By Annabel Brodie-Smith
Despite the first half of the year’s continued political uncertainty with a shock election, the surprising result of a hung parliament and the triggering of Article 50, investor confidence in the stock market has remained strong in 2017. The FTSE 100 Index started the year at 7,178 and closed at the end of June at 7,313, providing a total return of 4.7%.
The investment company sector has generally performed well in the first six months, with the average company returning 10%. The European sectors performed particularly well and this was partly due to the fall in sterling after the Brexit vote. To find out more about the top performing sectors in the first half of 2017 see our release.
Sterling again features in the article written by the “contrarian to the core,” Alasdair McKinnon, manager of The Scottish Investment Trust in his article on how the trust can take advantage of Brexit's unexpected opportunities.
Alasdair explains how the weakening of the pound after the Brexit vote has boosted the value of this global investment company’s investments and enhanced their dividend income, allowing them to pay a special dividend and increase the dividend by 40% this year. He also fully explains their investment approach including the ‘ugly ducklings’, the unloved shares which hopefully will surprise positively.
Two weeks ago, the FCA issued the results of their study into competition in the asset management sector. You may well have read the considerable press coverage on this report but frustratingly it focussed almost exclusively on open-ended funds (unit trusts and OEICs) and failed to properly consider investment companies.
Ian Sayers, Chief Executive of the AIC explains why this is a missed opportunity to create real competition in his blog. Investment companies offer so many of the features that the FCA sees as beneficial. Investment companies have delivered strong long-term performance for investors, regularly outperforming their benchmarks over time. They have independent boards of directors who owe their duties first and foremost to shareholders and can introduce reduced fees as the fund grows.
Finally, we would very much appreciate it if any enthusiastic investors could volunteer to share their investment company experiences with the media. Please complete the form and we will be in touch with you if there is a media opportunity. Those who are published will receive a bottle of champagne and we will donate £100 to the charity of your choice.
I’d like to wish you a wonderful and relaxing summer. Compass is taking a holiday in August but we will be back in September.
Annabel Brodie-Smith Communications Director, AIC