By Annabel Brodie-Smith
Well the election result is in and it’s a Conservative majority. Whether it’s the result you wanted or not, the FTSE All Share was up 2% at 10am this morning. So some good news for investors and perhaps the Santa rally is now coming to town. There’s always a lot to fit in before Christmas and this year is no exception… On Tuesday I had the pleasure of talking to Bruce Stout, Manager of Murray International, and Laura Foll, Co-Manager of Lowland Investment Company, about their hopes and fears for next year and what they think is most important for their investment company. Our video to the right is well worth watching. Both managers along with Nick Train, Manager of Finsbury Growth & Income, attended our end-of-year media roundtable. Do take a look at their views and others in our fund manager poll.
The annual poll showed that investment company managers are mainly bullish about Blighty, with a third of them tipping the UK to be the best-performing region next year. And the UK also comes second after Emerging Markets on a five-year view. When it comes to sectors, managers are most confident about Real Estate Investment Trusts and Software and Computer Services in 2020.
The average investment company is up 14% so far this year so there’s plenty to celebrate. And despite the Brexit doom and gloom, it may surprise you that the UK All Companies and UK Smaller Companies sectors were the third and fourth best performing sectors, up 27% and 26% respectively. And in a year when Greta Thunberg and Extinction Rebellion continued to make the news for their campaigning on climate change, there’s positive news for investors in the Environmental sector too. Find out who performed best in our release.
Laura Foll, Co-Manager of Lowland Investment Company, and Bruce Stout, Manager of Murray International, discuss the opportunities and risks for investors in 2020.
Finally, Ian Cowie takes us on an investment journey across the globe and around many sectors as he tells us how his investment company portfolio has performed this year. It was generally a good journey although there were a few character-forming experiences: “While 2019 was an ‘annus horribilis’ for some formerly high-flying fund managers, this DIY investor didn’t do too badly - thanks to a globally diversified portfolio of investment companies.”
In the last week we have seen the M&G Property Portfolio Fund suspend – yes the same old problem, an open-ended fund investing in property, a hard-to-sell illiquid asset, and offering daily redemption. We’ve been here before with open-ended property funds in 2008 and 2016. This follows the collapse of Neil Woodford’s firm and the damaging impact on their investors due to the suspension of Woodford Equity Income. This has been the dominant investment story of the year, and yes it started life as a UK Equity Income fund which ended up with a portfolio that wasn’t liquid enough to meet redemptions. Investment companies, with their stock exchange listing, are the natural choice for these hard-to-sell assets. Investors can always buy and sell investment companies and managers don’t have to worry about redemptions. Investors may not like the price but they can trade the shares. We are adamant that the FCA needs to address the fundamental problems with open-ended funds that invest in illiquid assets and have made suggestions on this. Mark Carney warned of the systemic risks these funds pose, describing them as “built on a lie” at the Treasury Committee. Clearly, we hope a satisfactory regulatory solution will come to the fore next year. To end on an entirely different and positive note, I have been to two school carol services, a school play and concert in the last week and I have thoroughly enjoyed them all. It puts everything else into perspective. Also some other good news, today is the AIC Christmas lunch. Hopefully all will be calm on the western front and we can enjoy the festivities. I’d like to wish you all a very Merry Christmas and a Happy New Year. Let’s hope 2020 is a happy and healthy year and best of luck with your investments!
Annabel Brodie-Smith Communications Director, AIC
