the weekend, were used by crypto companies like Avalanche and Ripple for payments between cryptocurrencies and fiat currencies.
The U. S. government’s intervention in SVB deposits has stimulated market confidence.
Stablecoins, which are pegged to fiat currencies such as the dollar and aim to maintain parity with their fiat counterparts, were the first to be hit by SVB’s run.
USDC fell to 88 cents over the weekend, its lowest level in three years. Since then, the stablecoin has returned to a value of $0. 99.
Hargreaves Lansdown no longer charges fees for holding investments and trading its junior shares
It is the latest provider to reduce fees amid a fierce festival between investment platforms to attract investors who make their own investments.
Existing and new JISA customers will no longer pay platform fees for investments (previously 0.45% per year, capped at £45 for shares, investment trusts and exchange-traded funds).
There will also be no transaction fees (saving consumers £5. 95 per transaction) or currency exchange fees on investment transactions.
The company has also reduced its annual platform payout on LISA from 0. 45% to 0. 25% (up to £1 million, capped at £45 for shares).
Trading fees remain unchanged between £5. 95 and £11. 95 (depending on trading frequency). LISA helped others under the age of 40 save for their first home.
Clients will pay the fees charged through the underlying investment provider, e. g. Annual fees charged through fund managers.
Ruchir Rodrigues of Hargreaves Lansdown comments: “We believe that saving and investing is for the whole family, for generations. We can see that parents and grandparents are taking cash to help their children and grandchildren during those difficult times.
“We also recognize the desire to inspire more young generations to save and invest to improve their monetary resilience. We believe this is the most important fiscal year-end not only in a generation, but also in generations.
“Our changes to our Junior ISA and Lifetime ISAs are the start of creating legacies that will last generations for our children and their children.”
This is worrying for the London Stock Exchange, writes Andrew Michael.
CRH, Europe’s largest construction fabric company, announced last week that it would move its main stock exchange directory from London to New York.
And SoftBank, owner of Arm, the Cambridge-based semiconductor designer whose products can be found in Apple iPhones, has rejected a domestic listing despite intensive lobbying by politicians ahead of Arm’s initial public offering (IPO).
Russ Mould, chief investment officer at AJ Bell, said: “It deserves to be an honour to be indexed in the UK, but that honour is diminishing.
CRH said its decision to swap to the other side of the Atlantic later this year is because the company had “come to the conclusion that a US primary listing would bring increased commercial, operational and acquisition opportunities”.
It says the move will further boost its “successful integrated solutions strategy,” adding that it will lead to “even greater degrees of profitability, profitability and liquidity for our shareholders. “
As the Dublin-based FTSE 100-listed company noted, it expects the United States to be a key driving force for long-term growth, while North America is responsible for three-quarters of the group’s profits.
It is believed that several other corporations are looking to the merits of London for a master listing.
But Victoria Scholar, chief investment officer at Trading Platform Interactive Investor, said it’s not all doom and gloom: “While the media has paid close attention to Arm’s decision not to publish a directory in London and CRH’s move to New York, we are far from seeing a mass exodus from the London market.
“After Brexit, many considerations have been expressed about London’s ability to hold its position as Europe’s leading monetary centre. But so far, the city is holding firm. “
That said, Ms Scholar acknowledges that making London a destination for technology companies has been problematic: “One of the biggest challenges for the UK market has been the difficulty in attracting tech giants to undertake IPOs on the London Stock Exchange. New York continues to be the go-to destination for tech behemoths, with the Nasdaq exchange boasting giants like Apple, Amazon and Microsoft.
“Although the FTSE 100 enjoyed relative resilience last year, thanks in part to its dearth of tech stocks, this has long been a complaint and meant that the UK large-cap index had not benefited from the gains the government had enjoyed. of the tech boom before 2022. “
“There have also been high-profile tech blunders in London, coupled with Deliveroo’s calamitous IPO and the drop in THG’s percentage price, reinforcing the sense of caution towards the UK among tech corporations deciding where to list. “
In February, news broke that oil giant Shell had moved the Anglo-Dutch energy company from London to the United States. Among those that have already taken the plunge are plumbing company Ferguson and biotech company Abcam, formerly indexed in AIM.
In recent weeks, Flutter Entertainment, Sky Bet and Paddy Power, the major Dublin-based and Footsie-listed sports betting corporations, said it was contemplating a new U. S. board. After the good fortune of his U. S. -based sports betting company, he was able to find his way to the U. S. U. S. Fan. Duel.
Separately, Ascential, the FTSE 250 news and events group, said it would spin off its virtual trading and list it in New York.
The main reason why companies are increasingly looking to the US market instead of London is the wider investor base and larger pool of potential investment capital.
However, David Schwimmer, managing director of the London Stock Exchange Group, is unaware of the recent outflows: “We are in the world’s largest foreign monetary centre and we continue to attract capital and corporations that have that kind of external outlook. “. »
Victoria Scholar of Interactive Investor added: “There is no doubt that, in the post-Brexit environment, investors have been nervous about the outlook for the UK market. But the pound’s weakness has investors looking to London, especially for potential mergers and acquisitions. lenses that are more attractively priced in British pounds.
But what are the implications for shareholders if a company they invest in decides to trade stock exchanges?
Ms Scholar said: “In terms of the practicalities for UK investors, companies can voluntarily delist. This would mean that investors would need to sell their shares either before, or after, the delisting. It does not necessarily affect the value of these shares, depending on the reason behind the decision.”
UK investors poured £1. 4 billion into investment budgeting in January 2023, with bond portfolios being the big winners, while the equity budget continued to lose cash, writes Andrew Michael.
The most recent figures from the Investment Association (IA) show that, overall, cash flowed into the investment industry in the first month of this year, ending a 10-month streak of withdrawals.
Amid a challenging economic environment and turbulent markets, UK investors pulled a record £26 billion out of their budget in 2022, the first time an exit has been reported.
At £1. 6 billion, the AI said the bond budget saw inflows in January 2023, up from £392 million the previous month.
UK gilts, corporate and other government bonds dominated the association’s best-selling sectors last month, as investors gravitated to secure and high-grade fixed interest assets whose performance was shaken last autumn in the wake of the government’s controversial September mini-Budget under Liz Truss and Kwasi Kwarteng.
In sharp contrast, investors continued to bail out of equity funds, which racked up withdrawals worth £913 million overall in January.
Inflows to the North American and Asian equities budget, £363m and £133m respectively, were dwarfed by outflows of £1. 4bn from the UK equities budget and a further £155m from portfolios. European.
Investors who pulled their money out of the UK equities-exposed budget earlier this year could make their decision.
The FTSE Hundred Primary Company Stock Index is up just over 5% year-to-date and the general consensus of a panel of investment experts who spoke to Forbes Advisor UK last month warned that UK shares were most likely to continue to rise in the year 2023 course.
Chris Cummings, IA chief executive, said: “We can expect to see a stronger year ahead for bond investors, with higher fixed interest rates available as we transition out of a low interest rate environment.
“On the other hand, UK stocks experienced the worst capital outflow since January 2022. The negative news circular about the state of the UK economy may have an effect on investor sentiment towards the UK. “
The heads of some of the UK’s biggest companies are bracing for a wave of acquisitions this year as foreign buyers queue up to jump into London-listed Array that trades on the stock exchange at attractive prices, writes Andrew Michael.
According to investment bank Numis Securities, the outlook for mergers and acquisitions (M&A) activity is
The effects of the bank’s annual M&A survey highlighted increased optimism about deals in the UK and an expectation of outperformance of shares traded in the domestic market.
Last week, news broke that two U. K. -listed companies, energy company Wood Group and the occasional Hyve, were acquisition targets for U. S. private equity firms.
Last month, Numis surveyed 80 managers of FTSE 250 companies, including leading executives and leading monetary officials, as well as 200 institutional investors, adding up to UK pension funds.
The survey shows that despite a challenging economic and monetary environment for buyback activity, characterised by peak inflation, emerging interest rates and market volatility, only nine in ten FTSE 250 managers (88%) consider UK corporations to be vulnerable to takeovers.
An even higher proportion of business leaders (94%) said they expect to close deals themselves this year, an 8 percent increase from the same time last year.
Numis said: “The higher proportion of FTSE 250 managers than domestic corporate buyers will be the largest festival source, however, personal equity is considered a secondary source of significant festival and much more likely than foreign corporations. “
Despite a brighter outlook, Numis said barriers to M&A remain: “Investors have been transparent about the challenging situations facing operations this year – the monetary environment, regulatory adjustments and the economic outlook were the three most sensible. “
In terms of regulation, he cited national and festival security barriers as the main barriers to reaching an agreement.
The survey highlights the importance of M&A returns in the overall return of an investment portfolio, with 10% of institutional investors describing M&A returns as “unimportant to their portfolio. “
Investors pulled £53.9 billion from UK funds in stocks and shares, bonds and alternative investments in 2022, writes Andrew Michael.
Taking into account an inflow of £12. 7 billion in cash investments, withdrawals amounted to a record £41. 1 billion for the year.
The UK budget was worth a total of around £2 trillion at the end of 2022, up from £2. 27 trillion last year. This is the first decline since 2018.
The figures come from Refinitiv, the insights provider of the London Stock Exchange. The analyst attributed the exodus to several factors, adding the war in Ukraine, rising inflation and emerging interest rates.
He added that the cash market budget itself experienced withdrawals in the first three quarters of 2022, when “in the fourth quarter the situation changed strongly. “
According to the company, cash “flowed into those vehicles” in the wake of the questionable Liz Truss/Kwasi Kwarteng mini-budget in September, as the pensions budget sought liquidity in an era of market turbulence.
Share funds experienced last year’s largest outflows to the tune of nearly £35 billion. Within this figure, UK funds suffered the most, with investors pulling more than £23 billion from UK equity, UK income and small and mid-cap funds.
By contrast, even at the height of the 2007/08 currency crisis, investors withdrew only a modest £8 billion.
It remains to be seen whether last year’s trend of underappreciated British inventories will continue. The UK stock market has been quite handsome since the start of 2023, with the FTSE 100 index of blue-chip companies crossing the 8,000 mark for the first time (see article below).
Year-to-date, the index is up nearly 5%, while the FTSE 250 – representing the UK’s 250 next-largest businesses – is up around 3%.
The Financial Conduct Authority (FCA) has launched a long-term consultation on the UK’s asset control industry to ensure it can innovate and remain competitive post-Brexit, and advisers hope the reform will lead to lower fees, writes Jo Thornhill.
The sector, which manages more than £11 trillion in assets, is still covered by EU law. The FCA needs to introduce reforms for the customer experience and help the industry remain competitive on the outside stage.
Its findings and proposals are expected to be presented later this year.
Kevin Doran, managing director of AJ Bell Investments, said: “Today’s publication from the FCA is one of the few birds in the industry for true consultation.
“With no cemented new proposals put forward, the next three months should give the industry the time to fly a kite on some Brexit dividend proposals. Any opportunity to progress some of the more archaic practices within the industry should be seized with both hands.
“I hope we can use this opportunity to make it less difficult for clients to invest, through cost reduction, transparency and making other people feel smart about investing. “
One of the questions raised in the FCA’s discussion paper is whether regulations are comfortable in relation to investing in “tokenized” assets, such as stablecoins and other cryptocurrencies.
The government is moving forward with the next phase of its plans for crypto assets in the UK and examining whether there is a case to regulate crypto asset portfolio control activity.
The Treasury and the Bank of England are working to create a virtual currency for the UK’s central bank.
Camille Blackburn, FCA, said: “The UK has the opportunity to update the asset control regime. We need to hear from a wide diversity of voices on how we can apply existing criteria and what we deserve to prioritize for maximum benefits. consumers, businesses, and the global economy as a whole. Comments in reaction to the consultation should be submitted by 22 May 2023 by emailing dp23-2@fca. org. uk or using the online feedback form at the FCA. website.
The UK’s primary inventory index has crossed the 8,000 mark for the first time in its 39-year history, writes Andrew Michael.
The FTSE hundred surpassed this psychologically significant figure in intraday trading when it reached a point of 8,003 before retreating.
UK share prices have continued to edge up since the start of 2023, buoyed by a strong performance from energy companies – including BP and Shell – and on the back of renewed takeover talk in the banking sector.
The FTSE 100 is the UK’s best known stock index and one of the leading indicators of company performance. Created in 1984, the index is made up of the hundred largest companies listed on the main market of the London Stock Exchange by market capitalisation – calculated by multiplying a company’s share price with the number of shares in issue.
Primary oil company Shell is Footsie’s largest company, valued at around £167 billion. Frasers Group, the retailer, is the smallest component, around £4 billion.
Despite a cocktail of economic headwinds, the Footsie’s performance held up during 2022 – eking out a modest return for investors of around 4%. This contrasted with other major stock indices, such as the US S&P 500, which suffered double-digit losses over the year.
The divergence in functionality is explained by the composition of the index: the FTSE 100 continues to have a higher proportion of dividend-paying so-called “old economy” stocks, particularly those in the oil and gas, commodities and those of finance.
Companies operating in those spaces performed well thanks to a number of factors, coupled with rising energy costs and emerging interest rates.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “The FTSE 100’s rise from a disadvantaged index to new all-time highs shows how temporarily it can change the global way of making an investment. During the Covid-19 pandemic, generation companies and expansion stocks were hugely in vogue, very few of which feature in London’s main index.
“Today, with persistently high inflation, high oil prices and emerging interest rates, the commodity giants, oil and gas explorers, mining groups and financial corporations that make up the FTSE 100 are looking forward to an even more favourable near-term environment.
“It is a salutary lesson that every dog has its day. While the story of the past decade was very much about the rise of the tech sector, the perennially forward-looking stock market sees a very different 10 years in front of us with cash generation, resilience and self-funded growth likely to offer options to businesses and investors looking to navigate the challenges ahead and maximise opportunities.”
The investment budget value of approximately £20 billion has been flagged as consistently underperforming “dogs” through online investment service Bestinvest, writes Andrew Michael.
The firm identified 44 underperforming funds, worth a combined £19.1 billion. This is an 42% increase in the number of funds in the category compared with the company’s last analysis six months ago.
However, the figure remains below the 150 funds identified at the beginning of 2021.
Bestinvest’s Spot the Dog analysis defines a ‘dog’ fund as one that fails to beat its investment benchmark over three consecutive 12-month periods, and which also underperforms its benchmark by 5% or more over a three-year period.
A benchmark is a stock market index such as the UK’s FTSE 100 or the S.
Bestinvest said the sectors with the most ‘dogs’ were those investing in UK stocks and shares: “Assets in dog funds rose to £8.4 billion from £5.5 billion for the UK All Companies sector, and to £3.1 billion from £2.1 billion for the UK Equity Income sector.”
He stated that this is contradictory given that 2022 has been far from disastrous for blue-chip corporations in the FTSE hundred index that are mining, resources and finance-oriented.
Explaining the discrepancy, Bestinvest said: “Beyond the UK market large-cap segment, it has been a challenging year for small and mid-cap companies, market segments that tend to be more exposed to the UK’s domestic economy. »
Bestinvest highlighted the poor functionality of three budget giants (over £1 billion), in particular: Halifax UK Growth; Invesco UK Equity High Income; and St James’s Place International Equity, a combined £8. 2 billion.
He describes their collective functionality as “representing a giant portion of the budget investors’ savings who are doing better. “
Other budgets criticised include Hargreaves Lansdown’s £1. 8 billion Multi-Manager Special Situations Trust, Scottish Widows UK Growth (£1. 8 billion) and Halifax UK Equity Income (£1. 7 billion).
Bestinvest described these funds as “repeat offenders” adding that “if the companies won’t act [to improve performance], investors should.”
Bestinvest also highlighted that Schroders is “the leader of the pack” in terms of which fund teams “earned the maximum number of nameplates. “
He said that although he only has three small budgets under his own name, Schroders also acts as the underlying budget manager for the Scottish Widows and HBOS brands: “This adds seven more budgets to his total assets and an additional £7. 3 billion.
“These budgets were already performing poorly long before Schroders acquired them, but investors were probably expecting a turnaround now. “
One of its budget organizations that did respond to the research is Abrdn, with 3 budgets listed, and Invesco with two.
Jason Hollands, CEO of Bestinvest, said: “The aim of this consultant is to inspire investors to check the functionality of their investments and assess whether action needs to be taken.
“Every fund manager will have moments of weakness in their career: they will possibly have a series of bad lucks, or their taste and procedures will become temporarily outdated.
“It’s critical to identify whether those points are short-term or structural, which is why it’s so vital to ask a few key questions when taking stock of a specific fund in your portfolio. “
The FTSE 100, the UK’s blue-chip stock market index, hit an all-time high of 7,906. 58 the previous day, writes Andrew Michael.
The Footsie jumped 84 points, or 1. 1%, surpassing the previous high of 7,903. 50 recorded in May 2018. It retreated to close at 7,901.
According to Marcus Brookes, chief investment officer at Quilter Investors, today’s high is due to a combination of points: “One of the key points is that the FTSE hundred index is partly made up of former energy suppliers and mining corporations that have benefited greatly from rising prices, inflation and the energy crisis that followed the outbreak of the war in Ukraine.
“This has the index a lot more than some of its tech-trending peers, such as the S
Mr Brookes said another major factor in the FTSE 100’s recent performance has been the re-opening of China following its relaxation of its ‘zero Covid’ strategy: “This has led to increased demand for several component stocks, which has helped to push the index higher.”
Danni Hewson, monetary analyst at AJ Bell, said: “The London Frontline Index is home to some of the world’s largest corporations, and those corporations don’t just make money in the UK. They are well-established, well-funded, and well-positioned to deal with any persistent volatility.
“Generally speaking, the global economy looks brighter and with the reopening of China, huge opportunities are expected to be provided for power companies, mining companies, luxury goods manufacturers and just about any company that runs overseas promotions.
“Shell, Reckitt Benckiser, AstraZeneca and Glencore are the names making the biggest gains today. “
Richard Hunter, head of markets at interactive investor, said: “Another reason for the more recent appeal of the FTSE 100 is the relatively high level of dividends.
“The index’s average recovery is currently 3. 5%, closer to its longer-term point after the ravages of the pandemic have dissipated. Over time, this has a significant effect on profits.
It’s not just the UK’s top basket of corporate stocks that posted eye-catching and consistent results this week. The value of gold in the UK in pounds consistent with the troy ounce peaked (Thursday) with a record high of £1,592, more than £10 more consistently. with past spikes induced by the Covid-19 pandemic, last September’s debatable mini-budget, and the war in Ukraine.
This week, the fourth-quarter 2022 effects of U. S. tech company Meta (which owns Facebook), Apple, Amazon, and Google’s parent company Alphabet, writes Andrew Michael.
Their financials played against the backdrop of interest rate announcements from the Bank of England (Bank rate up from 3.5% to 4%) and the US Federal Reserve (a 25 basis point rise taking the funds rate to 4.5%-4.75%), so there has been plenty for investors to digest.
U. K. markets rose on Thursday as investors bet that the end of the Bank of England’s financial tightening in a bid to curb soaring inflation is in sight.
U. S. markets also rallied strongly on the news, with the Federal Reserve itself indicating that there may only be two more rate hikes in the current cycle. The enthusiasm was short-lived, however, as profits from major tech companies dampened the good news.
Russ Mould, chief investment officer at AJ Bell, said: “Three big tech corporations – Apple, Alphabet and Amazon – have issued troubling news to varying degrees, and the drop in their respective percentage costs appears to be a definite reaction to the severity of the situation. “
Amazon shares fell a high (5. 2%) in after-hours trading on Thursday, and its earnings indicated that demand for cloud computing, which has been a driving force for the company’s earnings growth, may be slowing.
Shares in Alphabet, Google’s parent company, dipped by 4.6% after the close. The company makes its money from digital advertising and search and is perceived to be vulnerable heading into an economic downturn as businesses scale back promotional spending.
Mould said: “While many don’t believe we’re going to see such a severe recession, the weakening in business confidence has already been enough to fuel a decline in virtual ad spending. “
Gerrit Smit, portfolio manager at the Stonehage Fleming Global Best Ideas Equity Fund, said: “Although Alphabet’s sales remained stagnant in the fourth quarter of 2022, it is reassuring to see that they remain strong and no longer outperform Meta, its main rival. . 5%.
“One of the key features is Alphabet’s cloud sales expansion of 32%, outpacing [Microsoft’s] Amazon Web Services and Azure expansion degrees, and halving its losses from last year. Overall, the drop in the group’s profitability is weighing earnings lately, but it is correcting and bottoming out.
Regarding Apple, the world’s largest company by market capitalization, Mr. Mold said: “The fact that Apple has been experiencing production problems for the iPhone is old news, which may be why its percentage value fell the least, down 3. 2 percent from that year. “Period. Trio of generation companies.
While earnings disappointed, there are plenty of positives for the business. Production issues have been sorted out and Apple has a potentially large tailwind in the coming months thanks to China’s economic reopening.
Regarding Meta, Mould said: “It’s a huge positive wonder because few people imagine that it would bring smart news. Concerns about online advertising demand, regulatory pressures, and growing fears of losing a lot of money in the metaverse have weighed on Meta’s stock value over the past year.
Meta’s percentages soared after reporting better-than-expected sales, cost-cutting measures and a $40 billion percentage buyback.
UK investors withdrew a record £25. 7 billion from their budget in 2022, the first time an annual outflow has been reported, according to figures from the Investment Association (IA), writes Andrew Michael.
This figure includes £282 million that investors withdrew in total in December alone, the tenth consecutive month that cash has flowed out of the fund business rather than into it.
Bucking the trend in December were funds from the North American, Global, and UK gilts sectors, which attracted investor cash to the tune of £358 million, £237 million and £127 million respectively.
Prior to 2022’s dismal overall performance, the previous worst year was 2008 when, despite the global financial crisis, investors channelled a net amount of cash into the funds market.
The IA said overall budgetary control across all investment sectors amounted to £1. 4 trillion at the end of December last year, up from £1. 6 trillion in December 2021.
Two of the worst performing areas of last year came from funds in the UK All Companies and European Ex-UK sectors which, between them, witnessed outflows of around £13 billion.
The follow-through and investment sectors controlled to buck the trend, attracting £11 billion and £5. 4 billion respectively.
Dzmitry Lipski of Interactive Investor said: “Last year there were few put options that investors were able to hide, with bonds falling along with stocks and an overall complicated year that ended in primary political and economic turbulence.
“A new year bounce [in stock market returns] has shown how quickly sentiment can change, and some of last year’s outflows may already be working their way back into markets. There are no guarantees, but history shows us that the best years can often follow the worst.”
Chris Cummings, chief executive of IA, said: “With markets recovering in early 2023 and investment prospects improving in steady revenue streams, there are glimmers of hope that investor confidence will increase in the first quarter of 2023. “
The burgeoning market for investment platforms and trading apps aimed at amateur investors has become increasingly crowded with two installations introduced in less than a week, writes Andrew Michael.
METER
According to M&G Wealth, &me is an investing app that enables clients to call, chat or book a video meeting with a dedicated consultant. The company claims the app can help customers identify how they feel about investing, their attitude to risk, and their financial goals.
The app then matches customers to one of six portfolios and an investment account, adding an Individual Savings Account (ISA), a General Investment Account, or a Pension.
Investment options include a range of ‘classic’ or ‘targeted’ portfolios featuring a mix of product types, from exchange-traded funds (ETFs) to an array of so-called active and passively managed funds.
Passively controlled budgets, such as ETFs and index trackers, are computer-controlled and subsidized through algorithms to mimic an investment benchmark. Active budgets rely on investment professionals composing a basket of securities to outperform an express stock index.
The minimum investment for me is £500. Management fees are scaled on a sliding scale, from 0. 75% for invested amounts up to £10,000 to 0. 35% for amounts over £500,000. In addition, there is also an investment fund fee ranging from 0. 19% of the invested amount in the vintage range. , up to 0. 42% for the target range.
METER
In terms of cost, this pitches &me’s rates halfway between two large, existing platform providers.
For the same level of investment, figures from Forbes Advisor UK’s recent survey on investment trading platforms, show that AJ Bell would typically charge £112 a year for its managed portfolio offering, while the fee for a similar service from Hargreaves Lansdown is £288.
David Montgomery, CEO of M
Bestinvest’s free mobile app allows its clients to manage their investments on the go, log in or open an account with FaceID or TouchID technology, as well as make transfers to a wide variety of ISAs, verify their investments, and load cash or establish funds. Contributions.
The app consolidates accounts into a single position to help clients control the value and functionality of their holdings. Users can also link their account to their circle of family and friends to help them manage and plan their financial future together.
The app is available on the Apple App Store for iOS and Google Play Store for Android.
Elsewhere, investment trading platform interactive investor has introduced an entry-level addition to its subscription service.
Investor Essentials allows clients to invest up to £30,000 for £4. 99 per month, plus a trading payment of £5. 99 for funds, investment trusts and UK and US shares. Once consumers reach this limit, they are transferred to the service’s ‘Investor’ price. plan that costs £9. 99 per month.
UK companies paid inventory dividends of £94. 3 billion in 2022, up from £87. 3 billion a year earlier, according to Link Group, the fund management service, writes Andrew Michael.
Link Group says overall dividends, which cover regular bills and those from special or one-time distributions, rose 8% year-on-year. The underlying bills, the special dividends, rose by 16. 5% to £84. 8 billion.
With the exception of domestic utilities and customer staples, dividend payments have been higher in almost all business sectors over the past year. The weakness of the pound sterling for much of 2022 gave further impetus to bills declared in dollars and then changed into pounds. pounds sterling at favorable exchange rates.
Link says the resurgence in bank dividends is the main driving force of the year, accounting for a quarter of the increase in underlying distributions. The mining and oil sectors have also contributed significantly to the rise in energy prices.
But Link adds that mining stocks have reached an “inflection point” in 2022: “In the second half of the year, lower prices of several commodities had started to affect dividends, causing them to fall by as much as a fifth. “
Link predicts dividends will grow more slowly this year as emerging interest rates on debt weigh more heavily on corporate earnings.
Total bills are estimated to fall by 2. 8% in 2023, equating to a year-end figure of £91. 7 billion. Taking into account one-time invoices and normal dividend invoices, Link estimates that UK-listed corporations will have a 3. 7% pullback for the next 12 months.
Ian Stokes, of Link Group, said: “The economic sky is decidedly darker in the UK and around the world than this time last year.
“Corporate margins in peak sectors are already under pressure due to high inflation and tight household budgets. Rising interest rates are now undermining profits by expanding debt-servicing costs as well. This will leave less cash for dividends and percentage buybacks in many sectors. “
UK investors invested a record amount in venture capital firms (VAPs) last year, according to government figures, writes Andrew Michael.
VCTs, which invest in companies, raised £1. 122 billion in the 2021-2022 financial year, up 68% on last year.
Introduced in 1995, VDCs are a government-backed program designed to stimulate business activity by encouraging investment in small businesses that need funding for the next stage.
Alex Davies, ceo and founder of VCT broker Wealth Club, said: “VCTs are really edging into the mainstream. Despite economic uncertainty, demand for VCTs in the current tax year is also holding up and we expect it to be another bumper year.”
VCTs raise funds, each year, through new and/or additional share issuances. By making an investment in early-stage, high-risk companies, investors get tax breaks to offset the increased threat they assume.
Tax benefits include an initial tax break of up to 30% if shares in trusts are held for five years, no capital gains tax in the event of expansion, and tax-free dividends.
In his autumn speech last November, Chancellor of the Exchequer Jeremy Hunt said he would deliver on the promise made by his predecessor, Kwasi Kwarteng, in his September mini-budget to extend the TDC plan beyond 2025.
Individual investors are currently allowed to invest up to £200,000 annually into a VCT. According to official figures, the average amount invested by individuals for the tax year 2020-2021 – the latest figure available – was about £33,000.
The government said the amount of budget raised through VDCs has been on an upward trend in recent years and has more than doubled since the 2009-2010 fiscal year. The number of PAVs that increased the budget in the last fiscal year increased from 40 to 46 in the last fiscal year. Period 2020-21.
Bitcoin’s 10-year period to the end of last year is 40 times longer than the next best-performing investment, although the cryptocurrency’s price plummeted nearly two-thirds in 2022, writes Andrew Michael.
AJ Bell’s Investor Strategy League calculated the returns of 27 other investments over a decade, from inventory indices to real estate to commodities. See the table below.
Despite a 60% price drop last year, the investment platform said that Bitcoin, the world’s most famous cryptocurrency, still managed to increase in value by 162,981% over the past decade to the end of 2022.
In terms of liquidity, a £1,000 investment made and held in Bitcoin between the beginning of 2012 and the end of last year would have been just over £1. 6 million.
AJ Bell said the most productive performance sector at the moment is the global generation budget sector, which returned 466% over the same period.
At the other end of the scale, AJ Bell said investing in UK bonds, which are part of a broader asset class also known as bonds or constant income, has produced a pullback of just 3. 1% over the entire decade. The worst performer over the past 10 years is cash-based individual savings accounts (ISAs), with a 12% return.
In terms of short-term returns, last year the so-called “bargain hunter” methods emerged as the most sensible, with a 16% decline on the year. A bargain hunting strategy invests in the worst-performing sector of the past. 12 months, switching to the new sector at the beginning of the year.
Laith Khalaf, head of investment research at AJ Bell, said: “There is a sharp sell-off in the riskier spaces in the market in 2022, but that hasn’t brought down risk-hungry methods when they look for functionality in the market. “beyond the decade.
“Low-risk, safe-haven assets have not served investors, especially over a 10-year horizon. A typical money ISA yielded only 12%, and an investment in UK government bonds yielded only 3%, compared to a customer value inflation of 30% over the same period.
Sportswear retailer JD Sports has been named the most popular FTSE 100 stock by market analysts in 2022, based on the number of “buy, sell” and “hold” tickets issued to those keeping an eye on its shares, writes Andrew Michael.
Brewin Dolphin’s research shows that the company has earned 14 “buy” and thirteen “hold” ratings from stock analysts over the past year, with only one recommendation that its shares be sold.
The percentage value of JD Sports fell from 195 pence at the start of 2022 to 90 pence in mid-October before recovering to close the year at 138 pence.
It tops Brewin Dolphin’s study for the second year in a row, ahead of Prudential, the Asia-focused insurance company whose percentage value has risen 50% from its October 2022 low, with corrugated packaging company Smurfit Kappa in third place.
Resources and energy teams Shell, Centrica, Glencore and Endeavor Mining were also in the top 10 thanks to persistent rise in commodity prices.
Brewin Dolphin said the 100 FTSE stocks least favoured by analysts included Rolls-Royce as well as a number of retailers, and added Kingfisher, owner of DIY chain B.
At the bottom of the list is the investor group, which racked up nine “sell” recommendations in 2022 and was temporarily demoted from the UK’s smartest companies list before rejoining before the end of the year.
Rob Burgeman, senior investment manager at RBC Brewin Dolphin, said: “The FTSE’s hundred most and least popular stocks have changed dramatically since the start of 2022, when corporations such as Hikma Pharmaceuticals, asset builder Taylor Wimpey and Vodafone were among the top “. classified.
“In fact, Hikma is the most sensible and has since been relegated to the FTSE 250, highlighting the importance of making pro-monetary recommendations before making vital investment decisions.
“The continued prestige of JD Sports among analysts is curious, as customer spending is expected to see a sharp drop. That said, this is already largely factored into the percentage value and there is a much more positive view of JD Sports’ long-term prospects.
UK investors added £389 million to the investment budget in November 2022, the first time since last April that cash flowed into collective cars such as OEICs and mutual budgeting, rather than out of the sector, writes Andrew Michael.
Despite the good fortunes of the overall budget, the Investment Association (IA) warned that the outlook remains challenging.
In September last year, investors pulled a record £7. 5 billion out of their budget amid market turmoil and economic uncertainty.
According to the IA, the best-selling fund sectors from November were North America, which experienced net retail sales of £1.3 billion, followed by Corporate Bond (£720 million), Sterling Corporate Bond (£238 million), Global Inflation Linked Bond (£205 million) and Volatility Managed (£149 million).
AI said: “The positive knowledge of inflation from the United States has boosted market expectations that, on the other side of the Atlantic, the green shoots of recovery are emerging. “
The presence of several fixed income sectors on the latest most popular buy list also suggests that investors rediscovered an appetite for bonds last autumn as interest rate rises, both at home and abroad, started to take effect in helping to damp down inflation, especially in the US.
Increasing inflation can hurt bondholders by eroding the buying power of the fixed payments that investors receive from their holdings, and also by reducing bond values. The reverse is true when inflation falls.
The accumulation of money flows in North America’s steady-source income sectors last November contrasts sharply with the budget invested in UK and European equities, which saw a combined net outflow of nearly £2 billion.
Investors in equity-exposed budgets dumped holdings of more than £6 billion last year, according to the latest buying and selling knowledge from Calastone’s global budget network, writes Andrew Michael.
The company’s cash flow ratio showed that overall the equity budget lost £6. 29 billion in 2022, the worst figure in eight years. Three-quarters of the sector’s financial flows occurred in the third quarter, a period that coincided with excessive market turbulence.
Calastone reported that investors took particularly evasive action in relation to UK-focused funds. Net sales of holdings – that is, outflows of money – were recorded in the sector during every month of 2022, with the overall amount, including non-equity funds, totalling nearly £8.4 billion for the year.
Elsewhere, investors also sold the European budget to the £2. 6 billion song in 2022, the fourth consecutive year of net sales in this area. Other sectors that posted net losses at the time were North America (£1. 2 billion) and Asia-Pacific (£1 billion).
The cash flow index showed that last year was also bad for so-called “passive” index funds, with the sector posting net sales of £4. 5 billion.
In contrast, global funds – whose portfolios are invested across a range of geographical regions – continued to attract money.
Calastone said investors added around £5 billion to the sector last year, largely thanks to the attractiveness of the global budget that incorporates an environmental, social and governance (ESG) investment mandate.
Emerging market funds also enjoyed net inflows of cash worth £650 million.
Despite a seismic year in bond markets, the steady source of income sector also saw net cash inflows of £2. 9 billion, well below some of the £7 billion of investor liquidity that came into the bond budget in 2021.
Edward Glyn, Head of Global Markets at Calastone, said: “2022 has been a memorable one. The move by central banks from an inflow of reasonable currencies and currencies to a series of rate hikes aimed at taming rising inflation has rattled asset markets.
“Such large outflows from equity funds in 2022 without a corresponding increase in other asset classes is a very large vote of no-confidence. Fund management groups were hit with a double whammy. The supply of capital shrank as bond and equity markets fell, and the replenishment rate either reduced or went into reverse as investors either slowed their buying or fled for the safety of cash.”
Investors went far and wide in their quest to make money in 2022, according to the most-bought funds data from three leading investment platforms, writes Jo Groves.
Topping the buy lists were global funds, funds of funds and precious metal funds. Cautious funds were also a popular option as investors sought a safe harbour from falling stock markets.
Below, we’ve compiled a list of the 10 most sensible budgets purchased in 2022 through clients of investment platforms AJ Bell, Bestinvest, and Hargreaves Lansdown:
So where’s investors’ cash amid economic uncertainty and stock market volatility?Let’s take a look at some of the key investment themes of 2022.
First, there are budget budgets that offer out-of-the-box portfolios for investors who need a more hands-on approach. These budgets are allocated based on threat (from cautious to adventurous) and invested in a mix of budgets spread across other asset categories such as stocks, bonds, and commodities.
After posting impressive gains over the past 3 years, the global fund industry reached its limits last year, with an 11% drop (according to Trustnet). As a result, investors bought global budgets at reduced costs in 2022, hoping for a longer future. upside as stock markets recovered.
Precious metal funds were also a popular option. Gold, in particular, is seen as a hedge against high inflation and a potential sanctuary in a stock market downturn. Gold investors have enjoyed a 15% increase in its price over the last year, while the price of silver is up by 17%.
The war between the active and passive budget also looks set to continue. Investors: The Recovery in U. S. Stock MarketsU. S. , Budget S tracker
Finally, what budget has been bought to the maximum on the platforms?
At the most sensible spot on the list, Scottish Mortgage Investment Trust, which is in the top four most sensible on two of the investment platforms. Managed through Baillie Gifford, it focuses on business expansion corporations and more than 50% of the fund is invested in the United States. .
Most likely, the fund will attract investors willing to tolerate volatility in search of higher returns.
The fund had a stellar 2020, achieving a 110% return, before losing over 45% of its value in 2022.
Fundsmith Equity, controlled by veteran manager Terry Smith, was also popular with investors. Invest in a concentrated portfolio of global equities, with a preference for the U. S. and the consumer, healthcare, and generation sectors.
However, its functionality has also been mixed, with a 62% decline in the first quartile in five years, but a 14% loss in the third quartile in 2022, according to Trustnet.
Home REIT, the asset investment trust valued at £1. 2 billion, has been forced to suspend its shares after missing a deadline to publish its annual report in accordance with UK monetary rules, writes Andrew Michael.
The investment firm, which budgets for the acquisition and creation of homes to provide housing for homeless people, has been in litigation for two months with the short-term operator Viceroy Research, which last November published a report that included a series of claims against the company.
These included allegations, which Home REIT denies, of inflated asset values and conflicts of interest with developers. But the report reports a drop in percentage value (from over 80 pence in November 2022 to almost 37 pence now), leading to a drop in confidence in the FTSE 250 index.
Furthermore, those claims led BDO, Home REIT’s auditor, to redo its work on the company’s accounts and delay the publication of its annual report.
This caused the investment to be accepted as true in violation of the Financial Conduct Authority’s disclosure and transparency rules, which require the suspension of trading in its shares.
The regulations stipulate that a company must publish its annual report within four months of the end of its fiscal year. Home REIT’s fiscal year ended on Aug. 31, giving it until New Year’s Eve to complete the project or threaten to break regulations. .
In a statement to the London Stock Exchange, Home REIT said: “The Company intends to apply for the relisting of its ordinary shares following the release of 2022 results, which the Company expects to publish as soon as possible.
“While the Company awaits the final touch of BDO’s audit procedures, the Company will continue the measures announced in the past to maintain shareholder confidence, while continuing its overall operations to provide high-quality housing for some of the Company’s most vulnerable people. . »
Oli Creasey, equity research analyst at Quilter Cheviot, said: “In principle, this is a technical breach of rules, and one that should be able to be remedied fairly quickly. We would expect that the results will be published in January 2023, and trading in the shares to resume promptly after that.
“The reaction to full-year results, when available, will depend largely on the auditor’s statement, as well as the REIT’s management’s reaction to the allegations. For once, analysts may not be focused on financials. The local REIT has already refuted the report, but it will most likely want to offer more important details to investors to increase confidence in the company.
Twitter users have decreed that Elon Musk, the company’s chief executive, should step down from his role after he held a vote to decide his corporate fate at the social microblogging platform, writes Andrew Michael.
The billionaire entrepreneur, who also runs electric carmaker Tesla and air transport maker SpaceX, bought Twitter for 36 billion pounds ($44 billion) in October, stripping the company of its value.
Yesterday (Sunday), shortly after attending the World Cup final in Qatar, Musk announced a “yes” or “no” ballot on Twitter asking his 122 million fans if he was stepping down as the company’s director.
“I will respect the effects of the election,” he tweeted.
Of the 17. 5 million Twitter accounts that voted, more than a portion (57. 5%) called for Musk’s resignation, while the rest (42. 5%) said he would stay.
It remains unclear whether Mr Musk will honour his decision. An hour after the result of the poll appeared on Twitter, he tweeted: “As the saying goes, be careful what you wish for”.
Anyway, he would own the company.
Reacting to the poll, Changpeng Zhao, head of cryptocurrency platform Binance (which has 8 million followers on Twitter), tweeted at Mr. Musk to resign, urging him to “stay the course. “
Last month, Musk told a Delaware judge that he plans to reduce his time at Twitter and eventually find someone else to run the company.
Since Musk took over the company in October, many questionable decisions have been made. Roughly some of the company’s staff have been laid off, while an attempt to roll out Twitter’s paid verification feature was put on hold before being reactivated last week.
Musk has also been criticized for his company’s content moderation and has been condemned by both the United Nations and the European Union for suspensions the company has imposed on journalists over how they cover the company.
Tesla’s stock value has fallen dramatically over the course of 2022 (down 60% year-to-date compared to the industry to just over $148 in recent years); Musk’s critics claim his fear of Twitter is damaging the electric carmaker’s brand.
Russ Mould, chief investment officer at AJ Bell, said: “Given the degree of Mr. Musk’s distraction on Twitter, the EV maker’s shareholders will breathe a big sigh of relief if he leaves Twitter and returns to Twitter. paintings on Tesla.
“For those who value work ethic so much, it turns out that Mr. Musk spends a lot of time on social media. With Tesla’s stock more than halving since the beginning of the year, he wants to roll up his sleeves and get his core business back on track.
Private investors believe that recession risk, both at home and abroad, will be the maximum significant risk to stock markets in 2023, according to investment platform Interactive Investor (ii), writes Andrew Michael.
This view is shared by pro-investment company executives, many of whom believe that slowing corporate profits and threats of recession are more of a fear than inflation in the coming year.
The past 12 months have been turbulent for equity investors, with faltering markets amid severe economic headwinds, compounded by skyrocketing inflation, emerging interest rates and growing recession clouds.
Stock market performance has also been affected by global supply chain bottlenecks and Russia’s invasion of Ukraine.
The majority of private investors (54%) told ii that uncertainty over the economic outlook meant they would stay on the investing sidelines in the coming months, either because they were unsure how best to re-jig their portfolios, or because they weren’t planning on making any changes.
Investors also said they were torn between the need to achieve investment growth or focusing on strategies that preserved existing capital over the coming year.
One-in-10 investors said they were pre-occupied with the issue of investing tax-efficiently. A likely factor for this were the decisions, revealed in last month’s Autumn Statement, to slash capital gains tax and dividend allowances from the new tax year in April.
According to ii, of the investors who are taking the plunge lately, a portion (50%) decide to invest in the United Kingdom, followed by the United States (20%). The company claims that domestic stocks are favored by investors thanks to an idea. known as “national bias,” which makes it less difficult to locate and perceive the corporations closest to home.
From the attitude of investment professionals, a survey conducted by the Association of Investment Firms (AIC) found that more than a fraction (61%) of member investment firm managers believed that inflation had already peaked. A quarter (25%) told AIC that there is still room for costs to continue to rise.
Managers told AIC that their biggest fears going forward are a slowdown in earnings and the prospect of a recession.
More than a quarter (28%) of executives cited energy as the top-performing sector in 2023, followed by IT (21%) and healthcare (11%).
Lee Wild, head of equity strategy at ii, said: “While we don’t know exactly what will happen next year, we do know that the UK economy will likely spend at least some of it in recession. And that’s by far the biggest worry.
“A fifth of investors are investing more in the U. S. , where exposure is mainly focused on growth stocks such as the generation sector. Technology had a torrid era in 2022, but it definitely reacted to any hint that the U. S. rate hike cycle. Slowing down. If rates peak early or even start falling later in the year, expansion stocks pick up the game. “
Evy Hambro, co-head of the BlackRock World Mining Trust, said: “This year, we have noticed a growing acceptance that the transition to a low-carbon transition will simply take place without mining corporations offering the necessary fabrics for technologies such as wind turbines, solar panels and electric vehicles.
“The desire to scale up these technologies has increased over the past 12 months, as governments, especially in Europe, have pledged to rely on energy imports from Russia. “
Fund managers actively investing in UK stocks had “a dismal year” in 2022, according to a study by AJ Bell, writes Andrew Michael.
This year, the investment platform’s Manager report, unlike Machine, calls “actively managed” funds, i. e. those made up of stocks selected through investment managers based on region, asset class or sector, with the aim of outperforming an express benchmark. such as an inventory index.
Unlike active budgeting, so-called “passive” investments, such as indexed budgeting or exchange-traded budgeting, are only designed to copy the functionality of stock market indices and other benchmarks, to outperform them.
AJ Bell said a quarter (27%) of the active budget managed to outperform a passive option this year. Nearly a third of the active budget achieved the feat in 2021.
The company added that active budgeting functionality has advanced over the long term, with more than a third of portfolios (39%) outperforming passive ones over a 10-year period, while specifying: “This still represents far less than a portion and this figure will be flattered through “survivorship bias,” as underperforming budgets tend to close or merge with others over time.
The report looked at active funds in seven equity sectors and compared their performance to the average passive fund in the same sector. The company said this approach provided a “real world comparison, reflecting the choice that retail investors face between active and passive funds”.
The proportion of active funds outperforming the average passive fund was as follows:
Laith Khalaf, AJ Bell’s head of investment analysis, said: “2022 has been a terrible year for active equity funds, especially those plying their trade in UK shares.
“In a year when stock markets have weakened, active managers hoped to outperform tracking budgets that simply passively track the index. But our most recent report shows those hopes have been dashed.
“When choosing active managers, investors want to tip the scales in their favor by conducting studies on managers with a proven track record of outperforming. This doesn’t guarantee the future, but if an individual active manager has outperformed over a long period of time, it suggests that they are competent and not just lucky.
From London to Aberdeen and Cardiff to Manchester, electric car maker Tesla tops the list for top buying percentages among retail investors in the UK, according to the latest figures from Freetrade, writes Jo Groves.
The trading platform’s retail investment map in Britain processed more than six million buy orders worth about £2 billion to see what shares its investors were buying.
Reasonable maximum purchases of 10 percent by investors founded in 10 U. K. cities showed that the electric car giant, whose boss Elon Musk recently paid $44 billion for the social network Twitter, is the most popular exchange in 8 places and the moment in the other pair.
Freetrade’s research showed that Londoners, Manchesterers, Liverpudlians and Glasgowans were the most avid investors in tech companies, with Alphabet, Apple, Amazon and Meta accounting for part of their percentage purchases.
Elsewhere, the effects showed that other people in Cardiff, Brighton and Northern Ireland were willing to include AMC and Gamestop on their shopping lists.
AMC and Gamestop made headlines in 2021 when, as part of the so-called “meme stock” revolution, personal investors on social trading platforms coordinated their buying activities to increase the percentage costs of corporations that were heavily shorted through institutional investors.
Other effects included:
Despite its national affection for Tesla, investors tend to have a more regional preference for other companies.
Dan Lane, senior analyst at Freetrade, said: “Greggs made it into the top 50 in Newcastle, but he didn’t even make it into the top 300 in London. Dispelling the popular football myth that there are more Manchester United enthusiasts in London than in Manchester, the club’s shares were 4 times more popular in Manchester than in the capital. The company also accounted for 1% of all equity money invested through Mancunians in 2022. “
The UK regulator has proposed major reforms aimed at reducing the fee for financial advice for millions of people with “basic needs”.
The Financial Conduct Authority (FCA) says its proposals would create a separate, simplified advice regime, making it easier and cheaper for firms to advise consumers about investments within stocks and shares individual savings accounts (ISAs).
According to a study by the FCA, another 4. 2 million people in the UK have more than £10,000 in money and say they are willing to invest some of their savings.
Analysis by Paragon Bank shows that deposits in savings accounts hit £1 trillion for the first time in September, up £25 billion compared with the same month in 2021.
Paragon has more than £428 billion in “easily accessible” savings accounts that pay less than 0. 5% interest, and £142 billion is held in accounts that pay 0. 25% or less.
The FCA says: “While holding a reserve of money is a smart way to cope with unforeseen expenses, consumers with gigantic amounts of excess money can damage their monetary position as inflation reduces that of their savings.
“Changing the existing framework can help mass-market consulting clients with simpler needs. “
The FCA recommends that in-person financial advice should be too expensive for potential investors, “as it could prevent them from making an investment when it might be in their interest to do so. “
Its plans include lowering the qualification point required for corporations wishing to advise on products such as ISA shares and shares. It also requires fees to be paid in installments so consumers don’t have to deal with giant bills upfront.
Chris Hill, head of investment platform Hargreaves Lansdown, said: “We have the FCA’s resolve to make it simple to make an investment and it’s wonderful that the FCA recognises that the existing all-or-nothing recommendation technique is rarely suitable for everyone, i. e. those with sufficient savings who are embarking on their investment journey. The proposal deserves help limiting features for those who need to invest but don’t know where to start.
Richard Wilson of Interactive Investor said: “This is a watershed moment in the UK. This will determine whether we can begin to replace the narrative around monetary well-being in the long run.
According to Alliance Trust, men are much more likely than women to invest in stocks, but they are also more likely to abandon their investments more quickly when market turbulence hits, writes Andrew Michael.
Research conducted for the investment firm showed that about one in three UK men (30%) have an Individual Savings Account (ISA), compared to one in six women (16%).
The trend continues in other investment products, with one in six men (17%) reporting a general investment account, compared to one in 10 women (10%).
A stocks and shares ISA is a tax-efficient savings plan that allows the holder to invest up to £20,000 in shares each tax year, while shielding them from income tax, capital gains tax (CGT) and dividend tax.
A general investment account is a product that allows its holder to make investments outdoors from tax envelopes such as ISAs.
According to the study, women are much more likely than men to remain calm in the face of market volatility.
Alliance Trust found that nearly half of male investors (48%) said they had sold investments when they went down in value in a bid to avoid losing more money. This compared with just over a third of women (38%) who were less likely to have ‘crystallised’ a loss during a market dip.
Mark Atkinson, head of marketing at Alliance Trust, said: “Despite being less likely to invest, women are proving to be better investors. Their behaviour implies a steady long-term investment strategy, without knee-jerk reactions or impatient decisions. This is likely to result in much better financial performance.
“Recent weeks have seen even more chaos in the markets, and dramatic headlines could cause a crisis of confidence among investors. Staying calm is key. Investing is the one that stays silent for as long as possible. Patience will make it pay. “
The Financial Conduct Authority (FCA) warns stock trading apps to review the “game-like” elements in their offerings, so they don’t mislead investors or inspire them to take risks and lose money, writes Andrew Michael.
These types of apps, available on smartphones and tablets, are becoming increasingly popular, especially among those under the age of 40.
In the first 4 months of 2021, the FCA said 1. 15 million accounts were opened with 4 trading apps, roughly double the number opened with all other retail investments combined.
The regulator says the “gamification” of commercial apps, such as removing common user notifications and removing celebratory messages at the end of an industry, can lead to poor outcomes for consumers.
It said that “consumers using apps with these kinds of features were more likely to invest in products beyond their risk appetite”.
The FCA has produced research raising concerns that customers using trading apps are exposed to high-risk investments, with some demonstrating behaviour more commonly found with problem gamblers.
To make sure consumers are treated fairly, the regulator says all corporations review their products to make sure they are fit for purpose.
Next year, the FCA will introduce Consumer Duty, which requires companies to design designs that enable consumers to make “efficient, timely and well-informed decisions about monetary products and. “
Sarah Pritchard, executive director of markets at the FCA, said: “There are certain product design features that can contribute to problematic, or even playful, investor behaviour. We expect all corporations that offer fair trade to consumers to review and, where appropriate, introduce innovations into their products.
“They also want to make sure they cater to their customers, especially those who are in vulnerable cases or showing symptoms of challenging gaming behavior. “
Jeremy Hunt, Chancellor of the Exchequer, has announced adjustments to Capital Gains Tax (CGT) and Dividend Tax as components of today’s Autumn Return, writes Andrew Michael.
This measure is most likely intended to generate interest in individual savings accounts, which can be used to protect savings and investments from taxes.
The CGT applies to sales of shares, temporary homes and other assets. For taxpayers with a fundamental rate, the CGT rate is decided through the magnitude of the gain, the taxable source of income levels, and whether the gain comes from residential or other assets. assets.
Higher and additional rate income tax payers are charged CGT at a rate of 28% on gains made from the disposal of a residential property and 20% on gains made from other chargeable assets.
Hunt said the CGT’s existing annual tax-free allowance of £12,300 will be reduced to £6,000 from the start of the new financial year in April 2023. The amount will be halved again, to £3,000, in April 2024.
The majority of CGT that is paid to the government comes from a small number of tax payers who make large gains.
However, Chris Springett, tax partner at Evelyn Partners, said: “The halving of the allowance increases the burden on investors and property owners at the other end of the CGT spectrum – those who have made relatively modest gains but are nevertheless drawn across a much-reduced threshold.
“These taxpayers may have to file tax returns for the first time to declare their capital gains, which will be a new administrative headache. “
Today’s announcement by Mr. Hunt bolsters the case for holding envelope investments, such as individual savings accounts (ISAs), which are exempt from CGT.
Springett said this is also a reminder to use the benefits as successfully as possible: “In terms of reducing exposure to CGT, married couples and those in civil partnerships can transfer assets between each other – what is called a spousal move. – to use them either together, allowances, as well as transfer a possible gain to the spouse who would possibly be exposed to a lower tax bracket.
Dividend tax is a tax paid through shareholders on dividends they earn from corporations. Dividends are invoices that companies make, annually or semi-annually, from the profits they have generated.
The existing annual dividend tax allowance, the amount a recipient can get from dividends a year before paying tax, is £2,000. Hunt said he would cut this amount in half, to £1,000 from the new tax year next April, and then halve it again, to £500, from April 2024.
The amount a shareholder will pay in dividend tax depends on their source of income. Taxpayers to the fundamental rate are charged a rate of 8. 75%. This figure increases to 33. 75% for taxpayers at the top rate and 39. 35% for taxpayers at the top rate. the additional fee.
Chris Springett, of Evelyn Partners, said: “The annual tax-free dividend allowance has been reduced from £5,000 in 2017/18 to just £2,000 lately, and will be reduced from April to a limited amount of £1,000 and then to a very restrictive figure of £1,000,500 in 2023/24. Combined with the 1. 25% increase in the dividend tax rate introduced in April 2022, this constitutes a real crackdown on dividends.
“This is a blow to investors who hold assets outside of ISAs and to retirees who rely on the dividend income source to supplement their pensions. This is yet another reminder to use ISA allocations as a tax-free umbrella to hold investments.
“Business owners, many of whom pay themselves partially or primarily through dividends rather than salaries, will also be hit.”
Share trading platform eToro has struck a deal allowing millions of retail investors to have their say on how the companies they invest in are run, Andrew Michael writes.
The so-called “social investment network” has partnered with Broadridge Financial Solutions to offer proxy voting to its 30 million consumers around the world. In the UK, eToro has over 3 million registered users.
Proxy voting shareholders can weigh in at a company’s Annual General Meeting (AGM) on key facets of a company’s strategy or how an organization is run.
eToro says its clients will participate in general meetings by casting proxy votes that are managed and supported through Broadridge, a service provider specializing in this area.
eToro adds that the option will increase the size of its investors who hold fractional shares, allowing all of its clients to vote “on issues such as mergers, executive redemptions, and environmental, social, and governance [ESG] proposals. “
Rival sharedealing platforms, including Hargreaves Lansdown, AJ Bell and interactive investor, already offer similar voting services for their users.
Making ESG investments, once dismissed as a virtuous concept that could simply jeopardize portfolio returns, has had a central component in the global investment scene in recent years.
For young investors in particular, making an investment transparently has become a vital consideration, sometimes driven by the big issues of the moment, from weather conditions to general corporate behavior.
eToro says that votes submitted through its investors will be aggregated and shared with the relevant company.
A global survey of 10,000 retail investors conducted through the platform found that approximately three-quarters (73%) sought to vote at general meetings. According to the study, younger investors were the most interested in giving their opinion, at 80%. 18- to 34-year-olds who say they would vote in general assemblies if given the chance, compared to 65% of those 55 and older.
When asked which corporate issues they would like to vote on the most, dividends (the annual distributions paid through some corporations to shareholders out of their profits) came first, followed by pay to executives and then climate strategy.
Proxy voting for indexed stocks on US exchanges will take place on the eToro platform later this month, followed by voting for stocks on other global exchanges.
Yoni Assia, ceo and co-founder of eToro, said: “Retail investors have not always been given the platform, the voice and the support that they deserve but this is rapidly changing. Retail investor access to proxy voting is a crucial step in this journey.
“There is obviously a huge appetite among retail investors to participate in the annual meetings and we look forward to seeing how consumers will interact with this new feature. “
According to a study by the Association of Investment Firms (AIC), the vast majority of financial professionals are unwilling to fully invest in the sustainability claims of funds.
Sustainable investing, also known as socially responsible investing, is a process that incorporates environmental, social and governance (ESG) factors into investment decisions.
ESG investing, once dismissed as a virtuous concept that could jeopardize portfolio returns, has a central component to the global investment scene in recent years. As a theme, it is particularly popular among younger investors.
In theory, corporations that actively make positive replacements across various ESG metrics (such as how they run their businesses or treat their workers) will rank higher on a fund manager’s “buy” list than their rivals.
The AIC asked wealth control and monetary advisory firms to rate their point of confidence in the sustainability of ESG claims made through the investment budget on a scale of 1 to 5.
From a universe of 91 wealth managers and 109 financial advisors, just 1% responded by scoring a ‘5’ indicating they had complete trust in providers’ claims. The majority (56%) rated claims with a ‘3’ suggesting they had “limited trust” in the promises being made.
The findings coincide with the announcement that the U. K. ‘s monetary watchdog, the Financial Conduct Authority, is proposing a new set of regulations to prevent consumers from being misled by exaggerated claims about supposedly environmentally friendly investments (see Oct. 25 article below).
In an effort to combat greenwashing (where unsubstantiated claims are made to lie to consumers into believing that a company’s products are more environmentally friendly than they are), the FCA recently proposed a package of measures and restrictions.
These come with sustainability labels for investment products and restrictions on how terms such as “ESG”, “sustainable” and “green” are used.
Despite the skepticism surrounding ESG claims, monetary professionals told the AIC that they continue to support making ESG investments in general. More than three-quarters of companies surveyed (79%) acknowledge that “investments deserve to have a positive effect and monetary return. “
Nick Britton, AIC’s Head of Interim Communications, said: “Advisors and wealth managers are overwhelmingly in agreement with ESG and sustainable investing, but they are also acutely aware of the dangers of greenwashing, with only 1 in 100 people fully trusting AIC’s ESG criteria. claims. funds. “
“ESG investing has faced a real typhoon this year, which has obviously affected functionality and threatened expectations. Market declines, emerging inflation, and the war in Ukraine have made many advisors and wealth managers more reluctant to invest in sustainable budgets in the short term. In the long term, they still expect demand for ESG investments in general to increase over the next 12 months.
Elon Musk’s acrimonious months-long takeover of Twitter is now over, with the Tesla boss paying just over £38 billion ($44 billion) to snap up social media microblogging, writes Kevin Pratt.
Musk posted a tweet that said “the bird is free,” indicating that he now owns the platform.
Reports imply that he has fired several top executives, including Parag Agrawal, the chief executive. He is also expected to lay off a portion of Twitter’s 9,000 employees.
Musk is also expected to replace the way Twitter operates in his pursuit of what he called “absolutely relaxed speech. “This would possibly come with updating the site’s algorithm, reducing moderation activity, making it possible for users to edit their tweets, and lifting bans on questionable figures such as former U. S. President Donald Trump, who banned access to the site last year.
Further developments could see Twitter’s scope expanded so that the app could become a multi-purpose life management tool, enabling a range of administrative functions.
In a message to Twitter advertisers yesterday, Musk said his pursuit of relaxed discourse would not mean the site would become a “hellscape where anything can be said without consequence. “
Analysts believe Mr Musk will need ongoing support from advertisers because the price he paid for Twitter represents a significant premium over its true market value.
At the close of trading on Thursday, Twitter shares were valued at just over £46 ($53). The New York Stock Exchange, where the shares are listed, issued a notice that the suspension of trading in the shares is “pending before the market. “opens later at 9:30 a. m. U. S. Airport(2:30 p. m. in the United Kingdom).
According to financial commentators, it’s likely to be many days – and possibly weeks – before investors are credited once Mr Musk’s acquisition of Twitter has officially gone through.
What we do know is that shareholders will receive £46.70 ($54.20) for each share they held up to the time of acquisition.
Susannah Streeter of Hargreaves Lansdown said: “For UK investors, the proceeds of the money will be exchanged from US dollars to British pounds, subject to the exchange rate prevailing at the time and popular currency conversion fees. We have yet to hear from Twitter that the purchase has been made, so we don’t yet know what the prevailing exchange rate will be.
Musk’s decision to deprive Twitter of the company will now see it removed from the list, leaving a void for a new company to take its place.
“Insurer Arch Capital Group Ltd is established on Twitter Inc. in the S
This news means that the index’s budget, which in the past held Twitter inventories, will also have to adjust their portfolios to account for this decision. Index budgeting, or trackers, are automatic investments that contain baskets of inventory intended to copy the functionality of a specific inventory index.
Billionaire business tycoon Elon Musk appears to have closed his deal to buy social media giant Twitter, turning his profile into the platform for him to say “Chief Twit,” ahead of tomorrow’s acquisition deadline (Friday, October 28), writes Mark Hooson.
Negotiations between Musk and Twitter over the £38 billion acquisition have dragged on since April, stalled by disputes over how many fake user profiles and spam Twitter might have had.
The Tesla boss threatened to pull out of the £46. 72-per-share deal in July and filed a lawsuit via Twitter. The two sides were due to face off in court this month, and Musk could face an £860 million buyout clause in the event of a withdrawal. .
Earlier this month, however, the new ‘Chief Twit’ agreed to proceed with the deal. He is widely believed to want to prioritise eradicating spam and promoting free speech on the platform.
Yesterday on Twitter, Musk shared a video of himself visiting Twitter’s headquarters with a sink in the kitchen. The caption read, “Enter Twitter HQ, Let It In!” »
He has also talked in general terms about transforming Twitter into an ‘everything app’ in the mould of China’s WeChat – an application for completing a wide range of tasks including booking taxis and medical appointments.
Musk is expected to reinstate former U. S. President Donald Trump on the platform. Trump was “permanently” banned from Twitter due to the “risk of additional incitement to violence” in January 2021, following an insurrection at the Capitol in Washington DC involving his supporters.
Analysts believe that Twitter’s new owner will most likely eliminate jobs at the company. Musk is expected to take care of Twitter’s staff tomorrow, Friday, Oct. 28.
Investors could get another £5. 7 billion in dividends from British companies this year due to the pound’s fall against the US dollar, writes Andrew Michael.
This accumulation is a reminder of how the weakness of the British pound benefits many UK companies, as they make much of their profits in US dollars and benefit from the exchange rate when they repatriate their profits.
The effects were those of Link Group’s latest Dividend Monitor.
Dividends are bills that corporations make to shareholders from annual profits and are perceived by some investors, including pension funds, as an important source of income, especially for those who are approaching or approaching retirement.
According to Link, dividends fell by 8. 4% year-on-year to £31. 4 billion for the third quarter of 2022.
The company said the figure had been “strongly affected” by the delisting of mining company BHP from the London Stock Exchange.
Over the past year, mining and energy companies have rewarded investors with windfall payouts following the end of the pandemic, forcing companies to save money in the face of unprecedented economic conditions.
Excluding BHP’s exit, dividends rose as much as 1% in the third quarter from a year earlier.
Link said: “The sharp drop in special dividends and the decline in mining payouts, even after the adjustment for BHP, were offset by the strength of banks and other currency corporations, as well as oil corporations. “
The company added that “the weakness of the British pound has also greatly favoured the third quarter figures, reaching £1. 9 billion, as many dividends are declared in dollars. “
Without this buildup caused by exchange rate fluctuations, Link said invoices were smaller than expected.
For the full year, Link forecasted that the “extraordinary surge in the US dollar will add a record £5.7 billion to UK dividends and is the driver of an upgrade to our expectations for the fourth quarter of 2022”.
Total dividends are expected to reach £97. 4 billion for the full year 2022, a year-on-year increase of 5. 5%, but Link said it expects cuts in mining dividends and one-off payments.
Ian Stokes, chief executive of Link Group, said: “For 2023 we expect further relief in mining dividends and likely a drop in one-off special dividends, but outside of mining there is still room to increase payouts, even with a weakened economy. Array”
“Our interim forecast for 2023 suggests a slight decline in total dividends to £96bn. This is no replacement for our expectations that UK bills will only return to pre-pandemic highs in 2025. “
The Financial Conduct Authority (FCA), the UK’s monetary regulator, has proposed regulations to prevent consumers from being misled by exaggerated claims about supposedly environmentally friendly investments, writes Andrew Michael.
Making an environmental or ethical investment encompasses a variety of issues, from considerations about corporate habits to anxiety about climate change.
Within this sphere, the growth enjoyed in recent years by environmental, social and governance (ESG) investing means it has become a mainstay of the global financial landscape, with hundreds of billions of pounds invested worldwide in funds that purport to do good.
But according to the FCA, “exaggerated, misleading, or unsubstantiated claims about ESG credentials undermine confidence in those products. “
In a bid to combat greenwashing (where unsubstantiated claims are made to lie to consumers into believing that a company’s products are more environmentally friendly than they are), the FCA proposes a set of measures and restrictions.
These come with sustainability labels for investment products and restrictions on how terms like “ESG,” “green,” or “sustainable” are used.
Sacha Sadan, head of ESG at FCA, said: “Consumers want to be confident when products claim to be more sustainable than they actually are. The regulations we are proposing will help consumers and businesses accept what is true in this sector.
Beth Lloyd, Quilter’s director of responsible wealth strategy, said: “This is a step forward in helping to provide consumers with the required protections and limits when it comes to culpable investing. Lazy labeling of investment products as ‘ESG “has not been useful in recent times and has caused increasing confusion among consumers and the industry as a whole.
“Having transparent definitions to adhere to and refer to will not only facilitate greater understanding, but will also lead to better outcomes, as expectations and truth are more likely to be aligned. »
Becky O’Connor of Interactive Investor said: “Investors who want their money to make a difference want to be able to accept as true that the investment they are buying actually does what it says on the box.
“With so many other scoring systems and contradictory definitions circulating lately, it can be difficult to know which investments are really helping the planet and it’s easy to lose faith in the very concept of sustainable investing. “
The Financial Conduct Authority (FCA) has doubled the number of investment firms in the last year and in the last year as part of a crackdown on financial advice and scams, writes Andrew Michael.
The FCA said the total number of restrictions it had imposed on firms fell from 31 in the 2020/21 financial year to 61 in 2021/22.
The regulator added that it had prevented corporations from selling and selling express recommendations such as the final salary (defined benefits) of corporate pension plans.
Being misinformed or ill-advised can be financially costly for plan members if they are hired before or near retirement.
In addition, the regulator said that over the past year it had blocked 17 companies and seven Americans from downloading FCA authorization in the investment market, where they were suspected of “phoenixing” or “lifeboats”.
These situations apply when corporations or Americans try to take on the consequences of offering misplaced recommendations when setting up or establishing a new business.
The FCA said it had also stopped UK trading at 16 Contracts for Difference (CFD) providers, which had entered the UK transitional authorization scheme in 2021, where suspected fraudulent activity had been detected or where encouraged consumers to make transactions greater than generating income.
CFDs are a financial product used to speculate on the direction of a market’s value. The FCA’s Temporary Authorisation Programme is aimed at companies that operate in the UK on a long-term basis and are preparing to obtain a full licence in the UK.
In recent years, the FCA has come under fire for its handling of several high-profile scandals. These include the collapse of former star fund manager Neil Woodford’s eponymous investment company and the London Capital mini-bond saga.
The latter has been described as “one of the biggest behavioral blunders in decades. “
Sarah Pritchard, FCA executive director of markets, said: “We want to see a consumer investment market where consumers can invest with confidence, understanding the level of risk they are taking, and where assertive action is taken when harm is identified.
“Over the past year, we have continued with assertive and cutting-edge actions to address the damage. We have prevented one in five corporations from entering the client investment market and have taken action against unauthorized corporations, with a 40% increase. in the number of customer alerts issued.
Tom Selby, Head of Retirement Policy at AJ Bell, said: “Recent occasions have revealed some pretty basic and damaging misunderstandings about the dangers related to other types of retirement. Problems with a specific type of investment made in pension plans to obtain explained advantages have led to concern and panic in the face of absolutely independent monetary problems.
“Savers and investors are obviously asking for help, but right now the lack of clarity on the line between recommendation and guidance is holding companies back from communicating with customers. “
Stock investors who write off their investments in a market crash could end up paying a high price for their long-term decisions, according to Alliance Trust, writes Andrew Michael.
The investment firm carried out a knowledge model that showed that an “impatience tax” would have charged UK investors £1. 3 billion over the previous year.
The Alliance Trust defines an “impatient investor” as someone who sells wasted inventory — repairing or “crystallizing” a loss — when the market crashes, and then buys back the investment at a higher rate when the market recovers.
According to the company, almost a portion (45%) of British investors admitted to having made a loss in the following year. More than one in ten (12%) said they had done so in the year since.
Of those who ever suffered an investment loss, only two in five (41%) did so because they were convinced it was the right decision.
Only a quarter (23%) admitted to panicking and cutting their losses. One in six investors (16%) said they felt pressure among their peers when they saw others selling their securities.
Alliance Trust also found that the majority of investors who exited a stock whose value had fallen (52%) regretted doing so.
‘Buying the dip’ provides investors with the opportunity to gain exposure to an asset they perhaps already like, only at a cheaper price.
To back up its findings, the company used the example of two hypothetical market investors who both invested £10,000 in 1992 and also made monthly contributions equal to 10% of the national average salary for the next 30 years.
The patient investor intended to remain calm despite any market downturn, while the impatient investor would sell a quarter of his shares if the market fell 5% or more in a single day. When the market rallied 10% in a single day, the impatient investor hoped to bail out.
According to Alliance Trust, by 2022 the impatient investor would have accumulated £217,884, while the patient investor would have performed considerably better accruing £410,757. Neither calculation took into account capital gains or income tax, nor the fees associated with offloading investments.
Mark Atkinson, director of investor relations at Alliance Trust, said: “Investments are rarely without turbulence. As the cost-of-living crisis deepens, it’s understandable that other people have to take risks with their money.
“But for those in the market, selling at a loss to move into cash is not risk-free. With inflation nearing double digits, the real value of cash savings is falling by 7 or 8%. Even despite market dips, long-term investment in equities is proven to outperform cash over any 20-year period.”
Dividends (bills passed on to shareholders from their profits) will reach a record £1. 25 trillion globally this year, according to Henderson International Income Trust (HIIT), writes Andrew Michael.
The investment fund found that dividends for UK companies will reach their highest level since 2008, after higher oil prices boosted the revenues of about 100 FTSE companies.
Dividends are a key component of the investment landscape, especially for investors to gain a solid and reliable source of income stream, such as retired investors.
HIIT said the U. K. ‘s dividend policy — the ratio of a company’s profits to its dividend payout and a key indicator of the sustainability of its dividends — will be “remarkably” this year, driven primarily through profits generated through corporations in the oil sector.
Companies with a strong track record of paying dividends tend to be in fast-inventory sectors, such as energy and materials, where corporations have benefited from rising oil and fuel prices.
Unlike many of its competing stock indexes around the world, Britain’s FTSE 100 is filled with inventories from the so-called “old economy,” plus several power and textile companies.
HIIT said UK corporations had particularly cut their dividends during the pandemic, bringing its average dividend policy to just 1. 0 for the period between 2015 and 2020, less than a fraction of the global average.
However, the UK’s dividend policy has recovered to 2. 0 in 2021. This figure is still lower than the rest of the world, but HIIT forecasts that this figure is on track to exceed the global average this year thanks to oil profits.
Ben Lofthouse, portfolio manager at HIIT, said: “During periods of inflation, it’s vital to locate corporations with smart dividend hedging, pricing power, money and modest borrowing.
“If inflation and recession occur at the same time, profits may simply fall, but history shows that the source of dividend income is far less volatile than earnings over time, as corporations adjust the proportion of their profits they pay out to shareholders. Dividend policy At this level of the cycle, we can be confident that by 2023, overall dividend distributions will prove resilient.
In a twist to Elon Musk’s long-running saga over his Twitter deal, legal proceedings between the Tesla boss and the social media giant have been suspended until Oct. 28 to give Musk time to finalize the deal, writes Jo Groves.
However, Twitter has expressed opposition to the delay, with lingering considerations about the possibility of Musk increasing debt financing given the deterioration in the price of technology stocks and the broader economic situation since the deal announced in April.
While Twitter’s constant value rose from $43 to $52 after Mr. Musk’s announcement last week, it then fell back to around $49 per constant, indicating the point of uncertainty around the deal finally managing to cross the end. line.
Global market turmoil led to a record outflow of money from the budget being invested in stocks and securities last month, according to Calastone, writes Andrew Michael.
The global fund said the equity budget lost £2. 4 billion in September, marking the 16th consecutive month that investment portfolios have noticed outflows. The latter figure beats the previous record, set a month earlier, by more than a fifth.
Calastone’s Cash Flow Index showed that a net amount of just over £6. 6 billion has been withdrawn from the share budget since the beginning of 2022. The amount of cash flowing out of the sector in the third quarter of this year, £4. 7 billion, was higher than the total for 2016, past the worst year in terms of capital outflows in Calastone’s eight-year history.
He said: “Investors have to turn to UK equity-focused funds. “
Portfolios that invested in UK equities were hit the hardest, although all other geographies saw significant outflows.
According to the index, the U. S. equity budget lost £497 million net of capital in the month of September. In the same month, Calastone blamed a strong U. S. dollar and an economic slowdown in China for record net outflows from emerging markets and Asia. Pacific budget, of £116 million and £223 million respectively.
The company also reported a “sharp reversal in appetite” for so-called environmental, social and governance (ESG) funds, which shed £126 million during September. This was the first net outflow from this sector in nearly four years.
Edward Glyn, head of global markets at Calastone said: “The surge in global bond yields is driving a dramatic repricing of assets of all kinds. UK investors are voting with their feet and heading for the exits. The sensitivity to market interest rates of the big growth stocks that characterise the US market explains the record outflows there.
“For emerging markets, the support provided earlier in the year by high metals prices has been kicked away by the prospect of a global recession. The negative effects of the strong dollar for many emerging market economies are coming to the fore in its place.”
After months of legal battles, Elon Musk has agreed to reinstate his initial $44 billion bid for the social network Twitter, writes Jo Groves.
Yesterday’s filing with the Securities and Exchange Commission (SEC) revealed that Mr Musk sent a letter to Twitter on Monday night offering to go ahead with the original deal, pending receipt of funds from the debt financing package.
However, Mr. Musk’s offer is conditional on an early stay of action and the closure of ongoing legal proceedings in the Delaware Court of Chancery.
Both sides were due in court later this month, and Twitter would try to force Musk to comply with his initial offer to buy the company. The agreed-upon “breakup fee” of $1 billion would likely have been a moot factor as well if Musk had subsidized the deal.
Musk offered $54. 20 to buy Twitter in April, but the deal fell through when he raised concerns about the number of fake and spam accounts. He claimed that Twitter had not provided enough information to show that those accounts accounted for less than 5% of users.
The proposal could end months of uncertainty over the deal, with Twitter’s stock rising from $42 to $52 following the news.
However, there may still be a twist in the long-running corporate saga. A handful of Wall Street banks had pledged to provide $12. 5 billion in financing for the deal, with the aim of promoting debt to institutional investors.
Rising interest rates and fears of a recession may make this outlook more challenging, as corporate bond yields have soared in recent months.
In a tweet, Twitter confirmed: “We have won the letter from the Musk parties that they filed with the SEC. The company intends to make the transaction at $54. 20 per share.
Here’s more information on how to buy Twitter shares.
The market regulator, the Financial Conduct Authority (FCA), is set to review the rules regarding the provision of advice to investor clients.
In a speech today at the UK Future of Financial Services Regulation Summit in London, Sarah Pritchard, chief executive of the FCA, said: “Because of the prices involved, only relatively affluent people can access recommendations on investment spaces in. se face an incredibly wide selection with little support.
“As part of the FCA’s client investment strategy, we have stated that we need to identify a simplified advisory regime for classic stocks and ISA stocks where risks to clients are low. “
The distinction between recommendation and guidance was established in the context of the emergence of the Markets in Financial Instruments Directive (MiFID) in 2007. It requires companies to conduct a thorough assessment of the adequacy of a client’s private financial situation before issuing a recommendation.
The FCA is seeking to reduce this regulatory burden with the aim of reducing the fees firms need to charge and making advice on mainstream investments more accessible. It will carry out a review of the regulatory boundary between advice and guidance, while continuing to provide protection for consumers.
Tom Selby, head of pension policy at investment provider AJ Bell, comments: “A culture of concern has been created around offering guidance that risks finding itself on the blurred line between recommendation and guidance, with companies and employers staying away from the frontier and the ordinary. “. As a result, other people get less help making decisions.
“Those who don’t follow the advice need more and more privacy to be able to make financial decisions that are more likely to lead to ‘good outcomes’, in line with the FCA’s duty to the consumer. “
The timing of the review is yet to be decided, but Pritchard said: “Once the FCA has greater regulatory powers as a component of the long-term regulatory framework law next year, we will do more. “
The UK’s smallest index companies paid out £574 million worth of dividends to investors in the first part of 2022, according to fund management service Link Group, writes Andrew Michael.
Dividends are distributions to shareholders paid in money and paid out of a company’s annual profits.
Link Group said the amount paid in dividends through indexed corporations in the Alternative Investment Market (AIM) segment of the London Stock Exchange increased by 7. 4% compared to the same period last year.
The company’s annual AIM Dividend Monitor report showed that the largest contribution to growth came from the structural fabrics sector, which benefited from a revival of structural activity in the wake of the Covid-19 pandemic.
An example of this is Breedon, the cement, aggregates and asphalt producer, which paid its first dividend in the third quarter of last year. This was followed by a significant final payment in May 2022. Link Group said the food, beverage and tobacco industry sectors also saw strong growth.
AIM companies are less likely to pay dividends than larger, more mature companies operating in London’s main market.
Link Group said that before the pandemic, a third of companies indexed on AIM paid money to their shareholders, and about three-quarters of indexed companies in London’s main market.
In 2020, the number of AIM corporations that paid dividends plummeted to 22%. Link Group estimates that figure will hover around 29% this year, but also warned of a slowdown in the speed of recovery of AIM’s dividends for the second part of 2022.
Ian Stokes, Link Group’s managing director for corporate markets UK and Europe, said: “AIM companies have really impressed with their ability to bounce back from the pandemic. This is reflected in the strength of the recovery in their dividend payments, which was better than we expected. The easy work is done, meaning that growth will now slow.
“As we approach 2023, we expect expansion to slow further. Corporate margins are under pressure of late and a possible recession is to be expected, which will impact the ability and willingness of AIM corporations to pay back the money. ” to the shareholders.
An increasing number of investors have become victims of investment fraud, according to the latest figures from the UK’s financial services complaints service, Bethany Garner writes.
The Financial Mediation Service (FOS) said the number of reported investment scams had increased.
Between April and June 2022, the FOS won 570 court cases over “authorized” investment scams, where a user is tricked into sending money to a fraudster posing as a valid user or company.
Investment fraud accounted for 30% of all “authorized” scam court cases recorded in this era, representing a 14% increase compared to the same era in 2021.
About one-fifth of investment fraud court cases concerned cryptocurrencies. These schemes involve scammers posing as valid intermediaries and persuading consumers to move cash to buy cryptocurrency.
Nausicaa Delfas, Acting Director General of FOS, said: “Complaints about investment scams are the fastest fraud complaints received by FOS lately. “
As scammers prey on people’s heightened monetary vulnerability amid the accusation of living through a crisis, Delfas warned consumers to be careful.
She said: “We are concerned that in existing economic cases other people will be tempted to invest in fake investments. Our recommendation to consumers is to exercise caution, conduct their own research, check the Financial Conduct Authority’s register, and contact the company at the number provided.
Despite the investment fraud, the FOS added that the total number of court cases over “authorized” scams has decreased since last year.
But the service said it had also received nearly 200 new complaints about unregulated collective investment schemes (UCIS) between April and June 2022.
ICOs are high-risk collective investment schemes for high-net-worth investors and individuals.
Of the consumers who complained about a mutual fund, 45% said they had gotten irrelevant recommendations on how to use their pension to invest in it.
UK investors withdrew £1. 9 billion from the share budget last month, a record amount, according to Calastone’s most recent figures, writes Andrew Michael.
The global budget network said August’s capital outflows easily surpassed records set in June and July 2016, when investors withdrew £1. 54 billion and £1. 56 billion respectively in cash following the Brexit vote.
Calastone said August’s net outflow was driven by a “significant increase in selling activity, rather than a drop-off in buy orders, indicating a decisive choice [by investors] to exit holdings”.
Global stock prices rose sharply in July, rallying in reaction to a fall earlier in the summer. But Calastone said that, rather than leaving investors buoyed, an upwards move on the markets had left customers exposed to UK funds unconvinced.
He said: “Investors sold their equity holdings (before) the rally, earning a modest £251 million in the second part of July, reaching £2. 08 billion between August 1 and August 17. “
According to the data, the UK budget was hit the hardest by last month’s capital outflows, with investors fleeing the sector by £759 million. This is the fifteenth consecutive month in which locally-oriented portfolios experienced a net outflow of money.
Investors threw their North American and Asia-Pacific equity budget at £426 million and £234 million respectively.
Since the beginning of this year, the capital budget has lost a total of £4. 3 billion. Calastone, which publishes data on funds going back eight years, said the period from March to October 2016 saw the largest capital outflows (£5. 2 billion).
Calastone said the only portfolios that saw lower inflows in the month of August were those similar to specialized investment sectors, such as infrastructure, renewable energy, and environmental, social and governance (ESG) investments.
Edward Glyn, Head of Global Markets at Calastone, said: “Markets are absorbing the likelihood that inflation will be incredibly pernicious and persistent, meaning that interest rates will remain higher than initially expected.
“The combination of a weaker economy and higher rates is very negative for share prices, especially of growth stocks.”
Asset control organisation abrdn has been removed from the inventory index of the UK’s leading blue-chip companies after its percentage costs fell by more than 40% this year, writes Andrew Michael.
With a market capitalisation of less than £3. 2 billion, the company slipped down the FTSE in a well-marked move. The company, renamed Standard Life Aberdeen in 2021, was created when the two fund control companies merged in 2017.
One of those going in the opposite direction is the F investment fund.
The reorganization, announced via index compiler FTSE Russell, will take place at the close of trading on Friday, September 16. From that point on, so-called passive investment funds, designed to track the functionality of the “Footsie”, will be withdrawn. their positions in the company’s stock.
Two other businesses facing demotion from the benchmark stock index are kitchen maker Howden Joinery Group and the drug firm Hikma Pharmaceuticals.
F
Susannah Streeter at Hargreaves Lansdown, said: “Huge geopolitical uncertainty, sky-high inflation and worries about economic growth have been challenging for the asset management sector.
“abrdn’s operating profit was lower than expected as cash flows declined further. But this isn’t just a recent problem: assets have been disappearing for years. Its environmental, social, and governance characteristics are lagging behind its peers lately, and demand for ESG investments is rising, putting it in a tricky position. »
Wealth manager St James’s Place (SJP) will launch an investment app for its clients, writes Andrew Michael.
The company has approximately 4,600 advisors and 900,000 clients in the United Kingdom and Asia. It claims that the app will allow clients to manage and track their investment functionality and monetary situation.
A number of asset managers have created an app for consumers. Brewin Dolphin unveiled one in 2019, while Evelyn Partners is planning one for later this year.
SJP described the move as part of a broader vision for the “next-generation visitor experience” that will “utilize the virtual generation so that our clients and their advisors can collaborate, administer and manage their financial future in a more convenient way. “”
The company claims that once the app is downloaded and registered, consumers will be able to use biometrics and FaceID to securely log in in less than a second.
Clients will need to determine the pricing and functionality of SJP’s products, adding pensions, investments, individual savings accounts, trusts and bonds, as well as any coverage and loan products they have with the company.
Interactive charts will show the functionality of investments over other time periods and consumers will also be able to see how much cash they have paid out, withdrawn, and earned as income.
Ian Mackenzie, SJP’s Chief Operating and Technology Officer, said: “The aim is to ease the burden of paperwork, documentation, storage, reporting and planning, freeing up time for our advisors so they can focus more on making a difference for our clients. . designed using identity generation and security to keep visitor data safe.
UK retail investors are being let down by wealth managers who fail to discuss clients’ views on responsible investing, according to research from Oxford Risk, Andrew Michael writes.
The behavioural finance company found that nearly half (46%) of adults with investment portfolios run by wealth managers have never been contacted by them about their attitude to environmental, social and governance (ESG) issues or the broader issue of responsible investing.
Just over a third of consumers (37%) said portfolios reflected their perspectives on sustainable investing, suggesting that the majority of retail investors are not in this area.
Oxford Risk says this scenario comes at a cost to both clients and wealth advisers alike. It found that nearly one-in-three investors (31%) say they would invest more if their portfolio better reflected their views on ESG and responsible investing.
The company said this applies specifically to younger investors, where more than a portion of those under 35 (59%) say they would invest more if their money went to culpable investments.
Around one-in-three of all clients said their adviser did not address their ESG investing aspirations.
Greg Davies, director of behavioural finance at Oxford Risk, said: “Addressing investors’ sustainability personality tastes requires a deepening of monetary personality and suitability – matching investors with the right investments for them – is critical to helping personas. su wealth for good.
“It’s unexpected that nearly a portion of investors say they’ve never been contacted through their advisors about their attitude towards culpable investing and ESG, and fewer than two in five say their investment portfolio doesn’t represent their views on at-fault investing.
Oxford Risk produces a framework for tailoring wealth managers to an investor’s personal ESG tastes and the amount of cash worth weighting into the ‘E’, ‘S’ and ‘G’ portions of a portfolio.
Abrdn, the asset watchdog group, is at risk of being downgraded from the UK’s blue-chip inventory index after its share fell by almost 40% this year, writes Andrew Michael.
The company’s market capitalisation (the sum of all its issued percentages multiplied by the percentage value) has fallen below £3. 3 billion, putting it dangerously close to the bottom of the FT-SE 100 (see below), the UK stock market. .
The asset manager has experienced a tough year, with its recent interim results reporting an outflow of funds worth £36 billion during a six-month period.
Global index provider FTSE Russell will announce the final reshuffling of the 100 large-cap indices and 250 mid-cap indices later this month.
In addition to Abdrn, other potential targets for the quarterly rerating of the main index include generic drugmaker Hikma Pharmaceuticals and kitchen maker Howden Joinery Group.
Ben Laidler, global markets strategist at eToro, the social investment network, said: “Those tapped for an upgrade from the FT-SE 250 into the FTSE-100 include (medical technology firm) ConvaTec Group, whose share price has surged 20% this year, and the F&C Investment Trust that focuses on global equities. Both stocks have market caps well in excess of £5 billion.”
Changes in major stock indices, such as London’s FT-SE 100 and the S
Laidlaw said: “The amount invested in ETFs has almost doubled to a staggering £7. 7 trillion since 2018. “
The majority of the UK’s retail investors are bracing themselves for recession before the end of this year, irrespective of the outcome of the Conservative Party leadership contest, according to research from online foreign exchange provider HYCM, writes Andrew Michael.
The final results of the contest, which will be announced on Monday 5 September, will determine whether Foreign Secretary Liz Truss or former Chancellor of the Exchequer Rishi Sunak will become the next Prime Minister of the United Kingdom.
HYCM surveyed around 1,000 retail investors, each with at least £10,000 under management, excluding the cost of their private and occupational pensions. Almost two-thirds (62%) of investors said the UK would plunge into recession through the end of 2022.
Half of respondents (50%) also say they are concerned that the Bank of England’s (BoE) current cycle of interest rate hikes will not be enough to curb rising inflation in the coming months. Investors said the effect on inflation, which currently stands at 10. 1%, poses the biggest risk to the functionality of their currency portfolios.
The Bank of England recently warned that inflation in the UK could reach just 13% before the end of 2022, with levels remaining high next year.
More than a portion of investors said they themselves were “risk-averse” in the current environment of peak inflation and weak economic growth. Just over a third (38%) said “safe-haven” assets were their priority given the existing investment landscape.
When asked about their investment strategy for the rest of 2022, a third (33%) of investors said they planned to reduce their holdings in cryptocurrencies, while just over a quarter (27%) told HYCM they were likely to increase their exposure.
Investors also indicated that they would be reducing their holdings in so-called alternative investments, including classic cars and private equity, while upping their exposure to stocks and shares, social investments and gold.
Giles Coghlan, lead FX analyst at HYCM, said: “As the Conservative Party’s leadership race heats up, all eyes are on economic policy in the bid for prime minister. While Rishi Sunak warns that the lights of the economy are flashing red and that urgent action will be needed to curb spiralling inflation, Liz Truss and her supporters cast doubt on the Bank of England’s current thinking. Regardless of the solution, our studies show that investors obviously see a recession as inevitable.
“As the cost-of-living crisis continues to take hold, it’s not unexpected to see many investors reduce their holdings in some riskier and more speculative assets in favor of those that are usually a safe haven in uncertain times. “
Mining company BHP said it would return a record amount of cash to shareholders after reporting record profits for the first half of 2022 on the back of soaring commodity prices earlier this year.
Reporting its results for the year ended June 2022, the Australian-based mining company revealed an overall final dividend of £7. 4 billion ($8. 9 billion), widening the year’s bills to £13. 7 billion ($16. 5 billion), last year’s payout. 140 years of history.
Dividends are invoices to shareholders paid through corporations from their profits. They are a vital source of income for investors, especially as part of a retirement plan strategy.
Link, the fund management group, recently reported that dividends from mining companies accounted for nearly a quarter of all shareholder payouts in the second quarter of 2022, the highest share of any industry sector.
BHP’s annual profit rose 26% to 17. 7 billion pounds ($21. 3 billion), its highest in 11 years. The company says it continues to pursue acquisitions, having offered to buy OZ Minerals earlier this month. In the morning in London, the company’s percentage value rose 4% to £2,337 on the back of the results.
Mike Henry, chief executive of BHP, said: “These strong effects are due to reliable operations, allocation delivery and capital discipline, which have enabled us to capture the price of major commodity prices. “
Against a looming recessionary economic backdrop caused by faltering growth worldwide plus the prospect of rising interest rates, Henry said that the company was well prepared to manage an uncertain near-term environment, adding an optimistic note: “We expect China to emerge as a source of stability for commodity demand in the year ahead.”
Victoria Scholar, head of investment at investing platform interactive investor, said the price of coal hit record highs following Russia’s invasion of Ukraine at the end of February.
She added: “BHP has been a key beneficiary of the surge in commodity prices this year. Looking ahead, the environment looks increasingly challenging with copper prices down 25% since the March high and with concerns about rising global interest rates, labour constraints and an economic slowdown.”
An investment budget of approximately £11 billion is considered “dogs” with consistently underperforming in studies conducted by online investment service Bestinvest, writes Andrew Michael.
The company identifies 31 underperforming funds, with a total value of £10. 7 billion, highlighting the poor effects of three in particular: Halifax UK Growth; Halifax UK inventory revenue; and Scottish Widows UK Growth, collectively valued at £6. 7 billion.
Bestinvest describes the underperformance of this trio, each largely owned by UK retail investors, as “entrenched”, in the sense that they “want to ask questions about their [investing] approach”.
Halifax’s two budgets come from various investments submitted through the Halifax Bank of Scotland (HBOS). HBOS’ parent company, Lloyds Bank, is also ultimately guilty of the Scottish Widows portfolio. The Schroders fund manager acts as a sub-adviser to all 3 budgets.
Bestinvest’s latest Spot the Dog analysis defines a ‘dog’ fund as one that fails to beat its investment benchmark over three consecutive 12-month periods, and which also underperforms its benchmark by 5% or more over a three-year period.
A benchmark is a popular metric, a specific stock index, against which the functionality of a mutual fund is compared.
Bestinvest said that, despite its poor performance, the 31st budget it knew would generate control costs of around £115 million this year, depending on its duration and costs.
The company’s previous Spot the Dog, published earlier this year, highlighted 86 dog funds worth £45 billion.
Bestinvest said: “Although, sadly, there are many budgets that have underperformed the markets they invest in over the past three years, an increase in budgeting fortunes made on investments in undervalued corporations and dividend-paying stocks means that many of the budget that governed the list of recent editions has slipped away this time around due to much more powerful relative functionality in recent months.
Jason Hollands, Bestinvest’s managing director, said the report demonstrated a big disparity between the best and worst-performing funds that can’t be explained by cost differences alone: “The exceptional 12-year period of strong equity market performance that came to something of a halt at the end of last year meant that, until recently, most funds investing in equities generated gains irrespective of the skill of their managers.
“This has helped to disguise poor relative performance and bad value for money.
“In a bull market, when most funds rise in value with the upward tide, investing can seem all too easy, but tougher times are a period to reflect on your approach. If you want to be a successful DIY investor, then periodically reviewing and monitoring your investments is absolutely vital and you need to be super-selective in the funds or trusts you choose.”
UK investors withdrew £4. 5 billion from the investment budget in June this year, the largest monthly withdrawal of 2022 and the second-highest figure on record, according to the most recent figures from the Industrial Investment Association (IA), writes Andrew Michael.
AI said investors were responding to heightened economic uncertainty after a first part on market performance.
Last month, the U. S. market officially entered market territory when the influential S
The IA said that equity funds experienced outflows worth £2.3 billion in June. Within this cohort, the largest sector casualty was globally diversified portfolios, with investors pulling out money to the tune of £1.3 billion.
By contrast, so-called volatility control funds, which aim to deliver positive returns to investors by making an investment in a mix of assets by adding stocks, bonds and cash, were the best-selling AI sector in June, with retail net inflows worth £248. million. .
Chris Cummings, executive leader at IA, said: “Savers are expecting a slowdown in economic expansion and bracing for further interest rate increases as we move into new territories for the markets. Higher rates mean weaker functionality for the high-growth companies that helped fuel the bull market of the last decade.
“This month’s capital outflows imply that investors are looking for tactics to better balance their savings,” Cummings added.
[ ] Asset control in the European fund industry fell by £1. 7 trillion (€2 trillion), from £12. 8 trillion (€15. 3 trillion) to £11. 1 trillion (€13. 3 trillion) in the first part of 2022, according to the most recent figures. . Refinitiv Lipper data provider.
Detlef Glow, head of EMEA research at Refinitiv Lipper, said: “It is not surprising that the European fund industry has faced a decline in assets under control over the course of 2022 so far, given the geopolitical scenario in Europe, COVID-19 – The pandemic, disruption to supply chains, rising inflation and emerging interest rates are putting some pressure on stock markets.
According to the latest figures from fund manager Columbia Threadneedle, only four investment portfolios, a record, were held in the top quartile over a period of three consecutive years to the end of June this year, writes Andrew Michael.
A most sensible quartile fund is one that ranks in the most sensible 25% of its peer organization in terms of return on investment.
Columbia Threadneedle’s quarterly Multi-Manager Fund Watch survey reviewed 1,153 portfolios across 12 major fund sectors – as defined by the Investment Association (IA) universe – assessing performance in each of three 12-month periods up to June this year.
The Multi-Manager Consistency Ratio, the toughest test within the research, looked for funds that were top quartile for each of these periods. Columbia Threadneedle found that, up to the end of the second quarter of 2022, just 0.35% of funds, four in total, proved up to the mark.
The budget was: Quilter Investors Sterling Diversified Bond; Matthews Asia Small Businesses; Luxembourg Active Solar Selection; and Fidelity Japan.
Each fund is situated in another AI sector, making it difficult to understand why those portfolios produced the required investment returns, while many of their rivals languished during the same period.
Columbia Threadneedle said the fund industry is going through a “challenging time,” and that lately macroeconomic and geopolitical aspects are creating an “attractive environment for investment. “
The factors are accompanied by the lingering implications of the war in Ukraine, emerging inflation, and the effect of central banks’ decisions around the world to raise interest rates in the face of severe economic headwinds.
Kelly Prior, investment manager at Columbia Threadneedle, said: “The effects of this quarter are unprecedented, demonstrating the excessive rotations markets have experienced over the past two years and how other investments have boosted markets at other times. “
He added: “While the knowledge is hard to read, we think it indicates that fund managers are keeping their cool and not looking to chase those same markets. »
Total dividends from UK-listed companies reached £37 billion in the second quarter of this year, an increase of more than a third from the same period in 2021, according to the most recent figures from Link, the fund management group, writes Andrew Michael. . .
Dividends are invoices to shareholders paid through corporations from their profits. They are a vital source of income for investors, especially as part of a retirement plan strategy.
Link’s latest UK Dividend Monitor reported that overall dividends increased by 38. 6% year-on-year in the quarter this year.
This figure, due to one-time special payments, is the second-largest quarterly overall on record, dwarfed by the amount paid through corporations to shareholders between April and June 2019.
Link said mining corporate dividends accounted for about a quarter of all invoices sent to shareholders in the second quarter of this year, the highest share of any business sector. Apart from mining, banks and oil corporations are the three most sensible sectors that pay dividends. in the UK.
Link added that sectors such as real estate construction, commercial property, media and money services in general also had a good quarter, thanks to strong earnings expansion that boosted dividend payouts in the wake of the pandemic.
In light of this, the company said it was upgrading its UK plc dividend forecast for the full year with headline payouts expected to rise by 2.4% to £96.3 billion.
Link warned, however, that next year could prove more difficult for companies to further increase their dividend payouts, as the economic situation worsens further and the standoff in Ukraine continues unabated.
Ian Stokes, Managing Director of UK and European Corporate Markets at Link, said: “Mining bills are strongly linked to cyclical fluctuations in mining earnings and have a tendency to rise and fall much more during this cycle than dividends in other sectors.
He added: “As we move into 2023, headwinds will intensify. The simple effects of post-pandemic recovery will soon disappear completely from the numbers, and an economic downturn will cripple the ability and willingness of many corporations to increase their dividends.
Most investors ignore environmental, social and governance (ESG) investing, despite the shift towards sustainability and growing concerns about the impact of investments on the planet, writes Andrew Michael.
According to a study by financial advisor Foster Denovo, six in ten investors (60%) said they were aware of the offering of specialized investment portfolios, such as ESG funds.
However, Foster Denovo’s report, Investing with Dynamic Portfolios: The Latest Research on Investor Views on ESG Investing, shows signs of growing investor confidence in the environment and the impact of their investments.
Making ESG investments, once dismissed as a virtuous concept that could simply jeopardize portfolio returns, has had a central component in the global investment scene in recent years.
According to the Global Sustainability Investment Alliance, around £30 trillion in assets were controlled globally in accordance with ESG principles.
Foster Denovo said just over a fraction (51%) of respondents were very or very concerned about the effect climate change could have on their savings and investments.
In addition, nine in ten (89%) say they are concerned about the impact of corporate practices and some large companies on the environment.
A quarter (25%) of respondents told Foster Denovo that they invested with ESG aspects in mind, but the majority said they were not interested in making an ESG investment due to perceived under-industry returns compared to more classic investment channels.
Foster Denovo described this reaction as “at odds with most recent investment studies that have found that three-quarters of indices selected for ESG have outperformed their peers in the broader market. “
Declan McAndrew, Head of Investment Research at Foster Denovo, said: “It’s clear that many people, including those who have not been investing sustainably lately, are interested and willing to receive more information about ESG and need to invest their money to achieve it. benefits for the planet definitely and for profit.
“However, a lack of awareness about the availability of such products, what ESG means and a persistent misconception about lower returns are clearly having an impact.”
Twitter has carried through its threat to sue Elon Musk after the Tesla boss announced last week (see story below) that he is walking away from his £36.5 billion bid to buy the social media platform, writes Kevin Pratt.
In what is shaping up to be a long and bitter legal war (Twitter’s lawsuit filed with the Delaware Court of Chancery calls Musk’s “model of hypocrisy”), the main issues are the number of fake accounts on the platform and the billions of dollars. clause of the original contract.
Mr Musk is refusing to pay the sum, arguing that Twitter has not provided him with the information he needs to verify the number of genuine accounts.
The original offer for Twitter was at $54.20 per share but the stock is now trading below $35. Recent falls are attributed to Mr Musk’s announcement, but the price was already around the $40 per share mark before last weekend.
Twitter’s legal filing reads: “In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his efforts to close the deal. Now, less than 3 months later, Musk refuses to fulfill his obligations to Twitter and its shareholders because the deal he signed no longer serves his private interests.
“After putting on a public show to put Twitter on the line, and after proposing and then signing a seller-friendly merger agreement, Musk believes that he, unlike all other parties subject to Delaware contract law, is free to replace his mind, destroy the company, disrupt its operations, destroy the price for shareholders and walk away.
“This repudiation follows a long list of breaches of contract through Elon Musk that have cast a shadow over Twitter and its activities. Twitter is bringing this action to prohibit Musk from committing additional violations, force Musk to comply with his legal obligations, and compel the merger to be completed once the few notable situations are met.
In a tweet last night, Bret Taylor, Twitter chairman said: “Twitter has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable to his contractual obligations.”
Musk responded with his tweet: “Oh what an irony mdr (laughs out loud). “
Twitter’s filing with the Delaware court accuses Musk of not being able to walk away from the deal due to the stock market crash in general and the value of the company’s stock in particular: “After the merger agreement was signed, the market fell. The Wall Street Journal recently reported that the price of Musk’s stake in Tesla, the pillar of his private wealth, has declined by more than $100 billion from its November 2021 peak.
“So Musk needs to get out. Instead of shouldering the burden of the market crisis, as the merger agreement requires, Musk needs to pass it on to Twitter shareholders. This is in line with the tactics deployed through Musk against of Twitter and its shareholders since the beginning of the year, when it began to acquire an undisclosed stake in the company and continued to expand its position without the need for notification.
“It tracks the disdain he has shown for the company that one would have expected Musk, as its would-be steward, to protect. Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price.”
The market expects a fuller reaction from Musk’s lawyers in the coming days.
Elon Musk has told Twitter that he is pulling out of the deal reached in the past for 36. 5 billion pounds to buy the social media microblogging platform. Twitter says it is committed to completing the transaction on the original terms, writes Kevin Pratt.
A letter to Twitter, filed with the US Securities and Exchange Commission, says Mr Musk “is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect.”
Musk froze the deal in May when his team decided on the number of “spam” accounts on Twitter, arguing that he needed accurate data on the number of authentic users to calculate the company’s true price.
The latest letter reads: “For approximately two months, Mr. Musk sought the knowledge and data necessary to “make an independent assessment of the prevalence of fake or spammy accounts on the Twitter platform. “
“This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business.
“Twitter failed or refused to provide this information. At times, Twitter has ignored Mr. Musk’s requests, rejected them for reasons that seem unwarranted, and claimed to comply with them while providing Mr. Musk with incomplete or unusable information.
Bret Taylor, Twitter’s chairman, said in a tweet that he is determined to complete the takeover on the original terms: “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.”
The dispute between the two sides is most likely to be protracted and acrimonious, at least because the contract includes a £1 billion buyout clause, payable through either party if withdrawn without an intelligent explanation.
Mr Musk will therefore try to show that the contract is no longer valid because of Twitter’s actions or lack of action, while the company will insist it has acted within the terms of the arrangement. As stated in Mr Taylor’s tweet, it will sue Mr Musk to enforce the deal.
Twitter shares fell 5% when it became known that the acquisition was in jeopardy. After opening hours in New York, they amounted to around £35 (£29). Musk’s initial offer was $54. 20 (£45) per share.
The U. K. ‘s asset control is calling on the government to create a new elegance fund that incorporates blockchain technology, the virtual system that underpins much of the crypto Array.
The Investment Association (IA), the professional body representing UK investment screening firms managing around £10 trillion worldwide, has suggested that the government and the city’s regulator, the Financial Conduct Authority (FCA), work together “at pace”. A negotiated budget that would factor virtual tokens to investors in a position of classic stocks or budget sets.
AI claims that the increasing adoption of so-called “tokenization” would ultimately lower prices for consumers and the potency of fund delivery, thanks to faster settlement and greater transparency of transactions.
He added that tokenization can also expand the assets held within a fund by expanding into personal markets and illiquid assets such as real estate, which cannot be temporarily or fluidly converted into cash.
According to the IA, the landscape it envisages for funds of the future would offer consumers “more engagement and customisation, while maintaining important consumer protections”.
Greater variety
It added that this could include the provision of a greater variety of portfolios tailored to the specific needs of individual investors and a wider range of financial advice services to address the UK’s current advice gap.
Earlier this year, the Treasury, led through former Chancellor of the Exchequer Rishi Sunak, announced a series of measures aimed at turning the UK into a hub for generating and investing in crypto assets.
The FCA issues warnings to consumers regarding the crypto sector, reminding them that crypto assets are unregulated and pose a high risk.
The regulator’s current stance on cryptocurrencies as an investment is that “investors are highly unlikely to get coverage if things go wrong, so other people are willing to lose all their money if they decide to invest in them. “
Chris Cummings, chief executive of AI, said: “With the ever-increasing speed of technological change, the investment control industry, regulators and policymakers will need to work together to advance innovation without delay.
“Further innovation will not only improve the overall competitiveness of the fund industry in the UK, but will also improve the cost, power and quality of the investment experience. “
The UK’s financial watchdog has poached a director with specialist knowledge of economic crime and illicit finance from the National Crime Agency (NCA) for a new role overseeing the crypto-asset, e-money and payment markets.
The appointment is one of six new director positions revealed through the Financial Conduct Authority (FCA) as the regulator looks to have its senior staff cover classic investment areas, while polishing its credentials amid calls for stricter oversight of the crypto sector.
Matthew Long will join the Financial Conduct Authority in October as director of payments and digital assets. Long is currently director of the National Economic Crime Command, part of the NCA.
He also headed the UK’s Financial Intelligence Unit, which has a national duty to receive, analyze and disseminate monetary intelligence in the Suspicious Activity Reporting (SAR) regime.
SARs are pieces of information that alert law enforcers that client or customer activity is suspicious and might indicate money laundering or terrorist financing.
Camille Blackburn will join Long in October in the new role of Director of Wholesale Purchasing.
Ms. Blackburn will be responsible for policy progress and oversight of asset management, select investments, custodian banks, and investment research.
She is currently the Global Head of Compliance at Legal
Four new administrators were also appointed in the FCA’s most recent recruitment round, adding former City of London Economic Crime Coordinator Karen Baxter, who joins the Directorate for Strategy, Policy, International and Intelligence.
Three internal promotions: Roma Pearson, director of consumer finance; Anthony Monaghan, Director of Commercial and Regulatory Research; and Simon Walls, Director of Wholesale, Sell-Side, all appointments.
Dividends paid through investment trusts hit a record £5. 5 billion in the year to March 2022, driven by payouts from unlisted companies.
An investment trust is a public limited company, traded on the stock market, whose aim is to make money by investing in other companies. The investment trust sector has become increasingly popular with retail investors in recent years.
According to fund management organization Link, two-thirds of mutual fund dividends paid in the year to March went to so-called “alternatives. “These include investments in venture capital, renewable energy infrastructure, and real estate.
Link says the figures equate to an overall increase in dividends of 15% compared with the previous year.
It adds, however, that invoices to shareholders from the investment budget investing in corporate shares remained strong during the period, accounting for £1. 85 billion of the total payout. These equity investment budgets have historically played a key role in the London-listed investment fund. industry.
While dividends from option trusts have increased ninefold over the past decade, Link predicts that shareholder bills for stock trusts will grow more slowly than the market average over the next year.
Ian Stokes, Link’s managing director for corporate markets in the UK and Europe, said: “A decade ago, opportunities represented a much smaller segment of investment accepted as true in the market, but they have grown rapidly as new investment opportunities have opened up in reaction to investor demand.
Richard Stone, executive leader of the Association of Investment Companies, the industry framework representing investment trusts, said: “This report demonstrates that investment corporations are offering many benefits to investors who are sources of income and have continued to do so. despite challenging market conditions.
Competition has intensified among e-commerce platforms as they struggle to maintain their customers’ budgets now that the boom in “parlor” inventory trading has slowed during the pandemic.
The growing popularity of commission-free trading platforms has already caused larger platforms to overhaul their payment structures, with AJ Bell slashing its platform and currency payments starting in July.
Now, Interactive Investor(ii) has announced that it will begin paying interest on sterling and US dollar monetary balances held in its Individual Savings Accounts (ISAs) and Self-Investment Personal Retirement Accounts (SIPPs) from 1 July.
Historically, platforms have not paid interest on these balances, and investors may even have been charged for the privilege of holding cash in the past.
However, the stock market crash has encouraged some investors to leave their non-coin ISA contributions in their accounts. Others have sold their stock investments to keep the gains as currencies in their ISAs and SIPPs, allowing them to keep the coins on their taxes. Free packaging.
Moving to ii will result in interest of 0. 25% being paid on the price of any balance over £10,000, and each account (e. g. ISA and SIPP) will be treated separately, rather than combined for the purposes of calculating interest.
Richard Wilson, CEO of ii, commented: “Interest rates remain low, but following recent increases, ii will start paying interest on its accounts from 1 July. “
Wilson also highlighted the advantages that regular foreign stock traders gain, who will now earn interest on the U. S. dollar balances they hold in their accounts.
This announcement brings ii closer to major trading platforms as follows:
Hargreaves Lansdown (HL) also announced the introduction of a ‘pay by bank’ service today, allowing clients to transfer funds directly from their bank accounts to their HL accounts, without the use of cards.
George Rodgers, senior product director at Hargreaves Lansdown, commented: “Our consumers can expect a simpler payment experience, as well as instant deposit and withdrawal settlements compared to the days of the existing system. Our adoption of Open Banking is a step key in our virtual transformation strategy.
New insights from the Financial Ombudsman Service show that so-called “authorised” scams, in which consumers are tricked into transferring cash to accounts they deem valid, increased by more than 20% to 9,370 in 2021/22.
The Ombudsman says fraudsters are increasingly using social media to lure their victims, with many of the total 17,500 fraud and scam cases recorded for the year relating to fake investments.
The Ombudsman says that last year he confirmed 75% of fraud court cases.
In the area of insurance, the Ombudsman registered 38,496 court cases (including payment cover insurance) in the last monetary year, compared to 44,487 last year.
The number of travel insurance complaints decreased by 75% from 8,175 in the financial year 2020/21 to 2,116 in the financial year 2021/22.
The decrease coincides with an increase in the number of insurers that have added policies for Covid-related issues to their policies.
The Financial Ombudsman Service faced a backlog of complaints throughout the pandemic. Last month, it announced that the number of outstanding complaints had decreased to 34,000 from 90,000 in April last year.
It claims to have settled more than 58,000 insurance court cases (including PPIs) in total during the last fiscal year. However, less than 30% (28%) of cases were successful in favor of the plaintiff.
Nausicaa Delfas, acting head of the Financial Mediation Service, said: “Over the past year, the Service has served more than 200,000 customers who had problems with currency corporations in matters such as banking, lending, insurance and investments.
“In this time of economic uncertainty, it is more vital than ever that the issues that arise are resolved quickly. We are here to assist in currency disputes fairly and independently.
The Financial Ombudsman Service advises consumers to first complain to their product or service provider. If you are not satisfied with the way your provider has handled your case, you deserve to register your complaint with the Financial Mediation Service.
One of the UK’s largest online investment platforms, interactive investor (ii), has ditched two funds from its buy list of ethical portfolios.
It also revealed that two of the 40 budgets on its ACE 40 list of environmental, social and governance (ESG) investments (VT Gravis Clean Energy Income Fund and iShares Global Clean Energy ETF USD Dist GBP INRG) have generated positive returns since their inception. 2022 until the end of May.
Sustainable sector budgets are popular with investors, with strong functionality underpinned by their preference for so-called growth-oriented sectors (growth as an investment focuses on corporations with above-average profits and are expected to earn maximum levels of profits).
However, since the beginning of 2022, expansion actions have faltered in the face of inflationary headwinds and emerging interest rates, as evidenced by the overall functionality of the ACE 40 list.
In contrast, value investing – focusing on companies perceived to be underappreciated and undervalued – has gained increased backing from investors this year.
On the advice of Morningstar, which advises on the composition of the ACE 40, ii announced the removal of two funds: abrdn Europe ex UK Ethical Equity, and Syncona Investment Trust. In their place, the company will add M&G’s European Sustain Paris Aligned fund.
Dzmitry Lipski, head of fund research at ii, said: “We are continuously reviewing the list to meet consumers’ wishes and in this case, given the significant update in the market environment this year, we have agreed with Morningstar to make those updates. »
In connection with the removal of Syncona, Morningstar said: “We feel that the level of risk the trust displays is elevated relative to the benefits.”.
Regarding the abrdn fund, it said: “Compared to peers, the team’s fund management experience remains limited. Overall, we believe there are stronger fund options available in this sector and have therefore recommended the removal of this fund from the ACE 40 list.”
U. S. stocks closed in bear territory (June 13) after the S
Stock market professionals define a bear market as one that has fallen at least 20% from its peak.
The sell-off in stocks was sparked by jitters among investors, who were spooked by a higher-than-expected inflation figure of 8. 6% in May, announced last Friday (June 10) through the U. S. Bureau of Labor Statistics.
The announcement fueled expectations that the U. S. Federal Reserve could implement an interest rate hike of 0. 75 percentage points at its next policy meeting, which ends on Wednesday.
A rate hike of this magnitude would signal a more competitive stance in the Federal Reserve’s strategy to fight rising customer prices.
Later this week, the Bank of England’s financial policy committee is expected to announce a 0. 25% increase in the bank rate as a separate component to curb strong inflationary pressures in the UK.
Stock analysts have warned that the sell-off in U. S. stocks could continue.
Ben Laidler, market strategist at social investment network eToro, said: “The S
Laidler added that while the S bear markets
Russ Mould, chief investment officer at online broker AJ Bell, said: “A lot depends on the Fed’s policy update tomorrow. Investors seem to be concerned that the central bank will be more competitive on interest rates in a bid to curb inflation, given that living expenses figures released in May came in higher than expected.
“The Federal Reserve is focused on inflation, the economy, the markets, and yet its moves have a significant influence on the direction of stocks and bonds. A resolution to raise rates by more than a fraction of a point percentage can simply cause chaos in the markets and hurt investors’ portfolios more than they have noticed this year. “
According to investment app Dodl, nearly two-thirds of UK adults have cash to invest but say they can’t because they don’t know where to start.
Research conducted by Dodl found that 65% of people do not have an investment account such as an individual savings account (ISA) in stocks. But the company said that most people in this organization (95%) weren’t discouraged just because they didn’t have enough cash on hand.
Instead, Dodl said they blame a number of messes such as knowing where to start, making the investment procedure too confusing and knowing what to invest in.
When asked how much cash they had potentially set aside to invest, the average amount among respondents was £3,016.
Dodl said that leaving a sum this size in a top easy-access savings account paying 1.5% for 20 years would produce a return of £4,062. The company estimated that, if the same amount were invested over 20 years producing a 5% annual return, the total would be £8,002 after taking charges into account.
The company added that respondents were divided when asked what would inspire them to start investing. Just under a share (48%) said they preferred a narrow list of investments, while just over a third advocated for a wide diversity of investment options.
Dodl said nearly a portion of responses (40%) favored investment in common issues such as generation and health care.
Dodl’s Emma Keywood said: “With the burden of life emerging, it’s unexpected that so many other people say they have coins stored in coins and think they can simply invest. The challenge is that they don’t know where to start or locate them. Too complicated.
“However, when other people do some studies and dip their toes in the water, they find that making an investment is rarely as scary as they thought. “
The UK returned to the stock market in April after multi-billion pound withdrawals in the first quarter of 2022.
Figures from the Investment Association (IA) trade body showed that investors put £553 million into funds in April. Over £7 billion was pulled from the funds market between January and March this year.
In April, the total amount of budget control stood at £1. 5 trillion.
The AI said this year’s Individual Savings Account (ISA) season drove the change. ISAs are annual schemes that allow UK investors to protect up to £20,000 per year from source income tax, inventory dividend tax, and capital gains tax.
Plans are focused on the fiscal year, so historically there is an increase in interest in the weeks leading up to the end of the fiscal year on April 5.
AI said inventories from global sources of income were, for the first time, its best-selling investment sector in April. With a weaker outlook for inventory value expansion, due to issues such as the war in Ukraine, higher global inflation, and emerging interest rates. Interest rates: Corporate dividends are becoming increasingly important in the overall returns investors can earn from stocks.
Also popular were the Volatility Managed, Specialist Bond and North American sectors. The worst-selling sector was UK All Companies.
In April, UK investment platforms were responsible for some of all gross retail fund sales, while UK intermediaries, along with independent money advisers, accounted for just over a quarter (28%). Discretionary fund managers (20%) and direct investment sales. supplier to customer (3%) offset the balance.
Miranda Seath, AI’s Head of Market Insights, said: “While entries to ISA wrappers were part of those in 2021, they remained the third largest over the past five years. This is significant given that April’s positive sales come after one of the most challenging quarters on record in terms of retail cash flows.
Hedge funds led by women perform slightly better than those headed up by men over the longer term, according to research from broker IG Prime.
Hedge funds are pooled investment vehicles for primary and high-net-worth investors.
In their pursuit of oversized returns, investment methods related to the hedging budget are more eclectic and involve greater risk-taking than those found in the normal maximum retail budget.
IG Prime’s studies focused on the United Kingdom, Australia, Singapore, Switzerland, and the United Arab Emirates. The study tested the extent to which a higher proportion of women in high-level positions in the coverage budget correlated with higher fund performance.
The company said that when looking at all investment periods, from one month to five years, the results suggest that there is no consistent correlation between female leadership and the fund’s positive or negative performance.
But IG Prime added that over five-year periods, in the U. K. and Australia, the study found that female-led hedge funds outperformed male-controlled investment portfolios.
According to the company, the decision to appoint women as hedge fund leaders may prove “somewhat beneficial… from a financial perspective”.
Despite this, the study also found that women held only 15% of management positions at foreign hedge funds, compared to men.
IG Prime also found that male and female hedge fund investors followed other investment strategies. Nearly two-thirds (60%) of women said they rely on capital-focused investment approaches, compared to just over a quarter (26%) of men.
In contrast, almost twice as many men (33%) as women (18%) say they focus on macro investment strategies. A macro strategy bases its technique on the general economic and political perspectives of countries, or on their macroeconomic principles.
When it comes to crypto, around a third (31%) of male investors said they were more likely to incorporate crypto assets into their portfolios, compared to 20% of female investors.
IG Prime said: “When making investments in funds, the focus should be on people’s past performance and intended strategy for the funds. Due to the unique nature of funds, it remains a wise decision to tailor each investment decision to each fund.”
The majority of non-professional investors believe that making an investment with a life purpose in mind produces greater effects than seeking to make money in a summary way, according to a study by Bestinvest.
The investment department’s life goals study found that 80% of investors with a monetary goal on the horizon believe it would help them achieve a more satisfying outcome.
Bestinvest also said that approximately nine out of ten investors (89%) have a purpose in mind that they hope to achieve by making their money more difficult for them as an investment strategy.
Three-quarters (77%) of investors referred to a retirement-related investment incentive, either one that helped them to give up work sooner, or to help fund a comfortable income stream alongside their state pension.
Other primary goals underpinning investment methods include wealth under construction to ensure financial security, improving quality of life as retirement approaches, paying for long-term family expenses such as weddings or school fees, and wealth under construction to transfer over the long term. Generations.
Although men and women shared the confidence that having an investment target would lead to better results, Bestinvest said women “were less likely than men to check whether they were on track for their goals”.
Alice Haine of Bestinvest said: “It is worrying that female investors choose to pay less attention to their investments. Women are more vulnerable to pension poverty because they have less cash than men, either because of the gender pay gap or because they have taken time off in their careers to care for their children or relatives.
The fund manager also found that, on average, UK investors allocate around 16% of their money to investing. The majority of investors cited a lack of spare cash as the reason why they hadn’t started investing earlier.
Older, wealthy investors say inflation is their number one fear when it comes to the state of the U. K. economy and the outlook for their own finances, according to a wealth manager.
The Saltus Wealth Index also found that older HNWIs (those with investable assets of more than £250,000) have a much bleaker view of their finances than affluent young people.
According to the results, the majority of high-net-worth young people said they felt confident over the next six months about the long-term of the UK economy, as well as their own finances.
But when asked the same questions, older HNWIs expressed great concern. According to Saltus, one-third (34%) of HNWIs aged 55 to 64 say they are confident about their long-term prospects. This proportion fell further to 23% among HNWIs aged 65 and older.
When asked what the biggest threat to their finances is, older HNWIs cited inflation (33%), Covid-19 (30%), exchange rates (25%), cybersecurity (25%) and geopolitical threat (22%).
Saltus said this marked a shift from 2021, when Covid-19 was the top threat, followed by inflation, return on investments, Brexit and climate change.
Inflation in the UK rose to 9% in April 2022, its highest point in 40 years, as prices were hit by rising energy costs and the effect of the ongoing conflict in Ukraine.
The increase exacerbated a cost-of-living crisis that is already devastating the finances of millions of British households.
Michael Stimpson, partner at Saltus, said: “There are a number of issues causing concern, with the effect of emerging inflation being the main concern, especially among older people whose fears about how they will affect their retirement plans are more focused than ever on the importance of having a sound monetary plan in place.
Shareholder payments made through companies from earnings rose 11% to a record £242 billion ($302. 5 billion) globally in the first quarter of 2022, according to the latest dividend data from Janus Henderson.
Dividends are a source of income for investors, especially as part of a retirement plan strategy.
The investment manager’s Global Dividend Index said the dividend expansion may simply be the result of the “continued normalization” of bills following the disruptions caused by the Covid-19 pandemic.
In 2020, companies around the world slashed dividend payouts to shareholders, opting to conserve money to protect themselves from the worst effects of the pandemic.
Henderson said the region saw double-digit expansion in dividend payments in the first quarter of this year, driven by a stronger economic backdrop and a continued recovery in payouts after cuts in 2020 and early 2021.
However, it warns that the global economy will face challenging situations for the rest of 2022 and predicts that the resulting downward pressure on the economic expansion will affect corporate profits in several sectors.
In the UK, oil corporations in particular helped boost shareholder payouts by as much as 14. 2% in the first quarter of 2022, to £11. 2 billion ($14. 7 billion).
Distributions in the healthcare sector also increased, after pharmaceutical giant AstraZeneca raised its dividend for the first time in just 10 years. Janus Henderson said telecoms operator BT had also made a significant contribution to growth.
The United States, Canada and Denmark set record quarterly records with £114 billion ($142 billion), £10. 7 billion ($13. 4 billion) and £7. 8 billion ($9. 8 billion), respectively.
Jane Shoemake, Janus Henderson, said: “Global dividends were awarded for a smart start to 2022, helped by the specific strength of the oil and mining sectors.
“The world’s economy nevertheless faces a number of challenges – the war in Ukraine, rising geopolitical tensions, high energy and commodity prices, rapid inflation and a rising interest rate environment. The resultant downward pressure on economic growth will impact company profits in a number of sectors.”
FundCalibre, the online fund hub, has introduced what it describes as a “simple” set of definitions that it will use to review investment portfolios structured on environmental, social and governance (ESG) criteria.
ESG investing is as much about its impact on people and the environment as it is about potential financial concerns.
The concept is central to investing, to the point that trillions of pounds of assets are controlled globally in accordance with ESG principles.
FundCalibre says it now includes an ESG score in the scores of the 228 “Elite Rated” and “Radar” budgets featured on its website. Assessments fall into three categories: explicit, integrated, and limited.
‘Explicit’ funds are those that have an ESG or sustainable approach at the heart of their investment philosophy. Funds placed in this category are likely to have an independent panel or rely on a consumer survey to determine their ESG criteria.
“Integrated” budgets are those that integrate ESG research into the investment procedure as a complementary input to decision-making.
‘Limited’ funds contain an element of ESG in their process, but the portfolio is not influenced overall by the ideal of ethical investing.
Each assessment is publicly available and free to view.
Professional fund managers typically build investment portfolios according to ESG criteria and themes. But because ESG is a broad concept, there is no set of absolute principles that the budget must adhere to.
Ryan Lightfoot-Aminoff, senior research analyst at FundCalibre, said: “As every fund manager does something different, it has become very difficult for investors to know precisely how guilty a fund really is. In addition, the lack of acceptance of asset managers’ ESG claims as true remains a barrier to investment.
“We introduced a Responsible Investment Sector in 2015 highlighting budgeting in this category, which our research team considers to be among the best. Now we’ve gone a step further and included an ESG assessment.
Almost a fraction of Britain’s young investors are making investment possible while conducting business, according to the city’s regulator and the country’s official monetary lifeline.
In a survey exploring attitudes towards investing, 42% of respondents aged 18 to 24 said they made their latest investment while sitting in bed, watching TV or on their way home from a pub or out at night.
The research, carried out for the Financial Conduct Authority (FCA) and the Financial Services Compensation Scheme (FSCS), also found around half of investors (44%) did not research their investments because they found the process “time-consuming” and “too complicated”.
The FSCS has warned that if consumers don’t perceive where they’re investing their money, they’re more likely to fall victim to investment scams.
Earlier this year, a group of MPs warned of an alarming rise in financial fraud in the UK. The Treasury Select Committee has advised that social media giants compensate others who have been duped by criminals using their websites.
According to the FSCS/FCA survey, around a quarter of investors (27%) said they were more likely to invest in an investment opportunity with a “limited timeframe”, such as an opportunity that will only be available for the next year. 24 hours.
The FCA says time pressure is a common tactic used by scammers. It advises consumers to check its list of precautions to see if an investment firm is operating without authorization.
About one in five respondents said they had not checked or did not know if their investment had been made through FSCS. The FCA says this puts consumers in danger of opting for investments with no repayment option if their provider goes bankrupt.
FSCS cover means consumers can claim reimbursement of up to £85,000 unlike an FCA-authorised company that has gone bankrupt.
Consumers can check if their investment is financially registered through FSCS, their Investment Protection Checker.
Mark Steward, enforcement director at the FCA, said: “Fraudsters will always find new ways to target consumers, so make sure you do your homework and spend some time doing research. Just a few minutes can make a big difference.”
Investor sentiments are sharply divided by age when it comes to environmental, social and governance (ESG) issues, according to a study conducted on behalf of wealth managers and monetary advisors.
ESG, one of the approaches within the broader concept of “ethical” investing, is as much about its impact on people and the environment as it is to potential financial returns.
A study carried out by the Personal Investment Management & Financial Advice Association (PIMFA) – an industry body representing investment firms and advisers – reveals a “significant generational divide” in attitudes to ESG investing.
PIMFA found that a large majority (81%) of people across all generations consider ESG to be “very important” or “important” in their investment decisions.
But while around three-quarters (72%) of older investors aged 18 to 25 feel that some, if not all, of their investments deserve to be for the common good, less than a third (29%) of seniors aged 56 to 75 feel that the same. . . Among investors over the age of 75, this proportion drops further to one in five (21%).
PIMFA also found that ESG investment issues affected women more than men: 86% of women across all generations said this is part of their investment strategy.
However, while female investors need their money to contribute to smarter people than men, a higher proportion of women (37%) say they lack confidence and wisdom when it comes to making ESG investments compared to men (26%).
Liz Field, Chief Executive of PIMFA, said: “One of the most pronounced effects of the Covid-19 pandemic has been the increased interest in all things ESG. Of particular interest is the extent to which the five key generational teams differ in their responses to the GSS.
“The wealth control industry has a wonderful opportunity to leverage ESG by making an investment as a catalyst to inspire more women to invest and secondly to use ESG as an educational and practical tool to drive a much broader savings and investment culture in the world. market. . “
The investment functionality of the UK’s largest wealth managers has undergone a dramatic change this year, according to a leading investment advisory firm.
Asset Risk Consultants’ (ARC) research of 300,000 portfolios controlled through more than a hundred wealth control firms found that growth-oriented methods struggled given the prevailing economic situations in 2022, while value-oriented portfolios experienced a resurgence in fortune.
Growth-based methods are the process of making an investment in developing corporations and sectors that are expected to continue to expand over time.
Valuing an investment is the process of buying companies that are undervalued by both investors and the market as a whole.
The CRA says the situation is completely different from the end of last year. Many portfolios that were in excellent shape at the end of 2021 are now languishing in the bottom quartile in terms of performance, having been replaced by former laggards from the same period. .
The bottom quartile accounts for the bottom 25% of portfolios.
The CRA says its findings show that the changing economic landscape has had a significant impact on managers whose investment strategies were based on an environment of low inflation and low interest rates.
The firm says strategies that favor expansion stocks, small businesses and long-term bonds have suffered the most. At the same time, around one-third (30%) of biased managers moved from the fourth quartile at the end of 2021 to the first. quartile in the first quarter of this year.
Graham Harrison, leader of ARC, said: “The cause is Russia’s invasion of Ukraine, which has far-reaching and long-term geopolitical implications. »
Harrison pointed to other contributing factors, adding “a populist trend toward greater protectionism, supply chain shortages through Covid-19, and a decade without genuine wage growth. “
He added: “Easy money has been made. We are at an inflection point for money markets and investment strategies. The next decade will be very different for investors than it has been for the past three years. “
UK retail investors withdrew more than £7 billion from their budget in the first months of the year, with March 2022 responsible for almost part of that figure, according to the latest figures from the Investment Association (IA ).
The IA reports that capital outflows increased from £2. 5 billion in February this year to £3. 4 billion in March. Investors withdrew a budget amounting to £1. 2 billion in January 2022.
The speed of investor withdrawal accelerated dramatically in the first quarter of 2022, exacerbated by tighter financial policy in primary markets and exacerbated by Russia’s invasion of Ukraine.
Rising inflation, emerging interest rates and the Ukraine crisis have combined to cause a flight of threats from investors, bond budgets and, to a lesser extent, stock portfolios.
Laith Khalaf, head of investment research at broker AJ Bell, said: “Capital outflows look modest compared to bond fund withdrawals. In the first quarter, investors withdrew £1. 9 billion from stock funds, but £6 billion from bond funds.
Chris Cummings, CEO of IA, said that not all fund sectors experienced capital outflows during the period: “March was a two-part story, and outflows were balanced out by many investors using their individual savings accounts and seeking potentially safer havens in diversified funds. “”Flows into the guilty investment budget remain a bright spot and demonstrate investors’ commitment to sustainable investing. “
Less than 1% of the budget (out of a total of more than 1000) has managed to generate solid and sustained returns over time, according to the latest from BMO Global Asset Management.
The investment firm’s latest Multi-Manager FundWatch survey found that five (0. 45%) of the 1,115 budgets it covers achieved top quartile returns for three consecutive 12-month periods through the end of the first quarter of 2022.
He says this is the lowest budget figure he has recorded in this tranche since he began his investigation in 2008. He describes the figure as “well below” the old consistent and most productive budget average, which is around 3%. . brand.
The agency highlights market events that have harmed the functionality of funds over the past three years, Covid, inflation, climate change, and similar environmental, social, and governance (ESG) concerns.
It also sheds light on the war in Ukraine and its geopolitical effects on resource scarcity due to the dramatic decline in the number of high-yield portfolios.
Rob Burdett, head of BMO’s multi-manager team, said: “The war in Ukraine is the latest surprise for markets, and the resulting sanctions have a significant effect on commodities, inflation and interest rates, as well as on the economy.
“These crises produce significant shifts in money markets and underlying asset classes, resulting in the lowest consistency numbers we’ve ever noticed in the survey. “
According to Fundscape, assets held on direct-to-consumer (D2C) investment platforms have fallen below £300 billion in what may be a challenging year for providers.
The fund’s analysts say rising inflation, increases in emerging fuel national insurance and the cost-of-living crisis weighed on investor and market sentiment in the first quarter of this year, even before factoring in the effect of the crisis. Ukraine.
Fundscape says the overall result led to a 6% relief in the control of combined assets held on D2C platforms, from around £315 billion to £297 billion at the end of March 2022.
D2C providers tend to convert most of their revenue stream in the season from individual savings accounts, between January and March each year, adding to the damage caused by a sluggish first quarter.
Martin Barnett of Fundscape said: “The first quarter of the year is the indicator of investor sentiment and sets the tone and speed when it comes to making an investment for the rest of the year. 2022 may be a tougher year for many D2C households, especially robots.
Robo-advisors or robo-advisors offer an automated brokerage option for investors who have the option of making an investment on their own or delegating full control of their investments to a professional advisor.
New research from the Chartered Financial Analyst Institute (CFA) shows that 51% of UK retail investors now take the money facilities industry for granted, up from just 33% in 2020.
The CFA Institute is a global framework of investment professionals that administers CFA accreditation and publishes investment research, in addition to its biennial Investor Confidence Report.
According to the latest report, the majority of UK retail investors (59%) are now “very likely” to achieve their vital maximum monetary target. For 58 percent, it’s saving for retirement, while 12 percent, Cent prioritizes saving for a major acquisition, such as a space or car.
The CFA surveyed over 3,500 retail investors across 15 global markets, and found that trust levels have risen in almost every location. On average, 60% of global retail investors say they trust their financial services sector.
The CFA study sees last year’s strong market functionality as a key driver of investor confidence. In 2021, the S
Another thing is the adoption of technologies such as investment methods and AI-based trading applications, which can improve the accessibility and transparency of markets. Half of retail investors say the increased use of generation has led to greater buy-in in their monetary policies. tutor.
The study also revealed investor desire for personalised portfolios that align with their values. Two-thirds say they want personalised products, and are willing to pay extra fees to get them.
Investment methods that prioritize ESG (environmental, social, and governance) criteria are a key target area for this personalization, with 77% of retail investors saying they are interested in ESG investment methods or are already interested in ESG investment methods.
Rebecca Fender, head of strategy and governance for research, advocacy and criteria at the CFA Institute, said: “The high levels we’re seeing lately in investor confidence are certainly cause for optimism, but the challenge is to maintain confidence even in periods of volatility.
“Technology, price alignment and personal relationships are emerging as key determinants of resilient acceptance as true and dynamic. “
Investment platform AJ Bell has unveiled what it claims is a “pragmatic” mobile app aimed at investors with large sums of money to invest, but who are intimidated by the prospect of stock market trading.
AJ Bell hopes its Dodl app will appeal to investors who are disappointed by low returns on money and are looking for an undeniable way to access the stock market and manage their investments.
City watchdog, the Financial Conduct Authority, recently identified 8.6 million adults in the UK who hold more than £10,000 of potentially investable cash.
A study conducted by AJ Bell before launch found that around a third of those who aren’t currently making an investment (37%) are discouraged from doing so because they don’t know where to start. About a portion (48%) said that being able to choose from a short list of investments would inspire them to start making an investment.
Dodl will therefore limit investors to a choice of just 80 funds and shares that can be bought and sold via their smartphone. In contrast, rival trading apps offer stock market investments running into the thousands.
The app will offer several products that people need to save tax efficiently, including an Individual Savings Account (ISA), Lifetime ISA and pension. Dodl will also feature “friendly monster” characters that aim to break down traditional stock market barriers and make it easier for customers unfamiliar with the investing process.
AJ Bell says a Dodl account can be opened via the app in “just a few minutes”. Customers are able to pay money into accounts via Apple and Google Pay, as well as by debit card and direct debit.
Dodl imposes a single, fixed annual payment of 0. 15% of the portfolio price for open-ended investment accounts, such as ISAs or pensions. There is also a minimum payment of £1 per month. The annual charge for maintaining an ISA of £20,000 through Dodl would be £30.
The acquisition or sale of investments is commission-free and no tax payments apply. AJ Bell states that consumers who invest in the budget will also need to pay the annual payment from the underlying fund as they would if they were making an investment in the company’s fund. main platform.
Andy Bell, CEO of AJ Bell, said: “Investing doesn’t have to be scary. When creating Dodl, we focused on cutting out the jargon, making opening an account quick and easy, and reducing the diversity of investments consumers can make.
Britain’s millionaire investors have suffered bigger losses than their less well-off counterparts since the start of 2022, and market volatility has caused more damage to riskier portfolios, favoured by those with larger sums to invest.
Interactive Investor’s Private Investor Return Index shows that clients with £1 million portfolios suffered losses of 4. 2% in the first quarter of this year.
By comparison, average account holders were down 3.6% over the same timeframe, while professional fund managers had lost 3.7% of their money.
Figures for longer time periods show an improvement in overall performance. Typical consumers suffered losses of 1% in six months, but gained 5. 4% in the last year.
Professional managers fared worse, with a 1% drop in six months and a 5. 3% increase over the next 12 months.
Stock markets around the world had a tough time in the first quarter of this year. According to investment firm Schroders: “Russia’s invasion of Ukraine at the end of February was a global shock. The serious human implications spilled over into the markets, with stocks falling. “
Richard Wilson, director of Interactive Investor, said: “The horror unfolding in Ukraine has punctuated what was already a torrid time for the markets. So it is no surprise that the first quarter of the year saw first negative average returns since we started publishing this index.
“Markets don’t go up in a straight line, and this index is a sobering reminder of that. It’s also a reminder of the importance of taking a long-term view, and not putting all your eggs in any one regional basket.”
[] In recent months, those who have saved cash are more cautious when making investments in the markets.
Hargreaves Lansdown (HL), the investment platform, said that about one-third of investors who have invested coins in an inventory and ISA inventory this year have held their coins in coins rather than investing them.
Over the past two years, HL said about a quarter of investors had prioritized money over market-based investments.
Most investors with individual savings accounts (ISAs) are concerned about the short-term impact of inflation on their portfolios, according to research from online investing platform Freetrade.
ISAs comprise a suite of government-backed savings plans which, depending on the product chosen, allow interest or investment growth to accumulate tax-free
In a survey of 1,000 ISA holders, commissioned through the company in agreement with Investing Reviews, two-thirds (67%) said they were concerned about the effect of inflation on their investment earnings over the next 3 years.
Freetrade found that the average investor expects to earn a return of 5. 8% per annum over this consistent period. But as customer value inflation in the UK recently hit a 30-year high of 6. 2%, most investors expect it will have time to make genuine progress in the near future.
Despite emerging interest rates and increased volatility in equity markets due to the conflict in Ukraine, Freetrade said a significant proportion of investors – one in five (19%) – still expect double-digit gains in the coming years.
Another finding is that less than a third (31%) of investors believe that the strategy of owning shares in a single company promises the most productive returns in the long run. Conversely, almost a portion (49%) of the cheap budget is likely to be disbursed. offering the most productive returns.
The survey also revealed increased optimism about the outlook for UK equities, following record £5. 3 billion outflows from the sector in 2021. One in five investors intend to increase their exposure to domestic assets, while 4% are likely to sell their domestic assets. . UK assets.
Freetrade’s Dan Lane said: “Maybe the UK market’s relatively cheap valuation is proving too hard to resist, or maybe the allure of US tech is waning slightly. Whatever the reason, the UK seems to be back on the menu in 2022.”
* For savers and investors who have not yet done so, time is running out to use this fiscal year’s ISA allocation. All UK adults are entitled to an ISA allowance worth £20,000 for the tax year. The 2021-22 fiscal year ends on April 5. and the 2022-23 equivalent starts the next day.
Shareholder payouts made through corporations from their earnings hit a record high in 2021, but global dividend expansion is expected to slow sharply this year.
According to investment manager Janus Henderson, this trend was already observed before Russia’s invasion of Ukraine.
The company’s Global Dividend Index reported that companies paid out $1.47 trillion to shareholders in 2021, an increase of nearly 17% on the year before.
The figure represents a major rebound from the sharp cuts imposed on dividends by companies during 2020, when their preference was to retain cash due to the effects of the Covid-19 pandemic.
Dividends are a common source of income for investors, especially as part of a retirement planning strategy.
Henderson said bills hit new records in several countries last year: the United States ($523 billion), China ($45 billion) and Australia ($63 billion).
In the UK, dividends reached $94 billion, a 44% increase between 2021 and last year. The recovery is the result of a base of major cuts in 2020, meaning bills remain below pre-pandemic levels.
Janus Henderson said 90% of international corporations building increased or maintained their strong dividends in 2021. Banks and mining corporations are to blame for about 60% of the $212 billion accumulated in disbursements last year. Last year, BHP paid for the world’s largest mining investment. Dividend value of $12. 5 billion.
For next year, before the Russian attack on Ukraine, Janus Henderson forecast a more moderate dividend expansion of 3. 1%. This figure should perhaps be reduced further.
Jane Shoemake at Janus Henderson said: “A large part of the 2021 dividend recovery came from a narrow range of companies and sectors in a few parts of the world. But beneath these big numbers, there was broad based growth both geographically and by sector.”
Investors aged 45 or under who own crypto assets have doubled in number in a year, according to research from Boring Money.
The consultant’s Online Investing Report 2022, based on a survey of more than 6,300 UK adults, also shows that mobile comms is becoming the dominant medium for younger investors buying funds and shares.
Boring Money said the proportion of adults aged under 45 who own crypto assets has risen from 6% in 2021 to 12% over the past 12 months. Ownership among the over 45s was significantly lower at 3% this year, compared with 2% in 2021.
The Financial Conduct Authority, the U. K. ‘s monetary watchdog, warned last year about the number of new investors attracted by high-risk investments such as cryptocurrencies, as well as the threat of “low-friction” trading on mobile devices.
Investors in low-friction trading will be able to start trading with just a few clicks from their smartphone or tablet. The FCA says adding a small amount of “friction” to an online investment process, through the use of disclosures, warnings and checkboxes, is helping investors. Increased perception of risk.
According to Boring Money, 43% of investors say they have used their mobile phone in the past 12 months to get the balance of an investment account, compared to 36% of investors in 2021.
About one in five investors (19%) also said they bought or sold a mobile app, up from 16% last year.
Boring Money said one-in-five (19%) of the total UK retail investor population is made up of individuals with less than three years’ experience of investing, while 7% have been investing for less than a year.
Holly Mackay of Boring Money said: “There is a close-out effect in the DIY investment market today. On the one hand, we have millions of people in cash, with gigantic balances and no investments. On the other hand, across the spectrum, we have inexperienced, usually younger, investors who own incredibly volatile assets.
“There is a more natural middle ground for millions, and providers have to find some answers on how to transition more customers to that more comfortable area.”
The Financial Stability Board (FSB) warned that policymakers must act quickly to come up with rules covering the digital asset market, given its increasingly overlapping links with the traditional financial system.
According to the FSB, parts of the crypto market (around $2 trillion globally) are difficult to assess due to “significant knowledge gaps. “
Investment funds worth a combined £45 billion have been named and shamed as consistent underperformers by research from online investing service Bestinvest.
The firm’s most recent investigation, Spot the Dog, shows that fund teams abrdn and Jupiter and wealth manager St James’s Place were all guilty of six underperforming budgets out of the 86 so-called “dogs” known in the semi-annual report.
The research defines a ‘dog’ fund as one which fails to beat its benchmark over three consecutive 12-month periods, and also underperforms its benchmark by 5% or more over a three-year period.
A benchmark is a popular metric, a specific stock index, against which the functionality of a mutual fund is compared.
Bestinvest said the funds, despite their underperformance, will generate £463 million in management fees this year, even if stock markets remain flat.
The research highlighted 12 budgets worth more than £1 billion. These include JP Morgan’s £3. 93 billion US Equity Income fund, Halifax UK Growth (£3. 79 billion) and BNY Mellon Global Income (£3. 47 billion).
The research also included Invesco’s UK Equity Income and UK Equity High Income portfolios, described through Bestinvest as “perpetual performance funds”.
Bestinvest’s latest Spot the Dog report from last summer pointed to a budget value of 77 just under £30 billion. The company says the explanation for the increase in the number of underperforming stocks is due to additions from the Global and Global Equity Income investment sectors.
Jason Hollands, managing director of Bestinvest, said: “Spot the Dog has helped shine a spotlight on the problem of the consistently disappointing returns delivered by many investment funds. In doing so, not only has it encouraged hundreds of thousands of investors to keep a closer eye on their investments, but it has also pushed fund groups to address poor performance.
“More than £45 billion is a huge saving that could allow investors to work harder than rewarding fund corporations with juicy fees. At a time when investors are already battling inflation, tax hikes, and choppy stock markets, it’s imperative to make sure you’re making the most of your wealth.
Almost a portion of people who make investment decisions on their own are unaware that wasting cash is a potential investment risk, according to new studies from the UK’s monetary watchdog.
Understanding Self-Directed Investors, produced through BritainThinks for the Financial Conduct Authority (FCA), found that 45% of self-directed investors do not consider “losing money” to be a potential investment risk.
Self-employed investors are explained as those who make investment decisions on their own behalf, setting up investments and making trades without the help of a monetary advisor.
In recent years, proprietary trading has become increasingly popular among retail investors.
According to the FCA, more than one million UK adults increased their holdings in high-risk investments, such as cryptocurrencies or crowdfunding, in the first seven months of the Covid-19 pandemic in 2020.
The research says “there is a concern that some investors are being tempted – often through misleading online adverts or high-pressure sales tactics – into buying complex, higher-risk products that are very unlikely to be suitable for them, do not reflect their risk tolerance or, in some cases, are fraudulent.”
He adds that self-directed investors’ investment journeys are complex and highly personalized, but investors can be classified into three main categories: “the intent,” “the thinker,” and “the gambler. “
The FCA used behavioural science to test various methods of intervention to help investors pause and take stock of their decisions before committing in “just a few clicks”.
They found that adding small “frictions” to the online investment process, such as posting “frequently asked questions” about key investment perils, warnings, and checkboxes, helped investors perceive the dangers involved.
Susannah Streeter, senior investment and markets analyst at investment platform Hargreaves Lansdown, said: “The boom in subprime investments is causing massive nervousness among regulators, with the FCA implicated in vulnerable consumers being dragged into a frenzy of speculation.
“The “fear of missing out” effect that gripped the pandemic has drawn more and more people into the murky world of crypto investing, and most of them still don’t understand the risks involved.
METER
It will offer a collection of multi-asset model portfolios, backed by a range of actively managed and passive funds.
Making an investment in multiple assets offers a greater degree of diversification than making an investment in a single asset class, such as stocks or bonds. Passive budgeting tracks or mimics the functionality of a specific stock market index, such as the UK’s FT-SE 100. .
Moneyfarm will supply the operating models, adding committed ‘teams’ to the visitor appointment generation and management platform, as well as custody and trading services.
Direct investment in the UK has grown over the past five years, with an average annual accumulation of assets under control of 18% to £351 billion at the end of June last year, according to researchers at Boring Money.
David Montgomery, Managing Director of M
Moneyfarm was introduced in Milan in 2012 and has 80,000 active investors and £2 billion invested through its platform.
Bestinvest, by Tilney Smith
The company says it is revamping its existing platform into a “hybrid digital service that combines online goal-planning and analytical tools with a human touch”. Customers can ask for help from qualified professionals through free investment coaching.
If desired, clients can also receive a fixed-price advice package that includes a review of their existing investments or a portfolio recommendation. Bestinvest said a one-off payment of between £295 and £495 would apply depending on the package selected.
The new site will go live to coincide with the end of the tax year on 5 April.
The launch will be accompanied by ready-to-use “smart” wallets that will provide investment features tailored to other threat profiles.
The portfolios will be invested in passive investment funds, while being managed actively by TS&W’s investment team. Passive funds typically track or mimic the performance of a particular stock market index, such as the UK’s FT-SE 100. The TS&W team will adjust portfolios’ exposure to markets and different asset classes according to prevailing investment conditions.
Bestinvest said that the annual investment charge will be between 0. 54% and 0. 57% of the portfolio price.
From February 1, the company added that it will reduce its consistent online percentage trading fees to £4. 95 per transaction, regardless of the length of the transaction.
Bestinvest produces a twice-yearly report on underperforming or “dog” investment funds. It said it wants to bridge the gap between existing online services for DIY investors and traditional financial advice aimed at a wealthier audience.