Comment and opinion for retail investors in the UK
Not 007, but fixed income assets!
Readers will know that the return of inflation and the actions of central banks to sharply increase interest rates from a low base has had the entirely predictable (and indeed, this actually was predicted accurately by many, including your scribe) effect of trashing the value of longer dated fixed income assets like Gilts and Treasuries, which were valued on the weird assumption that interest rates were going to remain low or even negative for ever.
Last August my sub-heading for this introduction suggested some grounds for optimism with a final caveat (Reasons to be Cheerful 1,2 and 2.5). I fear I may be about to repeat myself in sentiment, although the context is very different.
Last year, I was finding reasons for hoping that a runaway bull market might hold up a little longer. This year I am going to suggest that we might have seen the end of a serious (and to be honest, long overdue) pull back to reality.
So what are this summer’s reasons to be cheerful and what ought investor’s to be worried about?
[Read more…] about Watching Brief – August 2022I will be overseas (for me, but actually in England) for a couple of weeks and so my next post will be the August monthly briefing.
Not much worthy of comment has happened in the last week. Markets seem less volatile but the currency markets have heavily favoured the US dollar against the Euro because of fears that Russia will self-sanction and cut off gas supplies to Germany, and against the Pound due to England not currently having a functioning political leadership.
I have mentioned in blog posts and rather more specifically in conversations over recent months the concerns I have had about the ‘merger’ of Aberdeen Investments (a business whose past record was not one I admired in ethical terms) and Standard Life, a former Victorian era Scottish mutual life office that had a very good track record in running smaller company and UK/European ethical funds, back from the time when ESG was rather less of a greenwashing oppportunity and ethical meant what you would naturally think.
The latest news, that Abrdn is merging its UK and European equity teams, however it gets spun in the press releases, is clearly a cost cutting measure, although it is said that the smaller companies team remains separate (I guess that is really only a semantic concession to the marketing team).
A departure that I think some subscribers will want to think about is that Lesley Duncan, the well thought of investment director and manager of the UK Ethical fund (I own that one myself) is leaving.
The merger of 2 big investment businesses is always going to be about shareholder interests and never those of investors. A change of fund managers in such a situation is a disruption, likely to cause loss of focus and a good reason to put any funds you own that are impacted on watch, or even, subject to tax and financial planning considerations, look for a switch to a more settled alternative.