By Annabel Brodie-Smith
Autumn has arrived and the much anticipated second wave of coronavirus has come with it. President Trump is its most high-profile patient and his tweets are moving markets but there’s no widespread sell-off yet. In case there was any doubt, rising case numbers have confirmed that the pandemic is here for the long haul and the kitchen office is now my normality for the foreseeable future. COVID-19 is continuing to impact our lives and our investments, and in this month’s bumper UK issue of Compass we look at some of the sectors most affected – both positively and negatively.
However, there is still some good news. My Mother is out of hospital and looking after her is keeping me out of trouble. And the children are at school!
The COVID-19 crisis has changed our behaviour, leading to the largest carbon reduction ever recorded. But climate change has not gone away. As Mark Carney said: “We have a situation with climate change which will involve every country in the world and from which we can't self-isolate.” There are clearly opportunities for industrialised nations to invest in a greener economic recovery from the COVID-19 crisis. Only this week Boris Johnson’s speech at the Conservative Party conference highlighted his aspiration that wind energy will generate enough electricity to power every home in the UK within a decade. So it’s highly appropriate that Faith Glasgow, the former editor of Money Observer, covers investing in investment companies to combat climate change. With Brexit rising up the agenda, two ambitious new investment company launches are aiming to invest in undervalued stocks here at home in the UK. We now know that one other prospective launch, Tellworth British Recovery & Growth, will not go ahead. Our investment expert, Ian Cowie, questions whether ‘cheap’ is the same as ‘good value’ when it comes to the UK. He quotes the well-known and always refreshingly honest manager of Finsbury Growth & Income, Nick Train, who when comparing two of his companies’ underlying holdings said: “It is hard to analyse the difference in share price performance between the two as being anything else than a punitive discount being placed by global investors on a company that is listed in London, rather than Hong Kong. Apparently global investors have an aversion to the UK stock market, but this is, in some cases, getting ridiculous.”
The pandemic is largely having a negative impact on commercial property. We talked to our UK commercial property managers to find out their views on what the future holds for the office, retail, and the fortunes of their tenants. However, the demand for warehouse properties has remained resilient boosted by a surge in online shopping since lockdown. My family are on trend and our online purchases include a gaming computer and screen, secateurs, a barbecue, moisturiser and oven gloves. Our managers comment on the shift to online and the winners and losers of the trend. Many of our purchases feature in the winners’ list – the beauty sector, which saw a rise of nearly 140% in the first week of April according to investment company Tritax Big Box, electricals (up 90%) and home and garden (up 70%). It’s no surprise that the alcohol category saw a significant rise in online demand following lockdown…
Finally, in these difficult times it’s wonderful to celebrate Venture Capital Trusts’ 25th anniversary. From humble beginnings when launched by Ken Clarke in 1995, the sector has grown to back winners from Zoopla to Secret Escapes. VCTs invest in innovative and cutting-edge UK businesses and VCT-backed businesses have been sold to Amazon, Google, Microsoft and Twitter. Find out more on managers’ views on the history of the sector, the many companies they’ve backed and the future of VCTs. I hope October goes well for you.
Annabel Brodie-Smith Communications Director, AIC
