The Forbes Advisor editorial team is independent and objective. To assist us in our journalism and continue to offer this content for free to our readers, we receive invoices from companies that promote it on the Forbes Advisor site. This comes from two main sources.
First, we offer paid placements for advertisers to showcase their offers. The invoices we receive for those placements show how and where advertisers’ offers appear on the site. This site does not include all companies or products available on the market.
Second, we also include links to advertiser offers in some of our articles. These “affiliate links” would possibly generate revenue for our site when you click on them. The reimbursement we obtain from advertisers does not influence the recommendations or recommendations our editorial team provides in our articles nor does it have any effect on the editorial content of Forbes Advisor.
While we attempt to provide accurate and up-to-date data at the time of publication that we believe will be relevant to you, Forbes Advisor does not and cannot ensure that the data provided is complete and does not make any representations or warranties in this regard, or as to its accuracy or applicability. You should check with the product supplier to ensure that the data provided is as up-to-date as possible.
Forbes Advisor’s editorial team is independent and objective. To help us in our journalistic work and continue to offer this content for free to our readers, we receive invoices from companies that promote it on the Forbes Advisor site. This comes from two main sources.
First, we offer paid placements for advertisers to showcase their offers. The invoices we receive for those placements show how and where advertisers’ offers appear on the site. This site does not include all companies or products available on the market.
Second, we also include links to advertiser offers in some of our articles. These “affiliate links” are very likely to generate revenue for our site when you click on them. The reimbursement we get from advertisers has no bearing on recommendations or recommendations. Our editorial team provides in our articles or otherwise the editorial content of Forbes Advisor.
While we attempt to provide accurate and up-to-date data at the time of publication that we believe you will find relevant, Forbes Advisor does not and cannot ensure that any data provided is complete and makes no representations or warranties in this regard, or in any respect. as to its accuracy or applicability. You should check with the product supplier to ensure that the data provided is as up-to-date as possible.
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 global funds network Calastone’s Fund Flow Index, investors withdrew £8 billion from UK equity funds during 2023, a similar amount to the previous year, marking the third year running where the sector experienced a net outflow of cash.
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, the year’s late flurry was not enough to prevent equity funds overall from experiencing a net outflow of cash worth £1.24 billion during 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 funds invest in money deposits and short-term bonds, with the goal of offering a point of stability and money-like liquidity to investors wary of investing in stocks, as well as higher returns than bank or construction company deposits.
In terms of the industry’s strengths, Calastone said the U. S. equity budget is a good one. The U. S. enjoyed record inflows worth around £1 billion last month. The European budget, which experienced net outflows each and every month between January 2022 and November 2023, reversed this trend by attracting £476 million in December, its 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 what you would get with coins deposited in a bank. In this way, they withdraw from the banking sector currencies that might otherwise be 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 dismally in 2023, in stark contrast to those who favored technology 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 managed by the IA members in the UK, Quilter Cheviot found that 42 of the bottom 43 funds were invested in China.
At the bottom of the list is abrdn’s China A Share Equity fund, which, according to data from Quilter Cheviot and Morningstar, produced a negative recovery of 29. 2% over the course of 2023. The next nine worst-performing budgets also come from the Chinese sector, recording losses of more than 25% (see Table 1).
Nick Wood, head of fund research at Quilter Cheviot, said: “China has retreated 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 rankings of functionality, 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 investor malaise in China, last year proved particularly successful for generation investors, with several industry budgets appearing in the top 10 most sensible operating budgets from across the universe. AI in 2023 (see table 2).
The most productive actor, Nikko AM ARK Disruptive Innovation, led by ARK founder Cathy Wood, a company synonymous with investment in the United States. Other managers that generated returns above 50% during the year included Liontrust, T. Rowe Price and Legal.
Quilter’s Nick Wood said: “It’s clear that tech stocks are back in vogue, despite the high interest rates that were intended to upset them. The actions of the “Magnificent Seven” [including Microsoft, Apple, and Nvidia] have pushed generation budgeting into the spotlight, with the 10 most sensible functioning corporations focusing almost exclusively on this sector.
“Clearly the artificial intelligence boom of 2023 has helped to drive these funds up from the doldrums they found themselves in at the beginning of last year and will have rewarded investors who stayed patient and invested through the difficult period.
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 barometer of primary shares of the British stock market (3 January) celebrates its 40th anniversary at a time when London’s reputation as a financial centre has never seemed more vulnerable, writes Andrew Michael.
Also as “the Footsie”, the FTSE 100, along the S
These indices provide stock investors with an indication of how the markets are performing, as well as the functionality of individual companies. They also provide the foundation on which passive investment vehicles, such as index funds, are built.
The UK’s so-called ‘blue chip’ index is made up of the 100 largest UK companies by size, or market capitalisation, as listed on the London Stock Exchange. Market ‘cap’ is calculated by multiplying a company’s share price with the number of shares in issue.
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 main stock market indicator for major UK-listed companies.
The arrival of the Footsies preceded a new generation of individuals flocking to the market following the privatisations of formerly state-controlled companies such as British Gas and British Telecom.
Nowadays, the Footsie is overseen by data firm FTSE Russell, which reviews the index each quarter. Companies can be promoted to, or be relegated from, the index depending on their size as dictated at the end of specific trading days each year.
Last fall, after a 14-year hiatus, the Marks store
Rob Morgan, chief investment analyst at Charles Stanley, said: “Some of the original 100 companies such as M&S, Prudential, Rio Tinto and NatWest, are still part of the index under the same name, and a total of 26 can trace their history back to original members. Others have been acquired, gone into private ownership, or broken up.
“The absolute failure rate has been low given the immediate technological upgrade we have experienced over the past four decades, illustrating the benefits of investing in blue-chip companies. While those aren’t the most interesting investments, disappearances tend to be rare among giant corporations and their sustainability can be a source of cash flow and dividends for investors.
The 40th anniversary of the Footsie comes at a time of great upheaval for the City of London. Today, UK stocks account for about 4% of the evolved market, as measured by the MSCI World Index, up from 10% a decade ago. A year later, London also moved to the United States as the headquarters for several corporate IPOs.
One of the accusations levelled against the index itself is that its composition is aging. Critics say its composition is too concentrated on stocks from the “old economy,” adding banks, insurers and mining corporations, while it lacks the tech corporations that have propelled rival indexes. , adding the S
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 negative reaction to Brexit that has seen the UK as a total investment. Fate failed. Get over it.
“In a time of high excitement in high growth stocks, particularly technology shares in the US where the potential for artificial intelligence has led the so-called “Magnificent Seven” technology companies to stellar returns, especially last year, the FTSE100’s lack of obvious exposure to the tech sector has been a hindrance.
“Growth-seeking investors have moved away from the UK’s main index as its parts are considered to be beyond the expansion phase. Although more reliable, cash-generating and stable, many of its businesses are considered They 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 adult life for the British index.
“Since 2000, the FTSE 100 index has deteriorated, while other indices in the evolved market appear to have advanced. Since the turn of the century, the FTSE index has risen by just 0. 4% on an annual average, to 6. 1%. annualized rise in the price of the S
In contrast to this view, Jason Hollands of Bestinvest considers it essential that the expansion of the index is only a small part of the Footsie’s retrospective figures: “In terms of percentage points, the FTSE hundred is up 447%. Since its inception and over the next five years, it only saw an increase of just 15%, which is modest compared to the U. S. S-Index. U. S.
“While it is undeniable that the FTSE 100 index has been massively outperformed by the performance of US stocks, the performance of the FTSE 100 issues is a very partial picture of the returns achieved, with the overwhelming majority of the overall returns achieved In the UK stock market, in fact, it is practical All real returns, once inflation is taken into account, come from dividend payments.
“When included and reinvested, the overall return on the FTSE hundred over the last 40 years is 2,219% and over five years it is 39%. “
The Financial Conduct Authority (FCA) is pressing ahead with a deep overhaul of the UK’s stock market listing rules after a series of companies shunned the City of London in favour of New York, writes Andrew Michael .
Listing regulations set out the criteria that a company must meet if it wishes 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 a merger of the premium and market segments and the removal of the requirement for corporations to discharge shareholder approval for primary transactions. The FCA said the adjustments were aimed at “encouraging more companies to list in the UK and compete on the world stage”.
The FCA claimed that the amendments could 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 businesses overseas, primarily to the US 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, chief executive of markets and international at the FCA, said: “We are harnessing the excitement of the UK capital markets and helping the UK’s competitiveness and growth. In doing so, it is vital that others think about what which can in turn, ensure that the UK remains an attractive location for companies wishing to raise capital.
Bim Afolami, Economic Secretary to the Treasury said: “The UK is Europe’s leading hub for investment but it’s a competitive world and we are by no means complacent. We want to make the UK the global capital for capital, attracting the brightest and best companies in the world.”
Online investment platforms and private self-investment pensions (SIPPs) have been ordered to avoid charging interest on clients’ money if platform fees are 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 platform CEOs this morning, the Financial Conduct Authority (FCA) called on firms 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 smart monetary policy. results. decisions.
‘Double-dipping’ is when platform providers retain interest earned on customer cash holdings and also impose an account fee or administration charge on the same pot. The regulator said it expected firms to cease the process 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 huge amounts deposited in individual savings accounts (ISA) and pension accumulation accounts (pension budget 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 earn 1. 95%, while those holding between £10,000 and £100,000 earn 2. 45%.
The platform also announced that the charges levied on customers to buy and sell investments including shares, exchange-traded funds, investment trusts, and bonds via the AJ Bell D2C platform are being reduced from £9.95 to £5 a trade. Dealing charges for frequent traders, defined as customers that place 10 or more trades in the preceding month, will reduce from £4.95 per trade to £3.50 next spring as well.
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”.
It added that, in June 2023 alone, those providers which retained interest collectively earned £74.3m in revenue from this practice.
For more information, read our article on investment platforms that lately pay the interest rate to their clients.
The FCA told CEOs that it expects firms “to ensure that their retention of interest on cash balances provides fair value and is understood by consumers in line with Consumer Duty, in particular the Duty outcomes of price and value 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’re going to have to make changes. If they don’t, we will intervene. “
Overseas investors have built a record stake in the UK stock market while UK individuals and institutions, such as pension funds and insurance companies, have seen the proportion of domestic shares they own decline sharply, writes Andrew Michael.
According to figures from the Office for National Statistics (ONS), shares in UK-based companies listed on the London Stock Exchange were worth £2.42 trillion at the end of 2022.
Of this total, the share of UK shares held through foreign investors, adding the global investment budget and the sovereign wealth budget, rose to a record high of 57. 7%, up from 56. 3% two years earlier.
By comparison, UK-resident individuals saw their holdings in UK shares fall from 12% in 2020 to 10.8% last year.
According to the Investment Association, since 2016 investors have withdrawn around £44 billion from the budget exposed to UK equities.
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
As we head into 2024, professional investors seem reluctant to increase their exposure to the UK stock market.
Sharing their thoughts on the investment outlook for the year ahead, a panel of commentators told Forbes Advisor that retail investors deserve to broaden their exposure to the steady source of income sector to stay on top of what can be a tough time in the markets. .
When asked how investors could better position themselves in an environment of “higher and longer” interest rates, the panel was unanimous in suggesting that they turn to steady sources of income, i. e. , through government bonds or “gilts. “
Laith Khalaf, head of investment analysis at AJ Bell, said: “The UK stock market is increasingly adapting to the control of foreign investors and, in a globalized market economy, this is perhaps not a surprise. Although the United Kingdom represents an increasingly smaller percentage of the MSCI World index due to its poor functionality compared to the S
“Obviously, UK investors are also facing cost of living pressures, which have understandably reduced their propensity to invest in UK shares. This scenario is compounded by the fact that in recent years, UK investors UK funds have increasingly sought and opted to sell their UK equity funds, largely in favor 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.”
A U. S. stock trading app that helped spark a stock-buying frenzy is launching in the U. K. 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.
Stock trading apps and online investment trading platforms allow retail investors to buy and sell stocks, budgets, and other investments directly, rather than at a financial advisor’s premises.
The boom in DIY investing over the past decade, partly driven by the Covid-19 lockdown period, means that the market has become increasingly competitive and saturated.
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 U. K. , giving its customers the opportunity to buy more than 6,000 U. S. -listed stocks. In the U. S. , adding Amazon, Apple, and Tesla. La company announced that it will come with a feature that will allow 150 of the most traded stocks. U. S. stocks are available to buy and sell 24 hours a day, Monday through Friday.
Robinhood is one of the many platforms that offer their consumers trading without commissions or exchange fees. The company says it will pay its customers 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 UK market follows a previous attempt that failed following operational issues in the US 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 launched Robinhood ten years ago, our vision has been to expand overseas. As a hub for innovation, global finance and the most sensible tech talent, the UK is a wonderful position to launch our first foreign brokerage product.
Robinhood said it aims to offer the ability to hold shares in an individual savings account, as well as stocks outside the U. S. , in the future.
Tenev added that he is “enthusiastically” engaging with the U. K. ‘s monetary regulator, the Financial Conduct Authority, to unload compulsory licenses 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 increasingly concerned with sustainability when choosing their investments, with annual investment in low carbon sectors more than doubling 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 new FCA rules aim to improve investor trust, and will require all authorised firms to ensure any sustainability claims they make are ‘fair, clear 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.
The rules are intended to prevent firms from naming or marketing financial products as ‘sustainable’ when, in reality, they aren’t.
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 centre for foreign investment. “
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 share dealing services to UK customers, said it had assembled a list of more than 6,000 global funds from managers such as Baillie Gifford, BlackRock, Fidelity, JP Morgan and Vanguard.
The list of funds includes more than 500 equity budget portfolios and 2000 constant revenue streams, as well as a diversity of specialized budgets targeting sectors such as biotechnology, energy, mining, healthcare, technology, telecommunications, and utilities.
Like a handful of its rival trading platforms, Saxo said investments can be made without commissions or platform fees on fund purchases.
In comparison, AJ Bell’s dealing account levies a fund dealing fee of £1.50, while interactive investor’s trading account costs £3.99.
Saxo’s annual “custody” fee, which is 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 in 3 tiers.
The “classic” account charges 0. 4% on assets between £0 and £160,000, while the “platinum” account charges 0. 2% on amounts between £160,000 and £800,000. The fee 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 best-selling funds came from the fixed-income sector, notably in UK gilts, corporate bonds, and other government debt.
Charlie White-Thomson, CEO 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’s shares will be put up for public sale, in a move reminiscent of the privatisation of Britain’s public sector in the 1980s, writes Andrew Michael.
Chancellor Jeremy Hunt, in yesterday’s Autumn Statement, said the government wants to return the taxpayer-supported bank to private ownership via an advertising blitz that will echo the ‘Tell Sid’ campaign used to promote British Gas shares 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 falling with a £45 billion cash injection after the 2007 financial crisis.
The funding gave the state an 84.4% stake in the company. Despite offloading blocks of shares to institutional investors such as company pension funds in recent years, taxpayers remain NatWest’s largest investor with a 39% holding.
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 retailers that makes an investment public would likely be worth less than the existing percentage value to inspire demand. NatWest recently lost its chief executive, Alison Rose, who resigned in July following a dispute sparked when her personal bank Coutts closed the accounts of the former leader of the UK Independence Party. United States, 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 some of the government’s NatWest stake to retail investors will probably strike a chord with some of the original Sids and Sidesses, seeing as its appeal probably lies with an older demographic with a focus on income rather than growth.
“Collectively, we all already own a percentage of NatWest as a result of the bailout, and the government’s removal from the shareholder register and a retail sale of percentages will move this deal from a mandatory majority stake to a voluntary majority position. “few. “
Will Howlett, money 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 free up a percentage of sale to retail investors over the next 12 months.
“We see that the fact that the government reduces its stake to 0 is more symbolic that it has no implication in the bank’s strategy. As such, we believe it is the fundamentals of the company that are more vital in determining the functionality of the percentage value than any technical issues caused by a percentage that cut into its stake.
“In 2015, the government proposed anything related to his involvement in Lloyds, but those plans were scrapped. It will be interesting to see if this will be successful or not.
Bank stocks tend to be a smart source of dividends and can also provide a diversified investment portfolio, while finance provides an “old economy” counterpoint to portfolios that include trendy tech stocks.
Investors without the time, experience, or inclination to research individual banks, but who are still keen to obtain exposure to the sector, could instead consider buying specialist exchange-traded funds (ETFs) that focus on financials, including exposure to 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, chief executive of investment platform Bestinvest, said: “Many investors have ignored government bonds since the global currency crisis [2007/08] 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 now offer very high yields, so they once again feature prominently 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.
Kasim Zafar of EQ Investors said: “The US economy appears to be the most protected from the shocks that could occur next year and is already further along in its financial cycle than most other regions. “
Karen Lau, investment director at JM Finn, said: “The US remains the strongest contender to lead us out of the current economic climate.”
Claire Bennison, director of investment solutions at Tatton Investment Management, said: “Regionally, it is always hard to bet too much against the US, although 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 access to a political “supercycle” with primary elections in the country.
When asked for the single most important piece of guidance they could give to investors, panellists pointed to remaining invested in the market, staying diversified, and keeping sight of long-term goals.
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, the biggest threat to keeping pace and building wealth is inflation. »
Corporate dividends distributed around the world 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, 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 things like one-time/special dividends and currency movements, the company said underlying dividend expansion in the third quarter was 0. 3 percent, adding that nine out of 10 companies increased their distributions or kept them flat 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.
UK companies’ dividend bills, which account for around 7% of global bills, amounted to £22. 4 billion in the third quarter, down 4. 8% from the same time in 2022. Janus Henderson said that “the decline in mining bills is largely due to balanced increases in banks and utilities. “
The 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 billion to £1. 33 billion 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 property fund and postponed requested repayments 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, said it would be closing its flagship property fund for good.
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, the UK’s property budget has seen outflows of almost £1 billion, according to data provider Calastone.
METER
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 suspension period, we will assess market situations and monitor asset valuations within the fund. We are committed to resuming negotiations as soon as we are happy that the situations are right.
Separately, St James’s Place has said it will remove the charges it imposes on clients looking to move their investments away from the company. It said it would also be capping the amount it charges for initial and ongoing financial advice and what clients pay to invest in its funds.
The raft of changes, which will come into effect from 2025, come in the wake of Consumer Duty regulations introduced by the Financial Conduct Authority in July.
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, particularly energy giants Shell and BP. The wholesale value of oil has soared due to cuts from sources through Russia and the Organization of the Petroleum Exporting Countries and, more recently, the development of geopolitical unrest 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 more sensible place does not worry investors. Russ Mould, chief investment officer at AJ Bell, said: “From a prestige point of view, it would possibly make a difference and the same is true from a liquidity point of view. In other words, the ease with which stocks and shares can be bought and sold.
“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 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 are going to compete, with the two main points being exchange rate fluctuations and differences in the composition of the sectors to which the market is exposed and in their functionality 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 rankings, the World Federation of Stock Exchanges ranks London ninth and the New York Stock Exchange first 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 global funds network Calastone’s latest Fund Flow Index, investors dumped £206 million of actively-managed equity funds in September 2023, preferring passively managed portfolios including index tracker funds.
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 response to concerns about borrowing costs remaining higher for longer globally, a sustained sell-off in sovereign debt – including in UK gilts and US treasuries – has seen the yields rise on some of these investments to levels not witnessed since before the 2008 financial crisis.
So far this year, entries into the passive budget amount to £5. 35bn, a stark comparison to the £7bn that has disappeared from the equity budget.
According to the network, among geographic sectors, equity budgets making investments in the UK have fared the worst in terms of higher outflows. Last month, investors dumped £448 million from the UK budget, the 28th time in a row that portfolios invested in domestic stocks have suffered net redemptions.
Environmental, social and governance (ESG) budgeting has also been impacted by investors in recent months. September marked the fifth consecutive month of capital outflows, which Calastone described as a “clearly emerging trend. “
On a brighter note, global funds remain investors’ favourite sector, attracting £981 million last month. In addition, emerging markets funds, which focus on investing in up and coming economies, continued their best run since Calastone’s records began nine years ago.
Edward Glyn, head of global markets at Calastone, said: “Distaste for UK equities is a structural trend that domestic and foreign investors are unwilling to break, despite elevated valuations. At the same time, capital flows to emerging markets in 2023 reflect elevated costs after very steep declines from their 2021 peak.
U. K. investors exited the equity-exposed budget last month at its fastest pace since last fall, opting instead 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 ditched the £1. 19 billion equity budget in August this year as the flight to lower-risk investments, such as market budgeting, accelerated.
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 investments in the cash market, with the sector seeing an inflow of £673 million last month, the most on record since March 2020, which coincided with the start of the coronavirus pandemic.
The money market budget invests in portfolios of short-term money deposits and bonds maturing in one to two years. They are presented as a safe haven that allows investors to park their liquidity in times of uncertainty in the market.
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. stock budget took the lion’s share of withdrawals last month, with investors taking home £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 was a big motivator in August. Discouraging economic insights in the UK showed that core inflation has proven resilient to interest rate increases.
“This had investors running for the safety of cash and money-market funds. With savings interest rates and yields on safe-haven money market funds at their highest level since 2007, it doesn’t take much to cause a rout.
“The shift 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 watchdog corporations will have to work to counter.
Brands
FTSE Russell, the global provider of stock indices, showed (Wednesday, August 30) that Mr.
Following the restructuring, which adjusts the components of the index based on their duration measured through market capitalization, it will join M
As part of the rebalancing, four companies leaving the FTSE 100, to join the second-tier FTSE 250 index, are the house builder Persimmon, fund management firm Abrdn, insurer Hiscox, and chemicals company Johnson Matthey.
The reform will enter into force 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 crisis and consumers feeling the pressure, M
“The company has effectively embarked on a significant shift under Stuart Machin’s leadership, which involves restructuring its store fleet and investing 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 has 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 payments to shareholders usually made twice-yearly by companies out of their profits. They provide an important source of income for investors, often as part of a retirement planning strategy to supplement state pension entitlements.
Despite a decline in UK corporate payouts, Janus Henderson’s most recent Global Dividend Index indicated that global dividends reached a record high of £490 billion ($568 billion) between April and June this year, an increase of 4. 9% on an overall basis compared to the current quarter in 2022. Taking into account one-time special dividends and other factors, the investment company said the underlying expansion was 6. 3%, adding that most corporations (88%) increased their bills or kept them stable. in the second 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 against an anticipated slowdown in global economic growth for the rest of this year, the investment firm forecasts that pay outs will reach $1.64 trillion over the course of 2023.
Ben Lofthouse, head of global equity income at Janus Henderson, said: “Most regions and sectors are delivering dividends in line with our expectations. Markets now expect global profits to be flat this year, after soaring to record highs in 2022. When we speak to companies around the world, they are now more cautious about the outlook.”
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 DC, a federal appeals court ruled that the SEC, the US equivalent of the UK’s Financial Conduct Authority, was wrong to turn down Grayscale’s application.
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 decision and now has 45 days to decide whether to accept the ruling, ask for a review, or take an appeal to the US Supreme Court.Despite recent developments, if Grayscale chose to submit another application, lawyers said there is no guarantee of success as it’s possible the SEC could reject it on other grounds.
UK retail investors are turning their backs on the regional budget in favour of global equity portfolios, writes Andrew Michael.
Investors have channelled more than £50 billion into funds whose remit allows them to invest anywhere in the world since 2015, while shunning portfolios over the same period that are limited to holding UK stocks and shares.
The latest data from Calastone, the global network of funds, has shown that over the past eight years, the global budget has seen a net inflow 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 towards a global budget began to increase particularly two years ago and has been driven in part by the popularity of ethical-style environmental, social and governance (ESG) budgeting.
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 budgets are geared toward the United States, whose rate of expansion is roughly double that of the U. K. economy over the past 15 years, helped in part by the good fortunes of corporations 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, Calastone’s head of global markets, said: “There is a clear logic in opting for global funds. Most of the world’s most successful companies operate globally, so where they are listed is immaterial. Global funds mean investors get exposure to these 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 customers today, 15 August, PayPal said it would not resume crypto sales until an unnamed date in “early 2024” as it takes 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 publication refers to a set of measures through the FCA and the Advertising Standards Authority planned for October 8, under which crypto companies will have to introduce transparent threat warnings and allow a 24-hour cooling-off period. hours 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, which means that its price is pegged to a fiat currency, in this case, the U. S. dollar. Therefore, the price of a PYUSD deserves to be the same as the price of $1.
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.
This year, several banks have placed limits on how much their consumers can spend per day on crypto exchanges. In some cases, invoices have stopped altogether. For example, Nationwide will block invoices to Binance.
HSBC, Nationwide, NatWest and First Direct are among the banks that have imposed caps on cryptocurrencies in direct reaction to 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 roughly £50 billion 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 market index such as the UK’s FTSE 100 or the S.
Global stock markets have enjoyed a better start to 2023 than the dismal returns recorded last year. But Bestinvest said more funds have entered its ‘doghouse’ because most of the gains have come from a handful of very large companies benefiting from the burgeoning artificial intelligence sector rather than a more comprehensive resurgence in 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: “While seasoned investors accept that short-term markets are impacted by current economic challenges, namely rising interest rates and high inflation, they will be less accommodating if they later discover their investments have performed even worse than the markets their funds invest in.”
Bestinvest identified Baillie Gifford’s Global Discovery fund as the worst-performing portfolio overall, having racked up a three-year underperformance record of -70%. St James’s Place was described as the worst-performing manager across an array of funds worth nearly £30 billion “with its paw prints on six measly mutts”.
Jason Hollands, chief executive of Bestinvest, said: “Every fund manager will revel in the weakest periods, whether it’s a run of bad luck or sticking to a taste or procedure that would possibly become temporarily outdated. It’s imperative whether it’s structural or short-term and investors deserve to ask themselves a few questions before deciding whether to stay with a fund or transfer to it.
“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 doing so as well?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.
Other global equity high-flyers 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 that other fund sectors to perform well year-to-date included global emerging markets, where the top-performing fund was Artisan Emerging Markets with a six-month return of 14%, and UK All Companies, where the Liontrust UK Focus came out best with a return of 12.9%.
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 the rules governing the promotion of monetary and social media products, adding a crackdown on influencers, writes Andrew Michael.
The FCA says social media has an increasingly vital channel for businesses looking to advertise their products and talk to their consumers more quickly 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 – individuals or accounts with large audiences – have become increasingly popular as households battle the cost-of-living challenge. Top finfluencers have sizeable fan bases, often hundreds of thousands strong, on platforms such as TikTok and YouTube.
The FCA said: “Often, such influencers have little wisdom about what they are promoting. This lack of experience is reflected in the huge number of promotions that are illegal or non-compliant, leaving consumers most likely to see low quality data on social networks.
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 also highlighted examples of misleading or unclear advertisements that don’t talk about a product’s dangers. This included the use of TikTok to advertise debt counseling and a “buy now, pay later” Instagram ad that fails to mention the dangers related to unregulated credit.
According to the FCA, around 60% of those under the age of 40 who invested in high-risk products in 2021 said they based their decisions on social media posts. A study conducted by the consulting firm MRM shows that almost three-quarters of young people say that we accept as true the data provided through social networks by influencers.
Lucy Castledine, from the FCA, said: “We’ve noticed an increasing number of adverts that don’t comply with the rules we have in place to end customer harm. We need people to stay on the right side of our rules, so we’re updating them to explain what we expect from businesses when they market monetary products online.
“And for those who promote products illegally, we will take action against you. “
Myron Jobson of Interactive Investor said: “The presence of finfluencers is a headache for the regulator. The references of many finfluencers are, at best, weak or even non-existent. But there are also a number of experienced and highly professional monetary professionals on social media. media outlets offering false advice.
The regulator’s latest initiative for customer coverage follows a multi-pronged strategy that affects all facets of the money 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 is also putting in place a new set of advertising rules aimed at cryptocurrency firms marketing 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 labels crypto assets as “risky” and warns potential investors that they could lose all their cash 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 “approximately 40” investment platforms and self-invested pension providers was described by the regulator as a “specific data request”. The correspondence included asking providers for details on ‘client interest turn’.
It is the difference between the interest that suppliers pay to their consumers who have deposited coins in them and the amount that suppliers earn after investing those sums in the currency markets.
The platforms pay interest of between 1% and 2% on clients’ money balances in general investment accounts. But with the Bank of England’s bank rate lately at 5%, analysts say providers in this sector stand to make off with many millions of pounds through this practice over the course of a year.
The regulator’s decision to contact investment platforms follows a wider recent initiative which recently saw leading high street banks summoned by the watchdog to justify the low rates of interest being paid by their easy-access savings accounts.
The regulator said consumers were feeling the effects of the emerging charges and the steady increase in the borrowing charge. He added that consumers deserve to be treated when it comes to the interest they get from monetary products and that this applies to money held on investment platforms as well as bank accounts.
An FCA spokesperson said: “We have been in an emerging interest rate environment lately. What we’re looking to do here is implement a number of measures to ensure that consumers get the price of cash from suppliers and a fair amount of their cash. – whether held in bank deposits or through investment and retirement accounts.
The spokesperson added that the FCA will analyse the information obtained from platform providers and “may use a range of measures to determine whether the quantities transferred 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 the retained interest in light of the new rules. It is believed that providers had until July 27 this year to respond to the request for data.
Given the proximity of the new client rights regime to date, the FCA rejected the claim that it was overdue in addressing the investment platforms factor and the amount of interest they pay to clients.
The Treasury is consulting on plans for a testing environment that would pave the way for digital securities, such as the long-mooted central bank digital currency (CBDC).
The Digital Securities Sandbox (DSS) would allow developers to create new infrastructures for virtual assets as part of transitory adjustments to existing legislation, and with the strength to replace legislative frameworks as they occur.
The sandbox is said to be the UK’s first Financial Market Infrastructure (IMF) sandbox, made imaginable thanks to 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) at the 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 increased 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 pushes costs up to that point.
UK investors ditched funds exposed to stocks and shares last month at their greatest rate since last year’s controversial mini-budget, replacing them instead with fixed income investments and those with cash-like characteristics, Andrew Michael writes.
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 outflow from equity funds was one of the worst it had ever recorded. It added that the cash raised found its way “straight into fixed income funds, which saw net inflows of £880 million, and money markets, which enjoyed net inflows of £503 million”.
Fixed-income investments tend to have a lower risk profile than classic capital budgeting and come with assets such as bonds: loans made by investors to governments and companies in exchange for interest and, possibly, a return on capital.
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 stocks were hit hardest by withdrawals last month, with investors pulling out £612 million, the 25th consecutive month of net sales. Outflows from environmental, social and governance funds, or ESG-themed funds, also reached £369 million, the worst month on record for the sector and 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.
“Lately, money markets allow investors to earn a revenue stream of 5% or more with very low risk, while bond funds, which invest in longer-term bonds than spot market bonds, offer the opportunity for the highest returns 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 currencies more than Bitcoin, the leading cryptocurrency. Miners earn coins in exchange for validating transactions on the respective blockchain.
LTC reached £87. 50 yesterday, July 2, up more than 122% from the same date last year and surpassed its previous high of £85. 39 in February.
The altcoin, which has a market cap of £6 billion, started rising in mid-June when it was trading at £57. 74. Over the next two weeks, LTC increased by approximately 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 participate in validating transactions and adding them to the blockchain have a chance to earn praise 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 halving Litecoin’s origination rate, this will most likely disappoint the balance between altcoin supply and demand and put upward pressure on its price.
A trend emerged before Litecoin’s halving in August 2019. In the seven months leading up to this halving, the altcoin rose from around £25 to around £107 in July of the same year. However, LTC had fallen back to around £30. until 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 gilt might have an interest rate – known as a coupon – of 5%, meaning the bondholder receives £5 a year. If the holder pays less than £100 to obtain the bond, the yield is effectively higher than 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 across 19 core issues to 4. 83% as the value of government debt fell. Last fall, the two-year bond yield hit a high of 4. 64%.
The rise in yields came after ONS data showed annual wage and bonus growth rose 7. 2% in the year to April, up from 6. 8% in 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 rising wages “risk further fuelling inflationary fires and reinforcing expectations that the Bank of England will have to keep raising interest rates”.
Yael Safin, chief economist at KPMG said: “If there was still any doubt about the direction of monetary policy, these data should solidify another interest rate increase from the Bank of England next week and probably more in the coming months.”
The Bank’s next rate-setting decision is announced on Thursday 22 June.
Shilen Shah, Head of Fixed Income, Investec Wealth
James Lynch, steady source of income manager at Aegon Asset Management, said: “The cases for why two-year bond yields have roughly the same diversity as they did in September last year are completely different. [In 2022] the British pound plunged 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 fiscal responsibility. Knowledge was strongest in the measures in which the Bank is most interested: inflation and wages. The ONS’s wage awareness was surprising, as personal sector wages reached an annualised 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 for months as investment sectors such as generation and media have recovered from a disastrous 2022, hoping that the worst is over.
Russ Mould, 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 other people rich in the ten years. In the years since the global currency crisis, it is very likely that many portfolios in the UK will have maximum exposure to the US.
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.
Specialized AI investment budgets are 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 sits now in absolute terms, it’s not too hard to make a case that it’s justified at current levels. The worry is how fast it’s risen and the concentration within a select few names.”Mr Britzman added that this week’s interest rate-setting announcement from the US Federal Reserve, coupled with the latest inflation data, will be influential: “Markets are pricing in a rate pause with scope for further hikes down the line.”
New crypto investors will have a 24-hour cooling-off period where they can change their minds about their trades, according to new regulations issued through the U. K. ‘s monetary watchdog, writes Mark Hooson.
The Financial Conduct Authority (FCA) today set strict new marketing regulations for crypto firms that will come into effect on Oct. 8. The FCA’s crackdown, which does not go so far as to fully affect the crypto sector, aims to ensure that buyers perceive the dangers involved.
The watchdog wants people to have “the appropriate knowledge and experience to invest in crypto” and expects those promoting crypto assets to put in place risk warnings, and to ensure their advertisements are 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 for 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 that fabric marketing will have to come with threat warnings such as: “Invest only if you are willing to lose all the money you invest. This is a high-risk investment and you shouldn’t expect to be. “If something goes wrong. Please take 2 minutes to receive more information.
Under the new rules, crypto marketplaces will no longer offer monetary incentives to consumers who refer them to a friend.
The new cooling-off period will mean consumers will have to wait for 24 hours after registering with an exchange before being able to make their first trade.
Sheldon Mills of the FCA said: “It is up to other people to buy cryptocurrencies. But studies show that many regret making a hasty decision. Our regulations give other people the time and adequate warnings about the dangers to make a decision. 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’s announcement helps keep regulatory attention on the cryptocurrency market, after a select committee of Treasury deputies last month called for the industry to be regulated in the same way as gambling, saying it has “no intrinsic value” and has “no useful social purpose. “”
David Ostojitsch, Spokesperson for Personal Investment Management
“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 U. S. Securities and Exchange CommissionThe U. S. Securities and Exchange Commission (SEC) has filed a lawsuit against crypto exchange Coinbase for violating securities laws, a day after initiating legal proceedings against rival Binance, writes Mark Hooson.
Today’s filing in the Southern District of New York alleges that Coinbase never officially registered as a broker, national stock exchange, or clearing agency, and presented its consumers with unregistered securities of 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 intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions 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 complaint seeks “injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other 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 lies in a law that allows fair road rules to be developed transparently and implemented equitably, through litigation. In the meantime, we will continue to operate as normal. “
Binance, one of the world’s crypto exchanges, is being sued for allegedly mishandling visitor deposits and lying to investors.
The United States Securities and Exchange Commission is accusing Binance of commingling billions of dollars of customers’ money with company revenue, in violation of US financial rules.
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 U. S. District Court in Washington, D. C. , alleges that the stock exchange and Mr. Zhao “enriched themselves with billions of U. S. dollars while putting investors’ assets at significant risk. “
The thirteen charges in the case relate to restitution and Zhao’s disqualification 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 U. S. Securities and Exchange Commission has decided to make a decision to protect the country. “The U. S. government has decided to file a lawsuit opposing Binance seeking, among other solutions, so-called emergency aid.
“From the beginning, we have actively cooperated with the SEC’s investigations and have worked hard to address their questions and 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 U. S. Commodity Futures Trading Commission (CFTC) issued a ruling on Binance. The U. S. Department of Homeland Security said that Binance had properly registered with the appropriate government and violated regulations designed to combat cash laundering.
The legal filing says Binance operated an “intentionally opaque” global corporate design to minimize regulatory scrutiny and maximize 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 will need to be prepared to accept a myriad of threats before they get started. Cryptocurrencies present multiple threats to consumers. Fraud and scams are common, but even if you buy valid cryptocurrency, the ultimate apparent threat is the possibility of significant losses.
“The UK Financial Conduct Authority suggests that it is seeing increasing evidence of addictive behavior by some cryptocurrency traders, and lessons can be learned from the gaming industry in terms of how to manage this, how to identify such behavior and potentially set transaction limits on secure 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.
Moving in the opposite direction is property company British Land, which has lost its place in the UK’s stock market index of leading blue-chip shares.
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 first manufacturer of herbal laundry detergents, will go public on the London Stock Exchange in a bid to bolster the market’s reputation to attract 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 UK’s roughly 80 largest listed companies and propel it straight into the FTSE 100.
Changes in major stock indices, such as London’s FTSE 100 and the S
Starting in mid-June, index trackers and ETFs (designed to mimic the functionality of the “Footsie”) will withdraw their positions in the shares of relegated companies and adjust their holdings to be compatible with the new holder.
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 register on the FTSE 100, it will need to have a market capitalization (the number of its percentages multiplied by the percentage value) that would place it in the top 90 in terms of size.
To fall out of the FTSE 100, a company’s market cap would need to be below that of the 110th largest company on the UK stock market.
These extended boundaries prevent companies from continually bouncing between the FTSE 100 and the FTSE 250, which accounts for the UK’s 250 next largest companies.
Susannah Streeter, head of FX and markets at Hargreaves Lansdown, said: “IMI has increased its percentage value by more than 23% since the start of the year and raised its full-year profit forecast after counterfeit 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.
FCA research among 1,000 investors aged between 18 and 40 who also use online dating services 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 half (48%) of those surveyed said they are dating to find a potential life partner. But the same cohort said their outlook when it came to investing was considerably shorter.
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, carried out as part of the FCA’s InvestSmart campaign, also looked at how young investors would react to a “red flag” on the date and time of investing.
Potential red flags arise when someone is late for an appointment or is rude to waiters, while in the context of investing, this applies to difficulties withdrawing cash from an investment or when an investment opportunity is only available for a short period of time. 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, FCA’s head of client investments, said: “We’ve noticed the temptation of high-risk investments building up as clients balance struggling family finances with the immediate thrill of a quick return. But that could simply mean investors are ignoring cautionary signals.
“We need investors to rethink their technique by spotting similarities with their own love lives and applying the same mindset, thinking long-term, doing research, and prioritizing values that align with their own. “
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 term and is 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), which oversees foreign money markets, targets investors through a comprehensive technique for the regulation of crypto assets and virtual markets, writes Andrew Michael.
Its consultation procedure proposes an 18-point plan that would place safety 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 rate adds to a dozen allegations already filed against the former head of FTX, whose company went bankrupt last November after failing to respond to a wave of withdrawal requests from its 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 an estimated one in ten adults own crypto assets, the Financial Conduct Authority does not look kindly on the sector and warns consumers about the threat of a blanket loss for any investment 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 end the regulatory uncertainty that characterizes crypto activities. It is time for regulators to work together across borders and jurisdictions so that coverage of investors and market integrity are reputable in the cryptoasset 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 prominent among thousands of cryptocurrencies, has gained 64% year-to-date, recovering in large part from the sharp declines it suffered in the second half of 2022.
The consultation process ends on 31 July 2023 with IOSCO looking to finalise recommendations by the end of this year.
Unless Congress can reach a deal to raise the country’s borrowing limit, the US government is on the cusp of running out of money, potentially sparking global financial chaos because the world’s largest economy would be unable to pay its debts, Andrew Michael writes.
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 a debt limit, it is a budget limit that restricts the total amount of money that the U. S. government can borrow. The U. S. government can borrow to meet its needs. These cover everything from paychecks for federal workers, the military, Social Security, and Medicare, to interest payments. on the existing national debt, up to the tax refund.
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 X” — the moment when the Treasury runs out of budget — is passed raising the debt ceiling, the monetary implications would be enormous.
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 United States defaulted on its debts for the first time in history, it would cause the value of its government-backed debt to plummet.
US debt is widely considered to be the single safest asset within the global financial system. The bulk, just over two-thirds, is held domestically via institutions such as the Federal Reserve and in retirement and mutual funds.
About a third is foreign-owned, however, with Japan being the largest holder at around $1.1 trillion. In addition, China owns nearly $900 billion in US debt while the figure for the UK is about $650 billion.
If the U. S. were to default on its obligations, it could lead to a sharp rise in borrowing prices in the country, which would most likely have consequences for borrowing prices around the world.
Ryan Brandham, head of Global Capital Markets for North America at Validus Risk Management, said: “Many of the issues facing the United States today, such as widening wealth gaps, social unrest, inflation issues , the issuance of money, the explosion of public debt and the weakening of The ability to pay internal and external obligations has been linked to the fall of difficult empires in history, dating 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: “Date X would mark the moment when the Treasury will run out of funds. After disappointing tax revenues for 2022, much now depends on the progression of revenues through May. If this can sustain the government until mid-June, when “quarterly tax bills are due, the Treasury will most likely wait until July and maybe even 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. “
MPs on the Treasury Select Committee say cryptocurrency trading has “no intrinsic value and serve no useful social purpose” and should be regulated in the same way as gambling.
The cross-party organization of MEPs said that the cryptocurrency market poses significant threats to consumers, given price volatility and the risk of losses, and looks more like gambling than a money service.
They worry that regulating cryptocurrencies as a typical monetary service will unduly legitimize the market, giving consumers the impression that cryptocurrencies are protected, which the committee says is not the case.
HMRC estimates that one in 10 UK adults now holds or has 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 value volatility, and no discernible social good, customer trading of cryptocurrencies like Bitcoin feels more like a game than a monetary service and should be regulated as such. “
The report stresses that the committee recognises the potential importance of the technology that enables cryptocurrencies to the financial services industry. It has also called on the government and regulators to keep pace with future developments.
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 a demonstration that the country is temporarily becoming a sea of bureaucracy. “. Training”
Mike Stimpson, of monetary advisor Saltus, said: “Our studies show that interest in virtual assets continues to grow at a steady pace, especially among younger 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 crypto sector is extremely volatile – both the upside and downside – due to the fact it is very difficult to work out a fair value for crypto currencies. This, combined with the immaturity of the sector and the lack of regulation, means there is significant risk 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.
Expected to become law next year, EU lawmakers hope MiCA will protect investors and safeguard against financial crime 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, favored New York over a national board.
Data from UK Listing Review shows that the number of listings in the UK has fallen by 40% since 2008. In recent years, stock exchanges in continental Europe have also attracted increased attention from corporations to go public. .
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” directory 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 it stands, corporations with a premium score are eligible to be included in FTSE indices, market barometers tracked through so-called “passive” investments, such as index trackers and exchange-traded funds.
According to the FCA, a single equity category would “remove eligibility requirements that can deter early-stage companies, be more permissive on dual class share structures, and remove mandatory shareholder votes on transactions such as acquisitions to reduce frictions to companies pursuing their business strategies”.
The proposals also come with concessions that allow founders of newly IPO corporations to retain more strength by allowing other categories of shares with other voting arrangements.
Regulations requiring “related party transactions” to be put to a vote of all shareholders would also be eliminated, a restriction that would have prompted Arm’s owner, SoftBank, to list in New York.
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.
The removal of 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 operates and cemented its position as a leading global centre 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.
“Dual-elegance structures, which entail differentiated voting rights, erode shareholder rights. Distorted rights distort governance and accountability. One share, one vote is the basis of shareholder democracy and we are concerned that the spectre of the double elegance of shares, against which we have actively lobbied, continues to loom large.
“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 a jewel of the country’s generation sector, the fact that the company has chosen the US as its new headquarters when it returns to the public markets is a sign of how the UK has fallen since the company was 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 turning into an avalanche have been welcomed in the City of London and beyond, writes Andrew Michael.
The FCA’s goal is a good one: to make the UK in general, and London in particular, a more attractive and competitive environment in which index corporations can thrive. That’s why it’s 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 in the wake of a turbulent period for the City amid suggestions that it has lost its appeal, with the US gaining the upper hand, especially with regard to companies planning a flotation.As Julia Hoggett, chief executive of the London Stock Exchange, has suggested, London arguably became complacent about its role as Europe’s dominant financial centre and now needs to become “scrappy and hungry” to compete.Roger Clarke, head of IPSX, the real estate stock exchange, says: “The FCA is beginning to recognise that a culture that seeks to eliminate risk completely will succeed in eliminating returns completely, hampering UK investment appetite. That is in nobody’s interests and will lead to a disastrous future for pensioners and savers.
“An unintended consequence of years of creeping regulation to remove risk for investors has been the removal of entrepreneurial and innovative spirits in the financial markets that established London’s global dominant position.
“Investors can be trusted to take responsibility for their investment decisions. Regulated markets are essential, risk-free markets are an illusion. “
According to the Association of Investment Firms (AIC), other people under the age of 40 are more familiar with cryptocurrencies as a potential way to make money than with premium stocks, mutual funds, or bonds.
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 budgets (ETFs), an affordable way for retail investors to access a stock allocation, fared even worse, clocking in at 12%.
The Financial Conduct Authority, the U. K. ‘s regulator, is warning consumers about the unregulated nature of cryptocurrencies, reminding them that crypto assets can potentially fail with an overall loss of capital.
The investment industry will be dismayed that funds, trusts, and ETFs (which are touted as tactics for retail investors to gain a foothold in making an investment) lack the awareness related to crypto assets in the eyes of potential younger 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, communications director at AIC, said: “Some of us may find it surprising that other younger people are more aware of cryptocurrencies as an investment option. But she shows that the investment industry wants to do more to help young people understand the diversity of investment options, the risks involved and how making an investment can help them save for the future.
More than 300,000 investors in the collapsed share income source fund managed by Neil Woodford will get up to £235 million in redemption following an investigation through the Financial Conduct Authority, 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 has agreed to the redress package, which will benefit those investors who had money in the fund at the time it was suspended, 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, executive director of enforcement and market oversight at the FCA, said: “The FCA’s investigation raised serious concerns about Link Fund Solutions’ management of the liquidity of the Woodford Equity Income Fund.
“LFS shares appear to have significant losses for investors who remained in the fund at the time of its suspension. “
Woodford created the Equity Income Fund in 2014 after 26 successful years of fund control at Invesco. It was a popular and high-profile choice among investors, and as of mid-2017, the fund had over £10 billion in investor money.
But a number of poor potential investment options and an increasing number of unlisted assets in the fund have led to heavy 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 sacked by Link Fund Group later that year and the fund was closed. Some money has been returned to investors through the winding up of the fund and sale of assets.
The FCA says that more data on the LFS programme will be provided in July 2023 and that the formula documentation, which aggregates 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 firms are rounding up London Stock Exchange-indexed corporations with renewed vigor, buoyed by the economic outlook that has improved prospects for potential M&A activities (M&A).
These companies use cash pooling through investors to invest in companies with which they can make money by furthering 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 negotiations as signs of recession 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, owner of 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. ” . Purchasing 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 reduced 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.
Separately, Dechra Pharmaceuticals said last week it is in talks about a possible £4. 6 billion offer from Swedish company EQT.
Hyve, the exhibitions firm, has been subject to a £480 million takeover approach from Providence Equity Partners, while nearly a third of shareholders in Industrials REIT have backed Blackstone’s £511 million cash offer for the multi-let business park owner.
Twitter, the microblogging website bought last year by Elon Musk for $44 billion, has teamed up with investing website eToro to enable Twitter users to see real-time prices instantly for stocks and shares, cryptocurrencies and other assets such as exchange-traded funds (ETFs) and commodities, writes Andrew Michael.
Starting today (Thursday), a new ‘$Cashtag’ feature will be introduced on the Twitter app that will enable users to view market charts on a range of financial instruments, and to click through to eToro to see more information about the asset in question and have the option 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 a business 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 benefits 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 day trading stocks to how to buy assets) via social media, up to hundreds of thousands or sometimes even millions of followers.
Strict rules govern the provision of financial advice, with licensing, qualifications, and procedural requirements to be followed before any financial advisor is allowed to disseminate his or her knowledge to 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 influencers offering unauthorised investment recommendations after seeing the number of misleading advertisements 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 ASA sees the couple with Ms. Geffka, a former Love Island contestant and self-proclaimed 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 be inviting finfluencer agents and the Influencer Marketing Trade Body to a roundtable discussion on illegal financial 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 want to work with influencers so they keep on the right side of the law, as this will also help protect people from being shown scams or investments that are too risky.”
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 get a little overwhelming.
“This crusade with the FCA and ASA will ensure that 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 a net £960 million to their equity fund holdings in March, the inflow 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 turnaround” on both January and February, when investors sold more equity-based funds than they bought. Global funds, which invest in a basket of international shares, were the main beneficiaries of improving investor confidence, attracting £1.69 billion.
However, Calastone said the UK-focused equity budget was still losing cash, with investors draining £747m from the UK budget last month, the 22nd consecutive month in which the sector has suffered an outflow. of money.
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 to perform comparatively poorly in March included funds invested in line 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 Glyn said: “The ESG gold rush is probably past its peak. There are a multitude of points at play, adding up the increased weighting of underperforming generation stocks in ESG portfolios, a greenwashing backlash, and a reorientation of marketing activity through 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 reduced diversity of investment features across three threat profiles, writes Andrew Michael.
Would-be investors can open a stocks and shares individual savings account (ISA) or a non-ISA investment account. Each has a minimum contribution of £25.
Investors can choose from three options: conservative growth, balanced growth, or adventurous growth.
Virgin says the option, which incorporates a controlled budget through Virgin Money Unit Trust Managers, offers 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 need to switch, for example, from a balanced expansion option to a conservative expansion, can do so without penalty.
Customers who open a new Virgin Money ISA or non-ISA percentage and percentage account of at least £5000 until June 30, 2023 will also get 8000 issues to spend on Virgin Red, the company’s rewards club subsidiary.
To be eligible, investors will need to hold the invested cash until the end of July this year. Clients will also get the issuances if they exit an existing investment before September 29, 2023.
Jonathan Byrne, chief executive officer at Virgin Money Investments, said: “The world of investments can be complex and daunting. That’s why we’ve designed our new investment service to make it easy 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.
There has been no word as yet on the possible impact of the deal on staff at either firm.
The UK’s wealth management sector has become increasingly competitive in recent years, with firms striving to achieve scale to survive while fighting to retain clients attracted by relatively cheap so-called passive investments, which rely on computer algorithms rather than human managers.
The combined entity will be known as the Enlarged Rathbones Group and will operate under the brand name “Rathbones”.
Rathbones will factor in new percentages in exchange for 100 percent of Investec W’s equity
The deal provides Investec with an implied equity value – a measure of its worth – of £839 million.
It includes its wealth and investment operations in the UK and Channel Islands but omits Investec Bank’s Swiss-based business and the company’s international wealth operation, both of which remain wholly-owned subsidiaries of Investec Group.
Clive Bannister, Chairman of Rathbones, said: “This transaction only presents compelling strategic and monetary logic, but also accelerates Rathbones’ expansion strategy. Operating at scale allows the organization to offer an even more attractive proposition to consumers and colleagues, supporting long-term expansion and meaningful pricing for Rathbones’ shareholders.
Fani Titi, CEO of Investec Group, said: “The strategic compatibility of the two corporations is compelling with strengths and functions complementary to the overall proposition for clients. “
Laith Khalaf, head of investment analysis at AJ Bell, said: “Bulking up will allow the companies to cut costs. The rationale for the merger lies mainly in the two firms’ overlapping interest in financial planning and discretionary wealth management services for high-net worth clients. A corporate merger of this size will bring with it changes for all parts of both businesses.”
Ben Yearsley, chief investment officer at Shore Financial Planning, said: “It makes sense for shareholders to merge the two companies, but there will inevitably be consequences and an era of uncertainty for customers and staff.
The government is pushing back plans to sell its stake in NatWest by two years, with volatility currently blighting the banking sector following UBS’s takeover of Credit Suisse and the collapse of Silicon Valley Bank, Andrew Michael writes.
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 turbulence for the global banking sector, UK Government Investments Limited (UKGI), the framework that manages taxpayer engagement in the bank, announced today that the scheme will 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 in the day, the bank’s shares were at 267 pence.
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 subsides in the coming weeks, we may see opportunistic buyers return to the market, buying NatWest shares and others 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 metrics (as we decide through ESG studies and ratings implemented through advisory bodies) will rank closer to 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 the ESG ratings of many budgets would be revoked and the ratings of thousands more downgraded, based on a review by MSCI, the provider of stock indexes.
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 scrapped 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 artwork or memorabilia from memorable sporting moments.
In addition to cryptocurrencies, such as Bitcoin, NFTs use blockchain generation, a multi-point computer ledger designed to store virtual data securely.
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, petitioned the Royal Mint for an NFT later that summer.
No major details were given about what symbol or object the NFT might represent, or whether the entity would be used to generate budget for the UK 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 resolution appears to be at odds with the stance of the regulator, the Financial Conduct Authority, which issues warnings to consumers about the crypto industry, reminding them that crypto assets are unregulated and pose a significant risk.
According to the Royal Mint, the Treasury’s NFT proposal will be kept “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 Ms said: “We have yet to notice much evidence that our constituents deserve to put their cash into those speculative tokens unless they are willing to lose all their cash. Perhaps that’s why the Royal Mint took this decision in collaboration with the Treasury. “
In recent months, the crypto industry worldwide has been rocked by a series of setbacks including the collapse of the FTX crypto exchange at the end of 2022 plus, earlier this month, the failure of three crypto or crypto-related banks in the US: Silicon Valley Bank, Silvergate and Signature.
At the time of writing, it is also conceivable that Binance, the world’s largest cryptocurrency exchange, could be banned from operating in the United States after violating the country’s monetary regulator (see article here).
Prices of NFTs, which had reached levels worth millions of pounds in some cases, collapsed last year in the wake of FTX’s demise.
In recent weeks, the spotlight has been on the 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 the dips” have triggered a record high in financial trading over the past fortnight. Paragon bank leads the list of “purchases” of rental assets, with an increase of almost 1,900% in purchases, followed through the FTSE by one hundred 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-earnings ratio of about 15 times, now could be a good time for investors to lock in an attractive entry point and start claiming some healthy dividends.”
Looking at the broader picture, David Dowsett, global head of investments at GAM Investments, said: “We do not think what has happened to Credit Suisse should derail the investment case for European financials. It is a painful and historic situation, however, it is largely being seen as a one-off.
“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 the sector remains fragile, with specific considerations about the effect on smaller U. S. regional banks, which are less 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 write-off of £14 billion of Credit Suisse’s AT1 bonds has also sent a shock-wave through the banking sector. These bonds are designed to convert into equity if a lender has financial difficulties and were therefore seen as 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 lending criteria for the entire banking sector.
There are a number of budgets that cover the overall money sector so that investors have a more diversified portfolio of bank 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 more demanding situations lie ahead.
The collapse of Silicon Valley Bank (SVB) in the U. S. The U. S. currency that matured last week continues to weigh on bank stocks around the world as investors worry about lenders’ monetary fitness, 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 of Britain’s biggest banks plunged 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 may be a buying opportunity.
Earlier today (Tuesday), shares of Japan’s largest banks dropped sharply as global markets responded to Monday’s overnight US banking sector sell-off amid growing uncertainty over interest rates in the wake of SVB’s failure.
Last Friday (10 March), SVB – a bank that mainly catered for tech start-ups – was taken over by the US Federal Deposit Insurance Corporation (FDIC), which focuses on maintaining financial stability.
The decision was taken amid growing concerns about the bank – the 16th largest in the US by assets – posing a systemic risk to the US and global financial 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.
SVB’s plunge prompted investors to sell U. S. bank stocks last Thursday, and the stock spread across Europe last Friday. Investors remained bearish on banks this week as the fallout from SVB’s collapse becomes 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 appropriately hedge its risks, exemplified by the high proportion of ‘long duration’ fixed-rate assets it held and which were purchased through the period of very low interest rates post Covid, as well as the short-term deposits from venture capital-backed technology companies almost entirely above the government insurance threshold.
“Therefore, we do not see systemic disruption for banks and it is unlikely to lead to a ‘new’ currency crisis. “
Jack Byerley, deputy IT director at wealth manager WH Ireland, said: “We have warned that excesses in the unprofitable and speculative segments of technology markets would be vulnerable in a world where cash is no longer ‘free’. We have noticed this has been happening in the stock markets for the past 18 months and is now declining in the monetary system as a whole.
Quilter Cheviot’s Mr Howlett said: “This does not mean there will be no volatility for investors – bank shares have sold off in recent days as a result of the SVB failure. The knock-on could be that interest rates are not raised by central banks to the level some had expected.
“This will likely result in a squeeze on profits for banks as the net interest margin – the amount it charges for credit, compared to the rate given on deposits – lessens. However, it will not result in a balance sheet issue for these banks and if anything, the largest US banks are seeing accelerated inflows of deposits as a result of the fallout.”
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 provided banking services to around half of all venture capital-backed technology companies in the US. The UK arm of SVB reportedly had over 4,000 clients, including consumer 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, the tech sector would possibly see some respite, with the option for the Federal Reserve to pause its interest rate hikes, or even reduce them, to repair 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 have rallied in the days since the collapse of Silicon Valley Bank, the 16th-largest US bank with close ties to the technology start-up sector, at the end of last week.
While bank stocks traded lower in 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, a 14% increase.
SVB and Signature, a U. S. bank that collapsed over the weekend, have been used through crypto corporations such as Avalanche and Ripple for banknotes between cryptocurrencies and fiat currencies.
The US government’s intervention in SVB deposits has boosted 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 is no longer charging fees to hold investments and trade online in its Junior Stocks & Shares ISA (JISA). It has also reduced its platform fee for Lifetime ISAs (LISAs).
It is the latest provider to reduce fees amid a fierce festival between investment platforms to attract investors who make their own investments.
The existing and new JISA will no longer pay platform fees for investments (previously 0. 45% per annum, capped at £45 for shares, investment trusts and exchange-traded funds).
There will also be no dealing fee (saving customers £5.95 per trade) and no foreign exchange fees on trades in overseas investments.
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.
Customers will still pay fees charged by the underlying investment provider, for example, annual fees charged by 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 ISA Junior and Lifetime ISA are the beginning of creating a legacy that will last for generations for our youth 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, investment director at AJ Bell, said: “It should be a badge of honour to list in the UK, but that honour is dwindling fast”
CRH said its decision to cross the Atlantic later this year was because the company “came to the conclusion that a number one board in the U. S. “The U. S. would provide greater 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 noted by the Dublin-based FTSE 100-listed company, 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, head of investment at trading platform interactive investor, said it’s not all gloom and doom: “Although there has been considerable media attention on Arm’s decision not to pursue a London listing and CRH’s shift 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 THG’s percentage price drop, reinforcing a 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, chief executive of the London Stock Exchange Group, shrugs off the recent outflows: “We are in the largest foreign monetary centre in the world and we continue to attract capital and corporations that have that kind of foreign 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 practical terms for UK investors, companies can voluntarily de-list. This would mean that investors would have to sell their shares before or after delisting. This doesn’t necessarily affect the price of those shares, depending on the explanation. Why the decision.
UK investors channelled £1.4 billion into investment funds in January 2023, with bond portfolios the big winners as equity funds continued to leak cash, Andrew Michael writes.
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.
Against the backdrop of a challenging economic environment and with turbulent markets, UK investors withdrew a record £26 billion from funds during 2022, the first time a net outflow 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.
British bonds, corporate bonds and other government bonds dominated the association’s best-selling sectors last month as investors turned to safe, high-quality fixed-rate assets whose functionality was shaken last fall following the government’s contentious mini-budget in September under Liz Truss. and Ki Kwarteng.
At the other end of the spectrum, investors continued to fill their equity funds, which saw withdrawals totalling £913 million in January.
Inflows into North American and Asian equity funds, worth £363 million and £133 million respectively, were dwarfed by an outflow worth £1.4 billion from UK equity funds and a further £155 million from European portfolios.
Investors who withdrew their money from the budget exposed to UK equities 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, executive leader at IA, said: “We can look ahead to a stronger year for investors with steady sources of income, with consistently higher interest rates as we emerge from 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. “
Bosses at some of the UK’s largest businesses are braced for a wave of takeovers this year, as foreign buyers line up to pounce on attractively priced London-listed companies, Andrew Michael writes.
According to investment bank Numis Securities, the outlook for M&A activity (M
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 board directors from FTSE 250 companies, including chief executive and chief financial officers, along with 200 institutional investors, including 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 share of business leaders (94%) said they expect to close deals themselves this year, an increase of 8 percent 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, corporations cited festivals and national security hurdles as the main obstacles 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 withdrew £53. 9 billion from the UK’s stocks, bonds, and options investment budget in 2022, writes Andrew Michael.
Including an inflow of £12. 7 billion into money market investments, withdrawals rose 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, money “flooded into these vehicles” following September’s controversial Liz Truss/Kwasi Kwarteng mini-Budget, with pension funds seeking liquidity during a period of market turbulence.
The equity budget saw the largest outflows last year, reaching almost £35 billion. In this figure, the UK budget suffered the most, with investors taking more than £23 billion from the UK’s share budget, the UK’s source of revenue and small businesses. and mid-cap budgeting.
By contrast, even at the height of the 2007/08 currency crisis, investors withdrew only £8 billion, a modest amount.
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 story below).
Year-to-date, the index is up nearly 5%, while the FTSE 250 (which represents the UK’s next 250 largest corporations) 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 release from the FCA is one of those rare birds in the industry of a genuine consultation.
“In the absence of concrete new proposals, the next three months will give the industry time to fly a kite on some of the Brexit dividend proposals. Any opportunity to advance some of the more archaic practices within the industry will have to be seized with 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 for making investments in “tokenized” assets, such as stablecoins and other cryptocurrencies.
The government is working on the next phase of its plans for regulating crypto assets in the UK, and is considering whether there is a case for regulation of the activity of portfolio management of crypto assets.
The Treasury and the Bank of England are also working on the development of a UK central bank digital currency.
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 to provide maximum benefits to 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 on the FCA’s 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 surpassed this psychologically significant figure in intraday trading as it hit a point of 8,003 before pulling back.
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 functionality held up in 2022, generating a modest return for investors of around 4%. This is in contrast to other primary stock market indices, such as the S.
The divergence in functionality is explained through the composition of the index: the FTSE 100 comes with a higher proportion of dividend-paying stocks from the so-called “old economy”, adding those in the oil and gas, commodities and financials sectors. .
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 move from a disadvantaged index to new all-time highs shows how temporarily global investing can change. During the Covid-19 pandemic, tech corporations and expansion stocks were hugely in vogue – very few of which feature in London’s main index.
“Today, with persistently high inflation, high oil costs and emerging interest rates, the commodity giants, oil and fuel explorers, mining teams and money companies that make up the FTSE are in a much more favourable short-term environment.
“It’s a healthy lesson that each and every dog has their day. While the history of the past decade has largely focused on the rise of the tech sector, the stock market, on the hunt for the future, sees 10 very different factors. Years ahead with money generation, resilience, and self-funded expansion will likely offer features for corporations and investors looking to navigate demanding situations and maximize opportunities.
Investment funds worth nearly £20 billion have been named as consistently underperforming ‘dogs’ by online investing service Bestinvest, writes Andrew Michael.
The company knew 44 underperforming budgets, with a total value of £19. 1 billion. This is a 42% increase in the category’s budget number over the company’s last research 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 highest number of ‘dogs’ were those investing in UK stocks: “Assets in the dog budget amounted to £8. 4 billion, compared to £5. 5 billion for the All UK companies sector, and £3. 1 billion. compared to £2. 1 billion for the UK sector. The UK’s source of revenue is the equity 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: “Look beyond the large end of the UK market and it was a tough year for small and mid-cap companies, parts of the market that tend to have greater exposure to the UK 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 funds singled out for criticism 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 those budgets as “repeat offenders,” adding that “if companies don’t act [to achieve results], investors should. “
Bestinvest also highlighted that Schroders is “the leader of the group” in terms of fund teams that “obtained maximum nameplates”.
He said that while 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 additional budgets to its total budget and an additional £7. 3 billion. assets.
“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 stock market index of leading blue-chip shares, hit an all-time record of 7,906.58 earlier today, 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
Brookes said that the main thing in the FTSE 100’s recent functionality has been China’s reopening following the easing of its zero-Covid strategy: “This has led to increased demand for a number of component stocks, which has helped propel 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 explanation for the FTSE 100’s most recent appeal is the peak 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 main 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) at a record high of £1,592, up more than £10 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.
US markets also rallied hard on the news, with the Fed itself indicating there may only be two more rate hikes to come in the current cycle. However, the excitement was short-lived, with results from the leading tech companies taking the edge off the good news.
Russ Mould, investment director at AJ Bell, said: “Three big tech firms – Apple, Alphabet and Amazon – issued worrying news of various degrees, with their respective share price falls seemingly an accurate 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 of Alphabet, Google’s parent company, fell 4. 6% after the close. The company makes money from advertising and virtual search and is seen as vulnerable ahead of an economic downturn as companies cut back on 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: “While Alphabet’s sales remain flat in the fourth quarter of 2022, it is reassuring to see that they are holding their own and outperforming 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 group’s declining profitability is ultimately weighing on earnings. , however, it is correcting itself and is 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.
Although the earnings are disappointing, the company has many positives. Production issues have been resolved, and Apple will benefit from a potentially significant tailwind in the coming months thanks to China’s economic reopening.
Regarding Meta, Mould said: “It’s a big positive surprise, as not many other people imagine that it would bring smart news. Concerns about demand for online advertising, regulatory pressures, and developing fears of losing a lot of cash 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 December trend, the budget of the North American, global and UK gold sectors attracted money from investors worth £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 spaces last year came from the budget in the UK, all corporate sectors and ex-British Europeans, which together saw outflows of around £13 billion.
The tracking and investment sectors managed to support 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.
“The rebound in equity yields in the new year has shown how sentiment can temporarily change, and some of last year’s capital outflows may already be returning to markets. There are no guarantees, but history shows us that the most productive years can be the worst. “
Chris Cummings, IA chief executive, said: “With markets rebounding at the start of 2023 and the outlook for bond investing improving, 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 features come with a diversity of “classic” or “specific” portfolios that offer a mix of product types, from exchange-traded funds (ETFs) to a variety of so-called active and passive 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.
M
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, Managing Director of M
Bestinvest’s free mobile app enables its customers to manage their investments on the go, using it to log in or open an account using FaceID or TouchID technology as well as make transfers into an array of ISAs, check their investments, and either add cash or set up regular 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.
On the other hand, the interactive investor investment trading platform has an entry-level addition to its subscription service.
Investor Essentials allows customers to invest up to £30,000 for £4.99 a month, plus trading fees of £5.99 for funds, investment trusts and UK/US shares. Once customers reach this limit, they are switched to the service’s ‘Investor’ price plan which charges £9.99 a 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 normal bills and those for special or one-time distributions, rose 8% year-over-year. Underlying bills, special dividends, rose by 16. 5% to £84. 8 billion.
With the exception of domestic utilities and customer commodities, dividend payouts have been higher in almost every business sector over the past year. The weakness of the British pound for much of 2022 gave a new impetus to bills declared in dollars and then exchanged for pounds. pounds sterling at favourable exchange rates.
Link says the resurgence of 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 been major contributors to rising energy prices.
But Link adds that mining stocks reached an “inflection point” in 2022: “In the second half of the year, lower prices of several commodities began 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-off bills and normal dividend bills, Link estimates that UK-listed corporations will be down 3. 7% for the next 12 months.
Link Group’s Ian Stokes said: “The economic skies are decidedly gloomier both 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.
APVs, which invest in companies, raised £1. 122 billion in the 2021-2022 financial year, up 68% from last year.
Introduced in 1995, VDCs are a government-backed program designed to stimulate entrepreneurial 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 annually through new and/or supplemental percentage issuances. By making an investment in early-stage, high-risk companies, investors get tax breaks to offset the increased threat they are taking.
Tax benefits include up to 30% up-front tax relief if shares in the trusts are held for five years, no capital gains tax on growth, and tax-free dividends.
In his autumn speech last November, Chancellor of the Exchequer Jeremy Hunt said he would make good on the promise made by his predecessor, Kwasi Kwarteng, in his September mini-budget to extend the TDC scheme beyond 2025.
Currently, individual investors can invest up to £200,000 per year in a VCT. According to official figures, the average amount invested by Americans for the 2020-21 tax year (the most recent figure available) is around £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 on 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 second-best performing sector 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 profitability, so-called “bargain hunter” methods emerged as the most sensible last year, with a decline of 16% for the year. A bargain hunting strategy invests in the sector with the worst performance in the past. 12 months, moving to the new sector at the beginning of the year.
Laith Khalaf, head of investment analysis at AJ Bell, said: “There was a big sell off in riskier areas of the market in 2022, but that hasn’t knocked risk-hungry strategies off their perch when looking at performance over the last 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 one hundred 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 research shows the company has earned 14 “buy” and 13 “hold” ratings from equity analysts over the past year, with just one recommendation for the stock to sell.
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 topped Brewin Dolphin’s analysis for the second year running ahead of Prudential, the Asia-focused insurance group whose share price jumped by 50% from its low point in October 2022, with Smurfit Kappa, the corrugated packaging company, third.
Resource and energy groups Shell, Centrica, Glencore and Endeavour Mining also featured in the top 10 thanks to the continuing elevated levels of commodity prices.
Brewin Dolphin said the 100 FTSE stocks least favoured by analysts included Rolls-Royce, as well as several stores, plus 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 ones. “classified.
“In fact, Hikma was top and has since been relegated to the FTSE 250, which underlines the importance of taking professional financial advice before making any significant investment decisions.
“JD Sports’ continued standing among analysts is curious, as customer spending is expected to see a sharp decline. That said, this is already largely priced into share value and there is a much more positive view of the long-term of JD Sports. Forward-term perspectives.
UK investors added £389m to the investment budget in November 2022, the first time since last April that cash flowed into collective cars like OEICs and the mutual budget, rather than out of the sector, writes Andrew Michael.
Despite the change in fortune for funds overall, 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 AI, the best-selling fund sectors in November were North America, which posted retail sales of £1. 3 billion, followed by corporate bonds (£720 million), corporate bonds of £238 million and global inflation-linked bonds (£205 million). ) and Managed Volatility (£149 million).
The IA said: “Positive knowledge of inflation in the U. S. it has boosted market expectations that, on the other side of the Atlantic, the green shoots of recovery are emerging. “
The presence of several steady-income sectors on the most recent list of popular top buys also suggests that investors rediscovered appetite for bonds last fall as interest rate increases, both locally and abroad, began to take effect and helped curb inflation, specifically in the A US.
Rising inflation can hurt bondholders by eroding the purchasing power of the constant bills that investors get from their holdings, and also by reducing the price of bonds. The opposite is true when inflation falls.
The inflow of money into the North American and bond sectors last November contrasted sharply with the budget invested in UK and European equities, which recorded a combined net outflow of almost £2 billion.
Investors in funds exposed to stocks and shares dumped holdings worth more than £6 billion last year, according to the latest buying and selling data from global funds network Calastone, Andrew Michael writes.
The company’s cash flow index 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 had been evasive about funds focused on the U. K. Net sales of securities, i. e. money outflows, were recorded in the sector in each and every month of 2022, and the total amount, adding non-equity funds, amounted to almost £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 fund flow index showed that last year was also bad for so-called “passive” index funds, with the sector recording net sales of £4. 5bn.
On the other hand, the overall budget – whose portfolios are invested in geographical areas – continued to attract capital.
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.
The emerging market budget also benefited from net inflows of £650 million.
Despite a seismic year in bond markets, the steady-source sector also saw net inflows of £2. 9 billion, far less than some of the £7 billion of liquidity from investors who discovered their position in the bond budget in 2021.
Edward Glyn, Head of Global Markets at Calastone, said: “2022 has been a memorable one. Central banks’ shift from an inflow of reasonable liquidity and cash to a series of rate hikes aimed at taming rising inflation has rattled asset markets.
“These significant outflows from the equity budget in 2022 without corresponding accumulation in other asset classes constitute a vote of no confidence. Fund control teams have faced a double whammy. The source of capital declined as bond and equity markets fell, and the replacement rate declined or reversed as investors slowed their purchases or fled for liquidity protection.
Investors have embarked on their quest to make money in 2022, according to data from the most purchased funds from three major investment platforms, writes Jo Groves.
Topping the shopping lists were the overall budget, the budget budget, and the valuable metals budget. Conservative budgets were also a popular choice as investors sought safe haven from falling stock markets.
We’ve compiled a list of the top 10 funds bought in 2022 by customers of investment platforms AJ Bell, Bestinvest and Hargreaves Lansdown below:
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 up are funds of funds which offer ready-made portfolios for investors wanting a more hands-off approach. These funds are split by risk (from cautious to adventurous) and are typically invested in a mix of funds across different asset classes such as equities, 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.
Steel prices were also a popular choice. Gold, in particular, is seen as a hedge against high inflation and a possible sanctuary in the event of a stock market crash. Gold investors have enjoyed 15% of its value over the last year. , while the value of silver has n 17%.
The battle between active and passive funds also looks set to continue. Investors are backing US stock markets to recover, with S&P 500 tracker funds a popular choice. But there’s also a number of actively-managed funds in the top 10, which may offer the potential to limit losses in falling markets, which tracker funds are not set up to do.
Finally, what budget was bought the most 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. .
The fund will most likely attract investors willing to tolerate volatility in search of higher returns.
The fund had an exceptional 2020, achieving a 110% recovery, before squandering more than 45% of its price 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 performance has also been a mixed bag, delivering a top-quartile return of 62% over five years, but a third-quartile loss of 14% in 2022, according to Trustnet.
Home REIT, the £1. 2bn asset investment trust, has been forced to suspend its shares after missing the deadline to publish its annual report in line with UK monetary rules, writes Andrew Michael.
The investment trust, which funds the acquisition and creation of properties aimed at providing accommodation to homeless people, has been in dispute for the past two months with short seller Viceroy Research, which published a report last November that included a number of claims against the company.
These included allegations, which Home REIT denies, of inflated property values and conflicts of interest with developers. But the report prompted a share price slide – from over 80 pence in November 2022 to approaching 37 pence now – that has seen the trust drop out of the FTSE 250 index.
In addition, those claims led BDO, the auditor of Home REIT, to redo its work on the company’s accounts and delay the publication of its annual report.
This put the investment trust in breach of the Financial Conduct Authority’s disclosure and transparency rules, requiring trading in its shares to be suspended.
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 request a restoration of the listing of its ordinary shares upon publication of the 2022 results, which the company expects to be published by as soon as is practicable.
“While the Company awaits the final touch of the BDO audit procedures, the Company will continue with the measures announced in the past to maintain the confidence of shareholders, while continuing its general operations to supply high quality housing for some of the most vulnerable people in the Company. . »
Oli Creasey, equity research analyst at Quilter Cheviot, said: “In principle, this is a technical violation of the rules, which deserves to be remedied temporarily. We expect the effects to be released in January 2023 and for stock trading. temporarily resume thereafter.
“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 top executive, deserves to resign from his position after holding a vote on his company’s fate on the social microblogging platform, writes Andrew Michael.
The billionaire businessman, who also runs electric car maker Tesla and air transport maker SpaceX, bought Twitter for £36 billion ($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 to stay, while the rest (42. 5%) said he would stay.
It’s unclear that Musk will follow through on his decision. An hour after the result of the vote was known on Twitter, he tweeted: “As the saying goes, be careful what you wish for. “
Anyway, he would own the company.
Responding to the poll, Changpeng Zhao, boss of cryptocurrency platform Binance (who has eight million Twitter followers), tweeted Mr Musk not to step down, 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 the helm of the company in October, many questionable decisions have been made. About some of the company’s staff has been laid off, while an attempt to implement 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 business.
Tesla’s share price has fallen sharply in value over the course of 2022 – down 60% year-to-date to trade at just over $148 currently – with critics of Mr Musk saying his pre-occupation with Twitter is damaging the electric car maker’s brand.
Russ Mould, investment director at AJ Bell, said: “Given how much of a distraction Mr Musk’s tenure at Twitter has become, shareholders in the electric vehicle manufacturer will be breathing a big sigh of relief if he steps back from Twitter and gets back to the day job at Tesla.
“For someone who values the ethics of painting so much, Mr. Musk spends a lot of time on social media. With Tesla’s stock falling more than a quarter of the year to date, it wants to roll up its sleeves and get its core business back. Back on the road.
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 firm executives, many of whom believe that slowing corporate profits and recession threats are more of a fear than inflation in the year ahead.
The past 12 months have been turbulent for stocks and shares investors, with markets stuttering against a backdrop of stiff economic headwinds compounded by soaring inflation, rising interest rates and gathering recessionary clouds.
The functionality of the stock market was also affected by bottlenecks in the global supply chain 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 ten investors say they are concerned about the fiscal power of investments. One of the most likely reasons is the decision, revealed in last month’s fall publication, to especially reduce capital gains tax and dividend deductions from the new fiscal 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 perspective of investment professionals, a survey conducted through the Association of Investment Firms (AIC) found that more than a portion (61%) of managers at member investment firms believed inflation had already peaked. A quarter (25%) told AIC that they had no idea, it was still conceivable that costs would rise further.
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, ii’s head of equity strategy, said: “While we don’t know exactly what will happen next year, we do know that the UK economy will most likely spend at least some of that money in recession. And that’s so far the biggest concern.
“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 soon or even start falling later in the year, expansion stocks will pick up again. “
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 simply cannot take place without mining corporations supplying the materials. for technologies such as wind turbines and 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 that only a quarter (27%) of active funds were able to beat a passive alternative this year. Almost a third of active funds achieved the feat in 2021.
The company added that active budget functionality has advanced over the long term, with more than a third of portfolios (39%) outperforming passive ones over a 10-year period, but added: “This is still much less than a fraction and this figure will be flattered by a “survival bias”, in the sense that poorly performing budgets tend to be closed or merged 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, head of investment research at AJ Bell, said: “2022 has been a terrible year for active equity funds, especially those trading UK shares.
“In a year when stock markets have faltered, active managers might have expected to nudge ahead of the tracker funds that simply passively follow the index. But our latest report shows any such hopes have been dashed.
“Where they do select active managers, investors need to tilt the performance odds in their favour, by conducting research to pick out managers with a proven track record of outperformance. That’s no guarantee going forward, but if an individual active manager has delivered outperformance over a long period, that suggests they are skilful and not just lucky.”
From London to Aberdeen and Cardiff to Manchester, the electric car maker Tesla has topped the table of most popular share purchases among UK’s retail investors, according to the latest figures from Freetrade, Jo Groves writes.
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 findings included:
Despite their nationwide affection for Tesla, investors tended to be more regional in their biases towards other companies.
Dan Lane, senior analyst at Freetrade, said: “Greggs cracked the top 50 in Newcastle, but didn’t even make the top 300 in London.“Dispelling the popular footballing myth that there are more Manchester United fans in London than in Manchester, shares in the club were four times as popular in Manchester than they were in the capital. The company also accounted for a whopping 1% of all cash invested in shares by 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 and simplified recommendation regime, making it less difficult and less expensive for businesses to advise consumers on investing in shares and 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.
Research from Paragon Bank shows that deposits in savings accounts reached £1 trillion for the first time in September, up £25 billion from 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 keeping a cash buffer is a sensible way of dealing with unexpected expenses, consumers who hold significant amounts of excess cash may be damaging their financial position, as inflation reduces the value of their savings.
“Altering the current framework could help the advice market support mass-market customers 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 the Alliance Trust, men are much more likely than women to invest in stocks, but they are also more likely to exit their investments more quickly when market turbulence occurs, 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: one in six men (17%) report having a general investment account, compared to one in 10 women (10%).
An inventory and inventory ISA is a tax-advantaged savings scheme that allows its holder to invest up to £20,000 in inventories during the tax year, while protecting them from source of 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 a portion of male investors (48%) said they sold investments when their price had fallen, in an effort to avoid wasting more money. This compares to just over a third of women (38%) who were less likely to have “crystallized” a loss in a market crisis.
Mark Atkinson, Chief Marketing Officer at Alliance Trust, said: “Although they are less likely to invest, women are proving to be bigger investors. Their behavior implies a sound long-term investment strategy, without knee-jerk reactions or impatience. “Decisions. This will most likely lead to a much higher monetary return.
“The past few weeks have seen even more chaos in the markets, and dramatic headlines could well spark a crisis of confidence among investors. Staying calm is key. The investment is the one that stays quiet for as long as possible. Patience will pay off. “
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.
Such apps – available via both smartphone and tablet – have become increasingly popular, especially among those aged under 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 “gamification” of business 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 states that “consumer apps with those kinds of features were more likely to invest in products beyond their appetite for threats. “
The FCA has produced studies that raise considerations that customers who trade apps are exposed to high-risk investments, with some demonstrating more common behaviour among challenge players.
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, the FCA’s executive director of markets, said: “Some product design features could be contributing to problematic, even gambling-like, investor behaviour. We expect all firms that offer stock trading to consumers to review and, where appropriate, make improvements to their products.
“They also want to make sure they supply their customers, especially those who are vulnerable or showing symptoms of challenging gambling behavior. “
Jeremy Hunt, Chancellor of the Exchequer, has announced significant changes to both capital gains tax (CGT) and dividend tax as part of today’s Autumn Statement, writes Andrew Michael.
The move is likely to increase interest in individual savings accounts, which can be used to shelter savings and investments from tax.
CGT is applied on the sale of shares, second homes and other assets. For basic rate taxpayers, the CGT rate is determined by the size of the gain, taxable income levels and whether the gain is from residential property or other 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.
Mr Hunt said that the current CGT annual tax-free allowance of £12,300 will be cut to £6,000 from the start of the new tax 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: “Halving increases the burden on investors and asset owners at the other end of the CGT spectrum; those who have made modest gains are still attracted to a broad spectrum of rents.
“These taxpayers may need to file tax returns for the first time to report capital gains, causing a new admin 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 a civil marriage can transfer assets to each other, which is known as a marital move, to use together. . allowances, in addition to passing on a potential gain to the spouse who would possibly be exposed to a lower tax bracket.
Dividend tax is a tax paid by shareholders on the dividends they earn from corporations. Dividends are invoices that companies make, annually or semi-annually, from the profits they have generated.
The current annual dividend tax allowance, the amount a recipient can receive from dividends each year before paying tax, is £2,000. Mr Hunt said he would be halving this amount to £1,000 from the new tax year next April and then halving the allowance again, to £500, from April 2024.
The amount a shareholder will pay in dividend tax depends on their income source tax bracket. Taxpayers with a basic rate are charged the 8. 75% rate. This figure rises to 33. 75% for taxpayers with higher rates and 39. 35% for taxpayers with higher rates.
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 cap of £1,000, 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 will also be affected, many of whom receive partial or mainly dividends instead of salaries. “
Stock trading platform eToro has struck a deal that allows millions of retail investors to have a say in how the corporations they invest in are managed, writes Andrew Michael.
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 give their opinion at a company’s Annual General Meeting (AGM) on key facets of a company’s strategy or how an organization is run.
eToro says that its customers will be able to participate in AGMs by casting proxy votes for free that are administered and supported by Broadridge, a specialist provider of services in this sphere.
eToro adds that the option will increase the reach of its investors who own fractional shares, allowing all of its clients to vote “on issues such as mergers, executive redemptions, and environmental, social, and governance [ESG] proposals. “
Rival exchanges, including Hargreaves Lansdown, AJ Bell and Interactive Investor, already offer similar voting to 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%) wished to vote at AGMs. 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 U. S. exchangesUU. se will be held 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 haven’t gotten the platform, voice and help they deserve, but this is quickly becoming a reality. Retail investors’ access to proxy voting is a very important step in this journey.
“There is clearly a huge appetite among retail investors to participate in AGMs and we look forward to seeing how clients engage 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.
Making ESG investments, 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 replace in a positive way through 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.
Out of a universe of 91 wealth managers and 109 money advisors, 1% responded with a rating of “5”, indicating they had complete confidence in the providers’ claims. The majority (56%) gave them a rating of “3. ” suggesting they had “limited confidence” in the promises made.
The findings coincide with the news that the UK’s financial watchdog, the Financial Conduct Authority, is proposing a new set of rules to prevent consumers from being misled by exaggerated claims from supposedly environmentally friendly investments (see story from 25 October 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 include investment product-sustainability labels and restrictions on how terms such as ‘ESG’, ‘sustainable’ and ‘green’ are used.
Despite the skepticism surrounding ESG claims, financial professionals told AIC that they continue to support making ESG investments in general. More than three-quarters of companies surveyed (79%) agree that “investments deserve to have a positive effect to the greatest extent possible”. as well as a monetary return. “
Nick Britton, head of intermediary communications at the AIC, said: “Advisers and wealth managers are overwhelmingly on board with ESG and sustainable investing, but they’re also keenly aware of the risks of greenwashing with only 1 in 100 completely trusting ESG claims from funds.”
“ESG investing has faced a perfect storm this year and this has clearly affected expectations about performance and risk. Market falls, higher inflation and the war in Ukraine have made many advisers and wealth managers more wary of investing in sustainable funds in the short term, though they still expect demand for ESG investing in general to increase over the next 12 months.”
Elon Musk’s bitter months-long takeover of Twitter is now over, with the Tesla boss paying more than £38 billion ($44 billion) to snap up the social media microblogging site, writes Kevin Pratt.
Mr Musk posted a tweet simply saying “the bird is freed”, 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 has called “absolute freedom of speech. “This would possibly come with updating the site’s algorithm, reducing moderation activity, allowing users to edit their tweets, and lifting bans on questionable figures such as former U. S. President Donald Trump, who was banned from 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. “
Musk analysts will need continued support from advertisers, as the price he paid for Twitter represents a significant premium to 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 monetary commentators, it will most likely be several days (or even weeks) before investors receive credit once Musk is officially finalized.
What we do know is that percentage holders will get £46. 70 ($54. 20) for the percentage they had up to the time of acquisition.
Hargreaves Lansdown’s Susannah Streeter said: “For UK investors, the cash proceeds will be converted from US dollars into sterling, subject to the prevailing exchange rate at the time and any standard currency conversion fees. We have not yet heard from Twitter indicating the takeover has gone through, 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 delisted, leaving a void for a new company to take its place.
“Insurer Arch Capital Group Ltd has taken notice of Twitter Inc. in the S
This news means that the index budget that in the past held Twitter inventories will also want to adjust their portfolios to account for this development. Index budgets, or trackers, are automated investments containing baskets of inventories 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 the number of fake user profiles and spam Twitter may have had.
The Tesla chief threatened to pull out of the £46.72-a-share deal in July and was sued by Twitter. The two parties were due to face off in court this month, with Musk potentially on the hook for an £860 million break clause for pulling out.
However, earlier this month, new Chief Twit agreed to continue with the agreement. It is widely believed that he will prioritize removing spam and selling loose speeches on the platform.
Yesterday, Musk shared a video on Twitter in which he appears visiting Twitter’s headquarters with a sink in the kitchen. The caption read, “Walk into Twitter HQ, let him in!”
He also spoke in general terms about Twitter’s transformation into a “do-it-all app” in the style of WeChat in China: an app for performing a wide variety of tasks, adding taxi bookings, and scheduling medical appointments.
Musk is expected to reinstate former US President Donald Trump on the platform. Trump was “permanently” banned from Twitter due to the “risk of additional incitement of violence” in January 2021, following an insurrection at the Washington DC Capitol involving his supporters.
Analysts believe Twitter’s new owner will most likely eliminate jobs at the company. Musk is expected to face Twitter staff tomorrow, Friday, October 28.
Investors could receive an extra £5.7 billion in dividend payments from UK companies this year because of the pound’s fall against the value of 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 payouts made by companies to shareholders from annual profits and are regarded by some investors, especially pension funds, as a vital source of income, especially for those approaching or in 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 was “impacted heavily” by the de-listing of mining company BHP from the London Stock Exchange.
Over the past year, mining and energy companies have rewarded their investors with bumper payouts following the end of the pandemic which had forced businesses to hold on to their cash 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 boost caused by fluctuations in the exchange-rate, Link said that payouts were slightly weaker than anticipated.
For the full year, Link predicted that “the normal rise in the US dollar will contribute a record £5. 7 billion to UK dividends and prompt an upward revision 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 £96 billion. This is no substitute for our expectations that bills in the UK 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.
Environmental, or ethical, investing covers a range of issues, from concerns about corporate behaviour to anxiety about climate change.
In this area, the expansion of environmental, social and governance (ESG) investments in recent years means it is a mainstay of the global monetary landscape, with billions of pounds invested internationally in budgets aimed at doing good.
But according to the FCA, “exaggerated, misleading or unsubstantiated claims about ESG credentials damage confidence in these 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, director of responsible wealth strategy at Quilter, said: “This is a step to help provide consumers with mandatory protections and limits on 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 stopped twice as many investment firms in the past 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.
Ill-informed or ill-advised decisions can prove financially costly for members of those plans if they are made near or at the time of retirement.
In addition, the regulator claimed that over the past year it had prevented 17 firms and seven Americans from trying to unload the FCA’s authorization in the investment market, amid suspicions of “fenixing” or “ship rescue. “
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 halted UK trading at 16 Contracts for Difference (CFD) providers, which had entered the UK’s transitory authorisation scheme in 2021, where suspicious fraudulent activity had been detected or where consumers were encouraged to make transactions above generating revenue.
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 errors 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 events have exposed some pretty fundamental and dangerous misunderstandings about the risks associated with different kinds of pensions. Problems with a specific type of investment held in defined benefit pensions have sparked fear and panic about entirely unrelated financial issues.
“Savers and investors are obviously crying out 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 amortize their investments in a market downturn could end up paying a high price for their long-term decisions, according to the Alliance Trust, writes Andrew Michael.
The investment company carried out insight modeling which showed that an “impatience tax” would have charged UK investors £1. 3bn 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 crystallized a loss in the following year. More than one in ten (12%) said they had done so in the following year.
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 he felt peer pressure when he saw others selling their securities.
Alliance Trust also found that the majority of investors who abandoned a stock that had fallen in value (52%) regretted doing so.
“Buying on the dip” offers investors the opportunity to gain exposure to an asset they might already like, but at a lower price.
For its conclusions, the company used the example of two hypothetical market investors who invested £10,000 in 1992 and also paid monthly contributions equivalent to 10% of the national average wage 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 the Alliance Trust, up to 2022 the impatient investor would have accumulated £217,884, while the patient investor would have realized much more by accumulating £410,757. Neither the calculations take into account capital gains, nor the source of income tax, nor the prices related to the lost 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, trading at a loss for liquidity is not without risk. With inflation nearing double digits, the real price of liquid savings falls by 7 to 8 percent. Even despite the market declines, there is evidence that long-term stock investments outperform money over any 20-year period.
Dividends – payments made by companies out of their profits to shareholders – will reach a record £1.25 trillion worldwide this year, according to Henderson International Income Trust (HIIT), Andrew Michael writes.
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 UK dividend cover – the ratio of a company’s income to its dividend payment and a key indicator of the sustainability of its dividend – will improve “markedly” this year, thanks mainly to profits generated by oil sector businesses.
Companies with strong track records in paying dividends tend to be in fast-inventory sectors, such as energy and commodities, where corporations have benefited from rising oil and fuel prices.
Unlike many of its rival stock indices around the world, the UK’s FTSE 100 is packed with so-called “old economy” inventories, adding several energy and commodities companies.
HIIT said UK corporations had particularly cut dividends during the pandemic, reducing their average dividend policy to just 1. 0 for the period between 2015 and 2020, less than a fraction of the global average.
However, the dividend policy in the UK recovered to 2. 0 in 2021. This figure is still lower than the rest of the world, but HIIT predicts it is on track to beat the global average this year thanks to emerging oil earnings.
Ben Lofthouse, portfolio manager at HIIT, said: “During periods of inflation it is vital to locate corporations with smart dividend hedging, smart pricing power, money and modest borrowing.
“If inflation and recession occur at the same time, profits may just fall, but history shows that the source of dividend income is much less volatile than earnings over time, and corporations adjust the proportion of their earnings they pay out to shareholders. With dividend policy so important at this point in 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 put on hold until October 28 to give Musk time to finalize the deal, writes Jo Groves.
However, Twitter has voiced its opposition to this delay, with continued concerns over Mr Musk’s ability to raise the debt financing given the deterioration in the value of technology stocks and wider economic conditions since the deal was 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. 4bn in September, marking the 16th consecutive month that investment portfolios have seen outflows. This latest figure exceeds 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 investing in UK equities were hit the hardest, but every other geography saw significant outflows.
According to the index, US equity funds shed a net £497 million in capital during September. During the same month, Calastone blamed the strength of the US dollar and the economic slowdown in China for record net outflows experienced by emerging market and Asia-Pacific funds, at £116 million and £223 million respectively.
The company also pointed to a “clear reversal of appetite” for so-called environmental, social and governance (ESG) funds, which lost £126 million in September. This is the first net outflow from this sector in just four years.
Edward Glyn, Head of Global Markets at Calastone, said: “Rising global bond yields are causing a dramatic revaluation of assets of all kinds. British investors are voting with their feet and heading for exits. The U. S. market’s sensitivity to interest rates on expansion stocks explain record capital outflows in the United States.
“For emerging markets, the forecast earlier in the year through high steel costs was offset by the prospect of a global recession. The negative effects of a strong dollar in many emerging market economies are now being felt. “
After months of legal battles, Elon Musk has agreed to reinstate his original offer of $44 billion for social media giant Twitter, Jo Groves writes.
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 was on the condition that there was an immediate stay of action and closure of the current legal proceedings in the Delaware Chancery Court.
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 may put an end to months of uncertainty about the deal, with Twitter shares rising from $42 to $52 on 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.
You can find more information on how to buy Twitter shares here.
Market regulator the Financial Conduct Authority (FCA) is set to review rules relating to 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 Consumer Investments Strategy, we have said that we want to establish a simplified advice regime for mainstream stocks and shares ISAs where the risks to consumers are relatively low.”
The distinction between recommendation and guidance was established in the context of the advent 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 will reduce this regulatory burden with the aim of reducing the fees that firms have to qualify for and making classic investment recommendations more accessible. It will review the regulatory boundary between recommendation and guidance, while proceeding to ensure client protection.
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 do not take advice need better, more personal guidance so they can make financial decisions which are more likely to lead to ‘good outcomes’, in line with the FCA’s Consumer Duty.”
The timing of the review is not yet decided but Ms Pritchard said: “Once the FCA has greater rule-making powers under the future regulatory framework legislation next year, we will be able to do more.”
The UK’s smaller publicly listed companies paid dividends to investors worth £574 million in the first half of 2022, according to fund administration service Link Group, Andrew Michael writes.
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 showed that the largest contribution to growth came from the building materials sector, one that has benefited from a revitalisation in construction 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 generally less likely to pay dividends than larger, more mature companies that trade on the main London market.
Link Group said that, before the pandemic, a third of AIM-listed companies paid cash to shareholders compared with about three-quarters of companies traded on the main London market.
In 2020, the number of AIM companies paying dividends plunged to 22%. Link Group estimated that the figure would rise back up to around 29% this year. But it also warned of a slowdown in the pace of recovery in AIM dividends for the second part of 2022.
Ian Stokes, Link Group’s managing director for UK and European corporate markets, said: “AIM corporations have been inspired by their ability to recover from the pandemic. This is reflected in the strength of its better-than-expected recovery in dividend payments. The simple task is done, which means the expansion will now slow down.
“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 Ombudsman Service (FOS) said there had been an increase in the number of investment scams reported through consumers.
Between April and June 2022, the FOS received 570 complaints about “authorised” investment scams, in which someone is tricked into sending money to a fraudster posing as a legitimate person or business.
Investment fraud accounted for 30% of all “authorised” scam complaints logged during this period, and represents a 14% increase compared with the same period 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 lately the fastest development of fraud court cases won through FOS. »
As scammers prey on people’s heightened monetary vulnerability amid a cost-of-living crisis, Delfas warned consumers to be on guard.
She said: “We are concerned that, in current economic circumstances, people could be tempted to invest in fake investments. Our advice to consumers is to be wary, conduct their own research, check the Financial Conduct Authority register and contact the firm directly on the number listed.”
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 equity funds last month, a record amount, according to the latest figures from Calastone, Andrew Michael writes.
The global funds network said that the August outflow of funds easily beat the previous outflow records of June and July 2016, when investors removed £1.54bn and £1.56bn of cash respectively in the wake of the Brexit vote.
Calastone said August’s net outflows were due to “a significant increase in selling activity, rather than a decrease in buy orders, indicating a decisive decision [by investors] to sell their holdings. “
Global inventory costs rose sharply in July, bouncing back in reaction to a drop earlier in the summer. But Calastone said that, rather than supporting investors, an uptrend in markets had left clients exposed to the UK budget sceptical.
He said: “Investors sold their equity holdings (before) the rally, earning a modest £251m in the second part of July, up to £2. 08bn between August 1 and 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 share 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 has been publishing budget data for eight years, said the period from March to October 2016 had seen the largest capital outflows (£5. 2 billion).
Calastone said that the only portfolios experiencing minor inflows during August were those linked to specialist investment sectors, such as infrastructure, renewable energy and environmental, social and governance (ESG) investing.
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 interest rates is very negative for inventory prices, especially for expanding inventories. “
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.
A company that is moving 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 companies facing a downgrade in the benchmark stock index are kitchen maker Howden Joinery Group and pharmaceutical company Hikma Pharmaceuticals.
F
Susannah Streeter, from Hargreaves Lansdown, said: “Huge geopolitical uncertainty, skyrocketing inflation and considerations of economic expansion have been challenging for the asset control industry.
“abrdn’s operating profits came in lower than expected as fund flows reduced further. But this isn’t just a recent problem, assets have been walking out the door for years. Its environmental, social and governance options currently lag peers, and demand for ESG investments is on the rise, which puts 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 around 4,600 advisors and 900,000 clients across the UK and Asia. It says the app will allow consumers to manage and track their investment functionality and monetary status.
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 graphs will show investment performance over different time periods and clients will also be able to see how much money they have paid in, withdrawn and taken 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 disappointed that wealth managers don’t talk about their clients’ perspectives on culpable investments, according to a study by Oxford Risk, writes Andrew Michael.
The behavioral finance firm found that nearly a portion (46%) of adults whose investment portfolios are controlled by wealth managers have never been contacted through them about their attitudes toward environmental, social, and governance (ESG) issues or the broader factor of the at-fault investment.
Just over a third of clients (37%) said portfolios reflect their perspectives on sustainable investing, suggesting that the majority of retail investors are not in this area.
Oxford Risk argues that this situation comes at a cost to clients and wealth advisors. It found that about one in three investors (31%) say they would invest more if their portfolio better reflected their perspectives on ESG and off-fault 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.
About one in three clients say their advisor has met their ESG investment 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 capitalization (the sum of all its issued shares multiplied by the percentage value) has fallen below £3. 3bn, putting it dangerously close to the bottom of the FT-SE 100 (see below), the UK stock market. .
The asset manager has had a difficult year, with its recent interim effects reporting an outflow of £36 billion in 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 market strategist at eToro, the social investment network, said: “Those who have been chosen to move from the FT-SE 250 to the FTSE-100 come from (medtech company) ConvaTec Group, whose percentage value has increased by 20% this year, and the F
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. “
Most retail investors in the UK are bracing for a recession before the end of this year, regardless of the final results of the Conservative Party’s leadership race, according to studies by online currency provider HYCM, writes Andrew Michael.
The final results of the contest, which will be announced on Monday, September 5, 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 invest in their crypto holdings, while just over a quarter (27%) told HYCM they were most likely to increase their exposure.
Investors also indicated that they would expand their holdings in so-called select investments, adding vintage cars and personal capital, while also expanding their exposure to stocks, social investments and gold.
Giles Coghlan, chief currency analyst at HYCM, said: “With the Conservative leadership contest gaining momentum, all eyes are falling firmly on economic policy in the bid for the prime minister role. As Rishi Sunak warns that the lights are flashing red on the economy and urgent action must be taken to tame spiralling inflation, Liz Truss and her backers are casting doubt on current thinking from the BoE. Whatever course is taken, our research shows that investors clearly view a recession as inevitable.
“As the cost-of-living crisis continues to bite, it is therefore unsurprising to see many investors reducing their holdings in some riskier and more speculative assets in favour of those that characteristically provide a safe haven in times of uncertainty.”
Mining company BHP has announced that it will return a record amount of money to its shareholders after reporting record profits during the first part of 2022 due to skyrocketing commodity prices earlier this year.
Reporting its results for the year ended June 2022, the Australian-based miner revealed a total final dividend of £7.4 billion ($8.9 billion), increasing payments for the year to £13.7 billion ($16.5 billion), the highest distribution in the company’s near 140-year 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 administration group, recently reported that dividends from mining companies accounted for nearly a quarter of all payments made to shareholders during the second quarter of 2022, the largest proportion from any industrial 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, BHP’s chief executive, said: “These strong effects are due to reliable operations, allocation delivery and capital discipline, which have enabled us to price-capture major commodity prices. “
Against a backdrop of looming recession due to faltering global expansion and the prospect of emerging interest rates, Henry said the company is well prepared to deal with a dodgy environment in the near term, adding a positive note: “We expect China to emerge as a source of stability for commodity demands in the coming year.
Victoria Scholar, chief investment officer at Interactive Investor, said the value of coal reached record levels after Russia invaded Ukraine in late February.
He added: “BHP has been one of the biggest beneficiaries of rising raw material costs this year. Looking ahead, the environment looks challenging with copper costs falling 25% from the March peak and with considerations about emerging global interest rates, the constraints of hard work. 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, together 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 most recent research, Spot the Dog, 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 standard measure, usually a particular stock market index, against which the performance of an investment 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 latest report, Spot the Dog, published this year, highlighted the budget of 86 dogs 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, chief executive of Bestinvest, said the report demonstrated a large disparity between the top-performing and worst-performing budget, which is explained solely through fee differences: “The exceptional 12-year era of robust equity market functionality that resulted in some closings in last year’s close meant that, Until recently, the Maximum Equity budget generated profits regardless of the ability of its managers.
“This helped mask poor relative functionality and economic deficiency.
“In a bull market, where the price of the maximum budget rises with the rising tide, making an investment may seem too easy, but tougher times are a time to think about your approach. If you want to be a successful DIY investor, it is surely imperative to periodically review and monitor your investments and you want to be very selective in the budget 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.
The IA said investors were responding to intensifying economic uncertainty following a challenging first half of the year for market performance.
Last month, the U. S. market officially entered market territory when the influential S
The AI said the capital budget saw £2. 3 billion worth of outflows in June. Within this cohort, the sector’s biggest casualty is globally diversified portfolios, with investors pushing the flight budget to the £1. 3 billion song.
Conversely, so-called volatility control funds, which aim to deliver positive returns to investors by investing in a mix of assets including stocks, bonds, and cash, have been the best-selling AI sector in June, with net retail inflows. value £248 million. Array
Chris Cummings, chief executive of IA, said: “Investors expect a slowdown in the economic expansion and are preparing for further interest rate hikes as we introduce new territory for the markets. Higher rates mean less functionality for the high-expansion corporations that have 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 was no surprise that the European fund industry faced declining assets under management over the course of the year 2022 so far, as the geo-political situation in Europe, the still ongoing COVID-19 pandemic, disrupted delivery chains, increasing inflation, and interest rate hikes put some pressure on the securities markets.”
According to the latest figures from fund manager Columbia Threadneedle, only four investment portfolios, a record, generated top-quartile returns over a three-year period to the end of June this year, writes Andrew Michael.
A top quartile fund is one that ranks in the bottom 25% of its peer organization in terms of investment performance.
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 index, the most difficult test in the research, looked for the budget in the maximum sensitive quartile of those periods. Columbia Threadneedle found that at the end of Q2 2022, only 0. 35% of the budget, 4 in total, were found to be up to the task.
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: “This quarter’s findings are unprecedented, demonstrating the extreme rotations that markets have been through in the last couple of years and how different flavours of investment have led markets at different times.”
He added: “While the knowledge is hard to read, it indicates that fund managers are keeping their cool and not looking to chase such uncommon 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. . Formation
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 profits and have a tendency to rise and fall much more during this cycle than mining dividends. other sectors. “
He added: “As we get closer to 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) investments, despite the shift towards sustainability and growing concerns about the impact of investments on the planet, writes Andrew Michael.
According to research from financial advisers Foster Denovo, six in 10 investors (60%) said they were unfamiliar with the availability of specialist 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.
Once dismissed as a virtuous concept that potentially compromised portfolio returns, ESG investing has moved centre-stage within the global investment arena 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 half (51%) of respondents either felt strongly or very strongly about the impact that climate change could have on their savings and investments.
In addition, nine in 10 (89%) said they were concerned about the impact that corporate practices and some large businesses were having on the environment.
A quarter (25%) of respondents told Foster Denovo that they had invested with ESG factors in mind. But the majority said they weren’t interested in ESG investments because of perceived lower returns from the sector compared with more traditional 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 been smart to take the risk of suing Elon Musk after the Tesla boss announced last week (see story below) that he would pull out of 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.
Musk refuses to pay the sum, arguing that Twitter provided him with the data he wants to determine the number of original accounts.
The initial offering for Twitter was $54. 20 percent, but the stock is now trading below $35. The recent declines are attributed to Musk’s announcement, but the value is already hovering around $40, compared to the percentage prior to last weekend.
Twitter’s legal filing reads: “In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to do his part 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 by merging to complete once the few notable situations are met.
In a tweet last night, Bret Taylor, Twitter’s chairman, said, “Twitter has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable for 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 Twitter and its shareholders since the beginning of the year, when he began acquiring an undisclosed stake in the company and continued to expand his position without the need for notification.
“It’s a testament to the contempt he shows for the company that one might have expected Musk, as a long-term steward, to protect. Since the merger agreement was signed, Musk has continuously disparaged Twitter and the deal, creating a business threat to Twitter and downward pressure on its stock 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 U. S. Securities and Exchange Commission, said:The U. S. Department of Homeland Security claims that Musk is “terminating the merger agreement because Twitter is violating several provisions of that agreement and appears to have made false and misleading statements that Musk relied on. “in the merger agreement, and will most likely suffer an adverse effect on the company.
Musk froze the deal in May while his team decided on the number of “spammy” 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 “conduct an independent assessment of the prevalence of fake or spam accounts on the Twitter platform. “
“This data is essential to Twitter’s commercial and monetary functionality and serves as the finishing touch to the transactions contemplated in the merger agreement, as well as to ensure that Twitter satisfies the final conditions, to facilitate Mr. Simpson’s financial and financial plans. ” Musk for the transaction,” and will interact in the transition by making plans for the company.
“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 was determined to complete the acquisition on the original terms: “Twitter’s board of directors is committed to finalizing the transaction at the price and on the terms agreed with Mr. Musk. and plans to take legal action to enforce the merger agreement. We are confident that we will triumph in the Delaware Court of Chancery.
The dispute between the two camps is likely to be drawn out and acrimonious, not least because the contract includes a £1billion break clause, payable by either party if they withdraw without good reason.
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 news broke that the acquisition was in jeopardy. Outside of opening hours in New York, they amounted to around £35 (£29). Musk’s initial offer was $54. 20 (£45) per share.
The UK’s asset management industry is calling on the government to create a new class of fund that incorporates blockchain technology, the digital process that underpins much of the cryptocurrency industry.
The Investment Association (IA), the trade body representing the UK’s investment management firms running nearly £10 trillion worldwide, has urged the government and the City regulator, the Financial Conduct Authority (FCA), to work together “at pace” to approve blockchain-traded funds that would issue digital tokens to investors in place of traditional shares or fund units.
The AI claims that the increasing adoption of so-called “tokenization” would ultimately reduce prices for consumers and the potency of fund delivery, through 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 AI, the landscape it envisions for long-term budgeting would provide customers with “more engagement and personalization while maintaining customer protection. “
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 by 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 “have any hedge if things go wrong, so other people are willing to lose all their cash if they decide to invest in them. “
Chris Cummings, IA chief executive, said: “With the ever-quickening pace of technological change, the investment management industry, regulator and policymakers must work together to drive forward 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 monetary watchdog has hired a specialist director for economic crime and illicit finance from the National Crime Agency (NCA) for a new role overseeing the crypto-asset, e-money and bill markets.
The appointment is one of six new director positions revealed through the Financial Conduct Authority (FCA) as the regulator looks to bolster its senior staff covering classic investment areas, while also burnishing its credentials amid calls for stricter oversight of the crypto sector.
Matthew Long will join the Financial Conduct Authority in October as Head of Payments and Digital Assets. Long currently serves as director of the National Economic Crime Command, which is part of the NCA.
He also headed the UK’s Financial Intelligence Unit, which has a national duty to receive, analyse and disseminate monetary intelligence under 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 Co-ordinator Karen Baxter, who joins the Strategy, Policy, International and Intelligence Directorate.
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 company is a public limited company, indexed on the stock market, whose objective is to make money by investing in other companies. Investment accepted as true in the industry has become increasingly popular among 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 those figures equate to a cumulative overall dividend of 15% from last year.
However, it added that invoices to investment budget shareholders who invested in corporate shares remained strong during the period, accounting for £1. 85 billion of the total payout. These equity investment funds have historically played a key role in the London-listed investment sector.
While dividends from alternative trusts have increased nine-fold over the past decade, Link forecasts that shareholder payments from equity trusts will grow more slowly than the market average over the coming year.
Ian Stokes, Link’s managing director, corporate markets UK and Europe, said: “Ten years ago, alternatives were a much smaller segment of the investment trust market, but they have rapidly expanded as new investment opportunities have opened up in response 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 companies are offering many benefits to income-generating investors and have continued to do so despite difficult market conditions.
Competition has intensified among online trading platforms as they battle to retain client funds now that the boom in ‘armchair’ share trading during the pandemic has tailed off.
The rise in the popularity of commission-free trading platforms had already put pressure on the larger platforms to review their fee structures, with AJ Bell reducing their platform and foreign exchange fees from 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 (ISA) and Self-Investment Personal Superannuation Accounts (SIPP) from 1 July .
Historically, platforms have not paid interest on those balances, and in the past, investors may have even been charged the privilege of holding money.
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.
The move by ii will see interest of 0.25% paid on the value of any balances over £10,000, with each account (eg ISA and SIPP) treated separately, rather than combined for the purpose of the interest calculation.
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 for regular foreign stock traders, who will now earn interest on the US dollar balances they have in their accounts.
This announcement brings ii in line with other major trading platforms as follows:
Hargreaves Lansdown (HL) also announced today the arrival of a ‘bank payment by bank’ service, which allows consumers to transfer the budget directly from their bank accounts to their HL accounts, without a card.
George Rodgers, Senior Product Manager at Hargreaves Lansdown, commented: “Our consumers can expect a simpler payment experience as well as instant deposit and withdrawal arrangements compared to the days of the existing system. Our adoption of Open Banking is a key step in our virtual transformation strategy.
Fresh data from the Financial Ombudsman Service shows that so-called ‘authorised’ scams – where consumers are tricked into transferring money into accounts they believe to be legitimate – increased by over 20% to 9,370 in in 2021/22.
The Ombudsman says fraudsters are increasingly turning to social media to lure their victims, with as many as 17,500 cases of fraud and scams recorded this year akin to fake investments.
The Ombudsman says it upheld 75% of scam complaints in the consumer’s favour last year.
As far as insurance is concerned, the Ombudsman recorded 38,496 complaints (including Payment Protection Insurance) in the last financial year, compared to 44,487 the year before.
The number of insurance claims decreased by 75%, from 8,175 in the 2020/21 financial year to 2,116 in the 2021/22 financial year.
The decrease coincides with an increase in the number of insurers that have added policies for Covid-related issues to their policies.
The Financial Mediation Service has faced a backlog of court cases due to the pandemic. Last month, it announced that the number of notable court cases had fallen to 34,000 from 90,000 in April last year.
It says it resolved over 58,000 insurance complaints (including PPI) in total in the last financial year. However, it upheld less than 30% (28%) of cases in the complainant’s favour.
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.
“During 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 monetary 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, has removed two budgets from its moral portfolio shopping list.
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 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.
Conversely, the investment price (aimed at companies perceived as undervalued and undervalued) has seen an increase among 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 continually reviewing the list so that it meets consumers’ wishes and in this case, given the important update in the market environment this year, we have agreed with Morningstar to carry out 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.”.
Commenting on the abrdn fund, he said: “Compared to its peers, the team’s experience in fund control remains limited. In general, there are features of more powerful funds in this sector and therefore we have advised the removal of this fund from the ACE 40 list. “
US stocks closed in bear market territory yesterday (13 June) after the S&P 500 fell 3.9%, hauling down the stock index’s overall performance by 21.8% since its record high achieved on 3 January this year.
Stock market professionals generally define a bear market as one that has fallen least 20% from its peak.
The sell-off in stocks was due to 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 Fed is focused on inflation and the economy, not the markets, yet its actions have significant influence on the direction of stocks and bonds. A decision to raise rates by more than half a percentage point could cause chaos on the markets and put a bigger dent into investors’ portfolios than they’ve already seen 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 variety of issues, such as knowing where to start, making the investment procedure too complicated and knowing what to invest in.
When asked how much cash they had potentially saved 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 almost a portion of the responses (40%) favored investing in common themes such as generation and healthcare.
Dodl’s Emma Keywood said: “With the rising rate of living, 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 either don’t know where to start or find it too complicated.
“However, once other people do some studies and put their feet 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) showed that investors poured £553 million into the April budget. More than £7 billion was withdrawn from the fund market between January and March this year.
In April, the total amount of budgetary 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.
The volatility, special bonds, and North American sectors were also popular. The sector with the worst sales is the United Kingdom, 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.
Women-led hedge funds perform better than those led by men over the long term, according to a study conducted by broker IG Prime.
Hedge funds are pooled investment vehicles for primary and high-net-worth investors.
In their quest for outsize returns, the investment strategies associated with hedge funds are often more eclectic and involve greater risk-taking than those found in most run-of-the-mill retail funds.
IG Prime’s studies focused on the United Kingdom, Australia, Singapore, Switzerland, and the United Arab Emirates. They tested how a higher proportion of women in senior control positions in the hedging budget correlated with improved 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 to lead the coverage budget may prove to be “somewhat beneficial. . . from a monetary point of view. “
In spite of this, the research also found that women accounted for just 15% of the leadership roles across international hedge funds compared with 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 equity-focused investment approaches, compared to just over a quarter (26%) of men.
In contrast, nearly twice as many men (33%) as women (18%) say they focus on macro investment strategies. A macro strategy bases its technique on countries’ general economic and political outlooks, 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 investing in funds, focus on the functionality of the individuals and the intended strategy for the funds. Due to the exclusive nature of the funds, it makes sense to tailor each investment resolution to each fund. .
Most non-professional investors believe that making an investment with a life purpose in mind produces greater effects than looking to make money in a nutshell, 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 nearly nine in ten investors (89%) had a purpose in mind that they were looking for: to make it harder for them to obtain cash through 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 both men and women are confident that having an investment goal 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, whether due to the gender pay gap or because they have taken time off from their careers to care for their children or family.
The fund manager also found that, on average, UK investors spend around 16% of their cash on an investment. Most investors cited a lack of liquidity as an explanation for why they didn’t start making an investment sooner.
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 main threat, followed by inflation, backsliding investment, 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 things that cause a sense of unease, with the effect of emerging inflation being the main concern, especially among older people whose fears about how this will affect their retirement plans stand out more than ever. The importance of having a solid monetary plan.
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 provide a source of income for investors, specifically as part of a retirement plan strategy.
The investment manager’s Global Dividend Index said the growth in dividends could be a result of the “ongoing normalisation” of payouts following the disruption caused by the Covid-19 pandemic.
During 2020, companies worldwide cut back sharply on dividend payments to shareholders, opting instead to retain cash as a defence against the worst effects of the pandemic.
Janus Henderson reported that every region experienced double-digit growth in dividend payouts in the first quarter of this year, thanks to a stronger economic backdrop and the ongoing catch-up in payments following cuts during 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 US, Canada and Denmark each set all-time quarterly records paying out £114 billion ($142 billion), £10.7 billion ($13.4 billion) and £7.8 billion ($9.8billion), respectively.
Janus Henderson’s Jane Shoemake said: “Global dividends had a good start in 2022, helped by particular strength from 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” assumptions are those that place ESG or sustainability at the heart of your investment philosophy. Funds positioned in this category will most likely have an independent panel or rely on a client survey on their ESG criteria.
“Integrated” budgets are those that integrate ESG research into the investment procedure as a complementary input to decision-making.
“Limited” budgets involve an ESG detail in their process, but the portfolio is influenced by the ideal of moral 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 guilty investment sector in 2015, highlighting budget in this category, which our research team considers to be among the best. We have included an additional ESG assessment.
Nearly half the UK’s young investors make investment choices while engaged in another activity, according to the City regulator and the nation’s official financial lifeboat.
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 study, conducted in collaboration with the Financial Conduct Authority (FCA) and the Financial Services Compensation System (FSCS), also found that around a fraction of investors (44%) conducted studies of their investments because they felt the procedure was “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 Warning List to see if an investment firm is operating without authorisation.
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, director of enforcement at the FCA, said: “Fraudsters will find new tactics to target consumers, so make sure you do your homework and take the time to investigate. Just a few minutes can make a big difference.
Feelings among investors are sharply divided by age in relation to environmental, social and governmental (ESG) issues, according to research carried out on behalf of wealth managers and financial advisers.
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 about potential financial returns.
A made through Personal Investment Management
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 were more important to women than men, with 86% of women across all generations saying it is a factor in 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. It’s appealing to see how the five pivotal 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 one hundred wealth control firms found that growth-oriented methods struggled given the existing economic situations in 2022, while value-oriented portfolios experienced a resurgence of fortune.
Growth-based strategies represent the process of investing in companies and sectors that are growing and are expected to continue their expansion over a period of time.
Value investing concerns itself with buying companies that are under-appreciated both by investors and the market at large.
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 company says that strategies favouring growth stocks, smaller companies and long-dated bonds had suffered the most. At the same time, around a third (30%) of managers with a value bias jumped from the fourth quartile at the end of 2021 to the top quartile in the first quarter of this year.
Graham Harrison, executive director of ARC, said: “The reason for this 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: “The easy money has been made. We are at an inflection point for financial markets and investment strategies. The next decade will be significantly different for investors than it has been during the past three.”
UK retail investors pulled more than £7 billion out of their budget in the first few months of the year, and March 2022 was to blame for almost part of that figure, according to the most recent figures from the Investment Association (IA).
The IA reports that outflows spiked up from £2.5 billion in February this year to £3.4 billion in March. Investors also withdrew funds amounting to £1.2 billion in January 2022.
The pace of withdrawal by investors accelerated sharply over the first quarter of the 2022 exacerbated by tightening monetary policy in major markets and compounded 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, the bond budget and, to a lesser extent, equity 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 saw capital outflows during the period: “March was a two-part story, and outflows balanced out as many investors employed their individual savings accounts and sought potentially safer havens in diversified budgeting, especially with multi-asset methods, This is benefiting from this. “Flows into the guilty investment budget continued to be 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.
It indicates that this is the lowest budget number it has recorded in this band since the beginning of its investigation in 2008. He describes this figure as “well below” the old consistent and best-performing budget average of around 3% mark.
The agency highlights market developments that have harmed the funds’ functionality 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 have caused significant gyrations in financial markets and underlying asset classes, resulting in the lowest consistency figures we have ever seen 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 research analysts says rampant inflation, fuel price increases, National Insurance hikes and the cost-of-living crisis have taken a toll both on investor sentiment and market prices in the first quarter of this year, even before factoring in the effect of the Russian invasion of 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.
Fundscape’s Martin Barnett said: “The first quarter of the year is the bellwether of investor sentiment and sets the tone and pace of investments for the rest of the year. 2022 could be a tougher year for many D2C houses, especially the robos.”
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.
A new Chartered Financial Analyst (CFA) Institute study shows that 51% of UK retail investors now trust the financial services sector, compared with 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 lifetime maximum monetary target. For 58 percent, it’s about saving for retirement, while for 12 percent, Cent prioritizes saving for a major purchase, like a space or a car.
The CFA surveyed more than 3,500 retail investors in 15 global markets and found that confidence levels are highest in almost each and every place. On average, 60% of retail investors globally say they consider their financial services industry to be true.
The CFA study views last year’s strong market performance as a key driver for investor trust. In 2021, both the S&P 500 and NASDAQ achieved average returns of over 20%, while the FTSE 100 returned 14.3% — its best performance since 2016 (although global markets have since suffered falls in line with the general economic downturn).
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 Standards at the CFA Institute, says: “The high degrees 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, the alignment of values, and personal connections are all coming through as key determinants in a resilient trust 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.
The city’s watchdog, the Financial Conduct Authority, recently learned that 8. 6 million adults in the UK have more than £10,000 in cash to invest.
A study conducted by AJ Bell ahead of the launch found that around a third of those not currently making an investment (37%) are discouraged from doing so because they don’t know where to start. About a share (48%) said 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 claims that you can open a Dodl account through the app in “just a few minutes. “Customers can deposit cash into Apple and Google Pay accounts, as well as debit cards and direct debits.
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.
Buying or selling investments is commission-free, and no tax wrapper charges apply. AJ Bell says customers investing in funds will also be required to pay the underlying fund’s annual charge as they would if they were investing on the company’s 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 investment consumers. can of.
Millionaire investors in the UK have suffered greater losses than their less prosperous 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 index of private investor performance shows that those of its customers with £1 million portfolios experienced losses of 4.2% in the first quarter of this year.
By comparison, average account holders declined by 3. 6% over the same period, while professional fund managers lost 3. 7% of their money.
Figures for longer periods of time show an improvement in overall performance. Typical consumers suffered losses of 1% in six months, but increased by 5. 4% in the last year.
Professional managers fared marginally worse, being down 1% over six months and up 5.3% over the last 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 at Interactive Investor, said: “The horror unfolding in Ukraine has marked what was already a torrid time for markets. Therefore, it is not surprising that the first quarter of the year sees the 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 with cash saved have become more cautious about making investments in the markets.
Hargreaves Lansdown (HL), the investment platform, said that roughly one-third of investors who put money into a stocks and shares ISA this year have kept their money in cash rather than investing it.
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 effect of inflation on their portfolios, according to a study conducted by online investment platform Freetrade.
ISAs are a set of government-backed savings plans that, depending on the product chosen, allow you to earn interest or grow your investments 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 rising interest rates and increased volatility in stock 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.
In another finding, less than a third (31%) of investors believe that a strategy of holding shares in a single company promises the best long-term returns. Conversely, nearly a portion (49%) of that cheap budget is more likely to deliver the most productive performance.
The poll also revealed more optimism about the potential of UK equities, following record outflows of £5.3 billion from the sector during 2021. One-in-five investors intend to increase their exposure to domestic assets, while 4% are inclined to sell off their UK holdings.
Freetrade’s Dan Lane said: “Perhaps the reasonable valuation of the UK market is proving too much to resist, or perhaps the appeal of the US generation is waning slightly. Whatever the reason, the UK will be back on the menu in 2022. “
* For savers and investors who haven’t already done so, time is running out to use this tax year’s ISA allowance. All UK adults have an ISA allowance each tax year worth £20,000. The 2021-22 tax year ends on 5 April and the 2022-23 equivalent begins the following day.
Payouts to shareholders made by companies out of their profits surged to a record level in 2021, but global growth in dividends is forecast 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 indicated that corporations paid out $1. 47 trillion to shareholders in 2021, an increase of about 17% from last year.
This represents a major rebound from the steep dividend cuts imposed on companies in 2020, in order to save money 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 building corporations increased or kept their dividends strong in 2021. Banks and mining corporations are to blame for about 60% of last year’s cumulative $212 billion in outlays. Last year, BHP paid out the largest mining investment in the world. Dividend value of $12. 5 billion.
For next year, before Russia’s 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.”
According to a study by Boring Money, the number of senior investors aged forty-five and over who own crypto assets has doubled in a year.
The consultancy’s 2022 Online Investment Report, based on a survey of more than 6,300 UK adults, also shows that mobile communications are becoming the dominant medium for younger investors buying budget and shares.
Boring Money said that the share of adults under the age of forty-five who own crypto assets increased from 6% in 2021 to 12% in the following 12 months. The share of homeowners among those over the age of forty-five is particularly lower: 3% this year, up from 2% in 2021.
The Financial Conduct Authority, the UK’s currency watchdog, warned last year about the number of new investors attracted to 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 in the last 12 months to obtain an investment account balance, 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 that one in five (19%) UK retail investors are people with less than 3 years of investment experience, while 7% have been making an investment 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’s a more herbal middle ground for millions of people, and providers want answers on how to get more consumers into that more comfortable zone. “
The Financial Stability Board (FSB) has warned that policymakers want to temporarily move to expand regulations covering the virtual asset market, given its intertwined links with the classical monetary system.
According to the FSB, parts of the crypto market (around $2 trillion globally) are difficult to assess due to “significant knowledge gaps. ”
A total investment budget of £45 billion has been flagged as consistently underperforming through studies conducted by online investment 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.
It defines a “dog” fund as a fund that fails to outperform its 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 popular metric, a specific stock index, against which the functionality of a mutual fund is compared.
Bestinvest said the funds, despite their poor performance, will generate £463 million in screening fees this year, even if stock markets remain stable.
The analysis highlighted 12 funds that were each worth over £1 billion. These included JP Morgan’s US Equity Income fund worth £3.93 billion, Halifax UK Growth (£3.79 billion) and BNY Mellon Global Income (£3.47 billion).
The investigation also included Invesco’s UK Equity Income and UK Equity High Income portfolios, described through Bestinvest as “perpetual behavioral funds”.
Bestinvest’s previous Spot the Dog report last summer identified 77 funds worth just under £30 billion. The company says the reason for an increase in the number of poor performers is because of additions from the Global and Global Equity Income investment sectors.
Jason Hollands, CEO of Bestinvest, said: “Spot the Dog has helped shine a light on the challenge of consistently disappointing returns generated through many investment funds. In doing so, it has only encouraged thousands of investors to stay closer to their investments, but it has also led fund teams to deal with 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 study states that “there is a fear that some investors may be tempted – through misleading online advertisements or high-pressure sales tactics – to purchase complex, higher-risk products that are highly unlikely to be suitable for them and do not reflect their risk. In some cases, they 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 “FAQs” about key investment hazards, 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 occurred in the pandemic has attracted more and more people to the murky world of crypto investments and almost a portion still do not understand the dangers involved.
METER
It will offer a collection of multi-asset style portfolios, backed by a diversity of actively and passively controlled 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 deliver the operating models, including dedicated “squads” to support the technology platform and customer relationship management, together with 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 in its platform.
Bestinvest, by Tilney Smith
The company says it’s revamping its existing platform into a “hybrid virtual service that combines online goal planning plans and analytics teams with a human touch. “Clients can search for qualified professionals through free investment training.
If desired, clients can also receive a fixed-price advice package that adds 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 novelty will be released at the end of the fiscal year on April 5.
A range of ready-made ‘Smart’ portfolios offering a range of investment options to suit different risk profiles will accompany the launch.
Portfolios will be invested in a passive investment budget, while actively monitored through TS’s investment team
Bestinvest said the annual investment cost will range between 0.54% and 0.57% of each portfolio’s value.
From 1 February, the company added that it is reducing its online share dealing costs to £4.95 per transaction, regardless of deal size.
Bestinvest produces a semi-annual report on the underperformance of investment budgets or “dogs”. The company claims that it needs to bridge the gap between the existing network aimed at amateur investors and classic monetary recommendations aimed at a more affluent audience.