The Sunday Times business section is reporting some rather worrying trends this week. Firstly, with Bank of England figures due out this week, they report on what they call the “rush to spend with plastic”. It is expected that figures will show that households borrowed £1.5bn in August, almost double July’s figure. Along with an unexpected rise of 0.3% in retail sales in August this would back up the BoE’s fears about the rapid growth of credit card debt, bank loans and car finance. The second point of concern is an article that suggests that City firms have drawn up plans to shift more than 10,000 staff to the Continent by the Brexit deadline in March, as fears grown of the UK leaving the EU without a deal.
Meanwhile, the Sunday Times Money section reports that the number of cash ISAs being opened has crashed by more than 20% since the introduction of the tax-free allowance for savings interest in 2016. With rates on such ISAs typically lower than those on savings accounts, it’s probably not a great surprise though.
In his personal account column, Ian Cowie is confessing to his contrarian side, and to his attraction to picking up some British investments which he thinks look pretty good value. He’s talking about individual equities – such as Greene King and Strix – but it seems he is in good company. He reports comments from investment trust managers Dan Whitestone, Callum Abbot and James de Uphaugh who all reinforce the message that you don’t get cheap share prices when all the news is good. Therefore the uncertainty caused by Brexit might well prove an opportunity if in the end the situation turns out to be not quite as bad as markets are pricing in today. Cowie quotes some interesting data. There’s a report from Morgan Stanley which shows British shares at their cheapest valuation relative to overseas stocks for nearly 30 years. He also refers to Morningstar analysis which says that the average allocation to UK equities in the typical investment trust has halved over the past decade, from 20% in 2008 to 10% now. He also refers to Investment Association analysis which shows that UK equity funds have suffered net outflows for 15 consecutive months – with withdrawals exceeding payments in by £6.5bn. Cowie confesses that he is continuing his 2018 investment policy and buying British.
Saving for the greater good is the theme in the Sunday Telegraph Money’s article this weekend. It explores the idea that some savers – particularly the younger ones – are becoming more focused on how their money is used and are putting their money into accounts where they know it will do some good for others.
The Telegraph reports on findings from Moneyfacts that there are only four “truly ethical” banks that offer savings alternatives in Britain. They are: Charity Bank, The Co-operative Bank, Ecology Building Society and Triodos Bank. The article makes it clear that even the best rates available from any savings account are hardly going to send people racing to deposit their hard-earned cash,
However, experts say attitudes towards ethical and social saving are changing. More than half of people would switch banks if they knew their savings would be used to make a “positive difference”, or if they discovered their current savings were having a negative impact, according to Opinium Research.
It also found that almost three quarters of the population believe banks and other financial service providers need to be more transparent about where savings are lent.
Writing in the Financial Mail on Sunday, Jeff Prestridge is taking a leaf out of Ian Cowie’s book with an article focused on his top tips – in this instance it’s for gaining financial independence. His is a common sense approach, with tips such as setting up an online investment platform, using your ISA allowance as well as getting the tax relief on pension contributions, making regular contributions to investment funds etc. There’s also the advice not to be greedy and to look for solid performers by doing plenty of reading and research. He confesses to his liking of investment trusts as an investment format – which is no surprise to regular readers! The whole thing sounds straight forward enough, but as IFA Magazine readers will know, the number of people who find the time and energy to devote to building an efficient financial planning process for themselves is sadly rather small.
Also in the MoS, Jeff Prestridge has been to interview Mark Mobius and Carlos Hardenberg ( who worked with Mobius at Franklin Templeton and has made the move to join him). He has written an interesting summary of Mobius, his approach to investing and his passion for emerging markets. As he reports, having ‘retired’ from asset manager Franklin Templeton earlier this year after an association going back to 1987 Mobius has re-emerged, this time with his own emerging markets business and a new £100 million investment fund – Mobius Investment Trust – which lists today on the London Stock Exchange. The fund has ambitious targets: to generate annual returns for investors of between 12 and 15 per cent. As Prestridge appropriately comments “emerging markets may rise and fall but Mobius just keeps on going. Like a Duracell battery on steroids.” To be fair, it is a good read – so if you’re interested in the detail then you know where to find it.