By Annabel Brodie-Smith
My usual pre-Christmas panic is on. I have the family coming – 11 for lunch on Christmas day and they are staying! So far I have only bought one present but when my train is delayed (often!) I have made the most of the shopping opportunities at Paddington station – Cards Galore, Hotel Chocolat, M&S Simply Food – clearly limited so there’s lots more to do. Still, I can’t wait – I’ve got two weeks off and I’m so looking forward to the Christmas frenzy and afterwards there will be time to do as little as possible – bliss!
“The huge tree and the wreath arrive at the end of next week and before we know it, we will be hanging up our stockings…”
The festivities start today when Alex, my eldest is playing cello in the orchestra at the school Christmas concert. On Sunday it’s the legendary village candlelit carol service where both my children are doing a reading – proud Mother moment! Then on Monday, my youngest son, Fabian is singing at his candlelit school carol service in the magical Magdalen College Chapel where I will inevitably be in tears… And just imagine how many glasses of mulled wine and mince pies will have to be consumed at each of these celebrations. The huge tree and the wreath arrive at the end of next week and before we know it, we will be hanging up our stockings…
This week I have been talking to fund managers about what went well and what didn’t work this year and their biggest causes for concern and optimism as we approach 2024. I spoke to Alex Wright from Fidelity Special Values, Emily Fletcher from BlackRock Frontiers and James Hart from Witan. I particularly enjoyed Alex Wright explaining why the US recession was his biggest risk, then Emily Fletcher arguing that the opposite could be a big risk – no slowdown in the US and inflation growing again. James Hart then entered into the fray saying he was most worried about the central banks making the right call on interest rates. Oh and you must find out what they enjoyed most about managing their funds this year.
And on the topic of 2024 and beyond, do read our fund manager poll where managers have given their new year predictions. After a strong year with the rise of artificial intelligence, it’s perhaps not surprising that Information Technology is tipped to perform best next year, ahead of Industrials and then Healthcare and Energy. The UK is tipped to be the best-performing region this year (fingers crossed – it’s been a while!), followed by the US and Japan. The majority of managers think interest rates have peaked but inflation will come down slowly with most thinking the 2% inflation target will not be reached until 2026.
“After a strong year with the rise of artificial intelligence, it’s perhaps not surprising that Information Technology is tipped to perform best next year, ahead of Industrials and then Healthcare and Energy."
Ian Cowie is on fine form this month scrutinising his winning investments of 2023. It was a year when excitement about artificial intelligence and a tech bounce back boosted his holding in Polar Capital Technology. His investment trust, India Capital Growth had a stellar run delivering 12-month returns of 36%. And a European company, Fidelity European Trust helped Ian “put on pounds from exposure to the weight-loss wonder drug-maker, Novo-Nordisk”. Its top holdings included exposure to weight gaining stocks – Nestlé and luxury goods giant and producers of celebratory cognac and champagne, LVMH.
And you should take a look at the top-performing sectors and trusts of the first 11 months of the year. Private Equity is leading the pack, producing a return of 43% in comparison to a more modest 3% for the average investment trust. Private Equity has clearly been boosted by the outstanding performance of the large company, 3i Group. However, there are many more strong performers in this sector on double-digit discounts. The second best-performing sector was Technology & Technology Innovation, followed by North America, Europe and India/Indian Subcontinent.
In our final article, Cherry Reynard looks east and explores emerging markets which are beneficiaries of some of “the strongest structural growth stories globally”. Emerging markets are leading in energy transition and supplying the ideas for software, specialist materials or IT equipment according to Carlos von Hardenberg from Mobius Investment Trust. They are also benefitting from supportive macroeconomic factors. Chetan Sehgal, lead manager of Templeton Emerging Markets said: “Rate cuts are on the horizon. Several emerging markets have already started rate cuts, which should be supportive for consumption.” Of course, there are geopolitical risks and upcoming elections but “the sector holds promise for the year ahead.”
And, if you are looking for a Christmas present for an enthusiastic investment trust investor, I’d recommend Jonathan Davis’s latest book on investment companies – the Investment Trusts Handbook 2024. Our Chief Executive, Richard Stone has written a state of the nation chapter on the investment company industry and there are lots of chapters written by industry experts and managers. The e-book is free and there is a hardback copy too.
Thank you so much for all your support this year. I’d like to wish you all a Merry Christmas and a Happy New Year.
Kind regards
Annabel Brodie-SmithCommunications Director, AIC
