Weekend press review: four new investment trusts to launch

by | Sep 24, 2018

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Concerns over a possible hike in CGT as part of the forthcoming budget, lie at the heart of the article in The Sunday Telegraph Money section this weekend. It reports that some wealth managers have been raising the matter with clients to review whether or not to lock in gains on investments held outside of tax wrappers, before the Chancellor stands up on 22 November. This is just in case he makes changes which might increase the tax burden on investors who may well have made significant gains through the bull market in equities. The article does include alternatives to selling outright – such as transferring to a spouse’ name, to stagger disposals over a number of tax years or to consider gifting to charities.

“Four star fund managers – including Mark Mobius and Terry Smith – are launching new investment trusts: Which should you scoop up?” That’s the headline of the article by Jeff Prestridge in the Financial Mail on Sunday.

In it, he summarises the details of the trusts and their managers, then gives a verdict on each one based on analysis from a range of commentators and experts. A summary is shown below:

  1. Smithson – managed  by Terry Smith and team, although Smith himself is not managing this trust. Simon Barnard and Will Morgan have been brought in from Goldman Sachs to run the portfolio. The verdict “you could coin it in”.
  2. Mobius – managed by – yes, you’ve guessed it – the 82 year old Mark Mobius. Again the verdict is the same as for Smithson, “you could coin it in”.
  3. AVI Japan Opportunity – managed by Joe Bauernfreund. Although Asset Value Investors is hardly a household name it – and Joe Bauernfreund – are better known for managing the British Empire Trust. The verdict is that this trust offers “a good solid bet”.
  4. Merian Chrysalis – managed by Richard Watts and Nick Williamson. Merian is the new name for Old Mutual Global Investors – headed up by Richard Buxton. Watts and Williamson have established strong reputations for investing in small and mid-cap stocks. The verdict? As in the AVI case, this is rated as looking like “a good solid bet”.

Over at the Sunday Times Money, Ali Hussein is taking a hefty swipe at advisers in the lead article entitled “Life savings shot down in pensions ‘wild west’ – thousands face a bleak retirement as lax rules let their unethical or incompetent advisers off the hook.” Ouch. Whilst the article does cover some legitimate areas of concern with warnings around advice to consumers around high risk or unregulated investments, as well as problems faced by some clients who had been awarded compensation for bad advice but whose advisers had then moved firms to continue practising as an adviser – a process known as phoenixing. However, reading the article you can’t help but wonder about unintended consequences.  Will the average ST reader will be sufficiently spooked by what they read here so that they end up not taking any sort of professional advice when it comes to their pension provision, preferring instead to take a DIY approach with all the risks which that entails? We do hope not.

Still in the Sunday Times and still talking about a DIY approach – but with a notable difference this time.  Ian Cowie has been reviewing the performance of his DIY portfolio and this week is confessing his “latest duds” – or as he wittily refers to it in the article his “DIY investment pratfalls”. His review of “Cowie’s Clangers” is mostly about individual equities such as Kraft Heinz, Vodafone, Daimler etc. but it does also include collective investments such as Fidelity China Special Situations, Woodford Patient Capital and Blackrock Latin American.  As always, it’s a great read. There’s a sensible conclusion too, in that investment management isn’t as easy as it might look, and that Cowie’s experience shows the importance of diversification.

Another small article of note in the Sunday Times is on annuities. James Coney reports that payouts on annuities have increased by almost a fifth since their post-referendum slump. Behind it is the recent rise in Bank of England base rate and the corresponding rise in gilt yields which are used to price annuities. Today, only a quarter of pensioners take out an annuity, but with annuity rates rising and fears over those investors sitting in cash within their pension pots, it is possible suggests Coney, that more will be tempted to de-risk with some or all of their pension monies and to consider the purchase of an annuity.

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