By Annabel Brodie-Smith
So how was your summer? I had a relaxing two weeks off at home with some sunny weather, guests and the Olympics in full swing.
We visited Kelmscott Manor, the home of William Morris and Sezincote House which was an exquisite Indian Mogul house in the Cotswolds with an elegant orangery, fountains, elephants, snakes and Brahman cows. This took me back to my honeymoon nineteen years ago and the dreamy places of Rajasthan.
However, it wasn’t a relaxing summer for markets with an early August sell-off fuelled by fears over the Bank of Japan raising rates and worries that the US could be heading for a recession. Markets bounced back but volatility has returned this week with worries about a potential US slowdown, triggering a drop in the share price of AI pioneer, Nvidia.
There was good news with the Bank of England cutting interest rates for the first time in over four years. We asked a number of analysts for their thoughts on which sectors and investment trusts would benefit the most from rate cuts. Let’s not mention the ‘painful’ budget in October – enough to bring us all out in a cold sweat and don’t get me started on VAT on school fees – aahh!
On the topic of interest rate cuts, our investment expert, Ian Cowie explains how investment trusts can help income seekers. Investment trusts have demonstrated their ability to raise dividends every year for long periods of time “despite such dramatic setbacks as the global financial crisis, Covid lockdowns and Europe’s worst war since 1945.”
Ian analyses the UK Equity Income sector, the Global Equity Income sector and the Asia Pacific Equity Income sector which are yielding 4.1%, 4.1% and 6% respectively. He also reminds us that there are “dozens of different ways to generate equity income” which don’t even mention the words “income or “equity”. He gives the examples of Tufton Oceanic Assets and Greencoat UK Wind.
With the August market volatility in mind, Faith Glasgow dives into the dilemma of when to review and rebalance your portfolio. Gavin Haynes, a consultant at Fairview Investing explains: “Providing fundamentals haven’t changed significantly, a market wobble alone is not a reason to make significant changes to your portfolio.”
The consensus seems to be regular reviews every six months and your portfolio needs to be “neat, well-balanced and tuned to your needs and attitude to risk – minimising the risk of sleepless nights when markets are on the skids.” But take a long-term view and remember sometimes the best thing to do is nothing at all!
“We are fast approaching the Investment Company Showcase on 11 October in its new City location.”
Finally, we are fast approaching the Investment Company Showcase on 11 October in its new City location, 133 Houndsditch near Liverpool Street station – you can also attend online. We are bringing together more than 30 investment trust managers and it’s going to be an unmissable event.
Compass readers go free with the promotional code COMP4 so make sure to pop that on the form when you book.
This year we have Craig Baker, manager of Alliance Trust, doing the keynote fund manager presentation. We also have managers travelling from Asia and San Francisco to speak at the showcase and we are covering a myriad of topics from renewable energy infrastructure and income investing to technology.
You can find more about our managers speaking at the Showcase including all the questions nosey people like me would like to ask them! Read the interviews in our ‘meet the manager’ series and you will find out that Gabriel Sacks, manager of abrdn Asia Focus last went on holiday to Brazil, where he grew up, to see his family and friends. Whilst Laura Foll, manager of Law Debenture, Lowland Investment Company and Henderson Opportunity Trust spends her ‘free’ time ferrying her two young children around, running and drinking coffee! In fact, she wonders whether coffee could be classed as a hobby!
I hope you have a lovely September. The boys are back at school, and I have been blackberry picking in anticipation of crumble and custard season – hurray!
Annabel Brodie-SmithCommunications Director, AIC