By Annabel Brodie-Smith
I hope 2018 is off to a good start for you.
It has not been the best start to the year for me as I have been plagued by the lurgy. I am writing this from home, propped up by what seems like a medicine chest of remedies.
On a more positive note, markets are off to a roaring start in 2018 with all-time highs a gogo. A look at my Self-Invested Personal Pension (SIPP) portfolio the other day was just what the doctor ordered!
This month we are taking a look forward to 2018 and are fortunate to have the views of two investment company managers. Europe was the most favoured region for 2018 in our investment company fund manager poll so it’s relevant that we have Ollie Beckett, manager of TR European Growth to give us his thoughts on European smaller companies.
TR European Growth was one of the best performing investment companies last year, with the European Smaller Companies sector being one of the best performing sectors.
We also have the opinion of Jeroen Huysinga, manager of JPMorgan Global Growth & Income who also has large positions in Europe, as well as the UK. This company is in the Global Equity Income sector and currently yields 3.6%.
While largely optimistic, Jeroen wisely reminds us, “this environment is not without its risks; higher equity valuations - and the absence of a significant market correction for quite some time - mean investors should guard against excessive risk taking.”
This month our investment expert, Ian Cowie, who writes every week for The Sunday Times, examines why investment companies could help readers in retirement. He explains, “fortunately, investment company shareholders enjoy unique advantages over unit trust and exchange traded fund (ETF) investors when seeking a high, rising and sustainable income.”
Finally, 2018 has seen the arrival of the KID - Key Information Document. This is a European regulatory requirement for investment companies. Before a private investor buys an investment company on a platform they now must prove by ticking a box that they have seen the KID.
In his article, AIC Chief Executive Ian Sayers looks at the significant shortcomings of the KID. These include mandatory performance figures which, in some cases, suggest too favourable a view of likely future performance and a single-figure risk indicator which will potentially be understating the risks.
As Ian emphasises, “I must be one of the few Chief Executives of a trade association who has been inundated by complaints from his members that a regulator is forcing them to overstate their performance and understate their risks!”
Hope you have a healthy month!
Annabel Brodie-Smith Communications Director, AIC
