By Annabel Brodie-Smith
"It's time to prepare for the worst but let's hope things aren't quite so bad. Us investors know that difficult times are often the best times to invest but a long-term perspective is essential."
It was excellent to see so many of you at our private investor event last week, The Investment Company Showcase. The day went really well and I will be sending an email to you with a link to the recordings of the manager presentations and panel sessions. We had 33 managers presenting including Paul Niven – F&C Investment Trust, Job Curtis – City of London Investment Trust and Peter Spiller – Capital Gearing. I really enjoyed talking to private investors last week as it’s well over ten years since the AIC hosted our last event and reassuringly some of the audience had attended both events.
On the other hand, my holiday to Crete was a total disaster. The flight arrived 25 hours late after a thunderstorm flooded the airport so we stayed a night at a Heathrow hotel without our luggage. The weather was stormy, my youngest son, Fabian and my husband both had to go to the doctor because they had chest infections and then my eldest son, Alex and I went down with it. The weather got better on the last two days but on our return, home had never looked better! Looking at politics – October was not the calm month I wished for. We have yet another Prime Minister but have kept the latest Chancellor - good to have some stability… Thank goodness things have calmed down a bit since the mini-budget maelstrom. But this week interest rates have risen to 3% and the Bank of England is warning the UK faces its longest recession since the 1920s. It’s time to prepare for the worst but let’s hope things aren’t quite so bad. Us investors know that difficult times are often the best times to invest but a long-term perspective is essential. With the United Nations Climate Change Conference (COP27) due to begin on 6 November, we have looked at private investors’ views of ESG investment criteria (Environmental, Social and Governance). Interestingly they are more sceptical and pessimistic about ESG investing than they were a year ago. Three-fifths of investors (60%) still consider ESG when investing, though this is down from 65% in 2021. However, of those who don’t consider ESG, 55% say they are not convinced by ESG claims from asset managers – double last year’s 27%.
This means the FCA was right to insist on a clamp down on greenwashing and new rules to ensure there are clear investment labels on ESG funds. The AIC has welcomed these rules as it’s vital investors can trust funds’ ESG claims – funds need to do what it says on the tin. We’re still a couple of years away from these rules coming into effect but they are very much needed.
This month Ian Cowie has taken a trip to emerging markets and found some positive returns. Larry Summers, a former United States treasury secretary has claimed Britain “is behaving like an emerging market” after the recent turmoil. Ian comments: “Shareholders in some investment companies may wish it were literally true” as some investment companies invested in emerging markets have performed much better than their British counterparts.
With Luiz Inácio Lula da Silva recently re-elected president of Brazil, Ian has looked at Brazil as well as India and Vietnam and has plenty of investment company successes in his portfolio. Ian concludes: “it makes sense to set aside outdated prejudices about emerging markets and consider the opportunities they offer to diminish risk by diversification.”
Faith Glasgow explores infrastructure investment companies in her piece this month. This is a fascinating sector where nine companies invest in a range of infrastructure projects from prisons and schools to transport and digital infrastructure including wireless networks and data centres. Their benefits to investors include reliable income, diversification and in these high-inflation times some companies are inflation-hedges as they receive inflation-linked income from their investments.
Another event takes place on 16 November when Asset TV are running an online conference, “Future Trends in Investment Trusts. A number of investment company managers and industry experts are speaking and it’s an interesting programme. To find out more and register please visit Future Trends in Investment Trusts | The Virtual Conference Partnership. Finally, I’d like to wish you all a good month. We are off to see fireworks on Saturday and I’m hoping this week’s torrential rain does not put in another appearance. It’s time for some sunshine after the rain…
Annabel Brodie-Smith Communications Director, AIC
