View more on these topics

CPD: Investment principles and risk

The latest edition of Newsbrief counts as 1 hour of structured CPD and covers the regulatory and marketplace changes which took place during March 2014. Visit the Money Marketing CPD Centre to answer 10 multiple choice questions and complete this CPD activity. Just click into your CPD Plan and you’ll find each month’s marketplace changes round-up in your activity list.

April CPD Newsbrief – Investment principles and risk

newsbrief-g1.jpg

Balancing trade deficit and trade surplus

Steve Williams

The UK runs a large trade deficit in goods each month (around £7.7 billion), alongside a trade surplus in services (of £6.6 billion).

International trade figures are notoriously volatile, but what we are seeing is a persistent deficit in the balance of goods trade averaging more than £7 billion in the last decade or so. None of this is good news for those who hope for a rebalanced economy, with less reliance on consumption and services, to one with a greater contribution from manufacturing and exports.

What is baffling is that the precipitous fall in sterling’s trade-weighted value during the credit crisis has not better supported UK exports. Between July 2007 and December 2008 sterling lost around 30% of its value when compared with a basket of other important trade currencies (the US dollar, the euro, the yen and the Canadian dollar).

In 2007, the monthly deficit in goods averaged £7.5 billion compared with nearly £7.9 billion in 2008, £6.9 billion in 2009 and £8.2 billion in 2010.

Perhaps the trade deficit might have widened further had it not been for the sharp depreciation in sterling which coincided with dramatic declines in economic output among our main trading partners – notably Ireland and the rest of the EU and the USA.

http://www.ft.com/markets/currencies

Barclays Capital Equity Gilt Study

newsbrief-g1.jpg

John Housden

The latest Barclays Capital Equity Gilts Study (EGS) was published in February.

Now in its 59th edition, the EGS continues to provide detailed analysis of the performance of cash, bonds and equities going back to 1899 for the UK and 1925 for the US. In both countries, last year’s investment performances had a similar pattern: equity markets rose strongly, while real returns on fixed interest and cash were negative.

Government bonds had a particularly bad time of it. In the UK, the 9.6% real terms loss posted by gilts was the worst performance in two decades. US Treasuries delivered a 13% real terms loss, which Barclays largely attributes to QE tapering. A single year’s returns make little difference to the long-term view that the EGS is able to take. But, if you make comparisons over short periods, changing the start or end year can have a significant impact on returns.

Last year, for example the EGS showed UK equity real performance over the five years prior (from the end of 2007 to the end of 2012) as -0.9% pa. The latest five-year results are much better – at  +10% a year – thanks to 2008 (-30.4% in-year real return) falling out of the calculation and replaced by 2013 (+17.4%). The longer the timescale, the less dramatic such an effect is.

The EGS highlights the dispiriting performance of cash (as measured by Treasury Bills) over the last decade. Like all the numbers in the report, the figures are gross, so the loss would be greater for taxpaying investors. The last time cash posted negative real returns was back in the 1970s, when inflation was the problem. From 2003 to 2013 inflation averaged 3.3%, and in the first half of that period gross interest more than kept pace. Then came 0.5% base rates from March 2009, quietly doing the same damage to depositors as inflation did in the 1970s.

The EGS contains chapters on half a dozen medium- to long-term investment trends alongside the statistics, including the risks of deflation in Europe and the future of US housing finance. The most revealing chapter concerns cyclical adjusted price-earnings ratios, in which Barclays challenges the idea that the US market is markedly over-priced: if adjustment is made for sectorial differences, “the gap between the US and the rest of the world is in general meaningfully smaller.”

As usual, the long-term numbers in the EGS make a strong case for equity investment.

http://group.barclays.com/corporates-and-institutions/research/equity-gilt-study

April Newsbrief

The latest edition of Newsbrief counts as 1 hour of structured CPD and covers the regulatory and marketplace changes which took place during March 2014. Visit the Money Marketing CPD Centre to answer 10 multiple choice questions and complete this CPD activity.

Just click into your CPD Plan and you’ll find each month’s marketplace changes round-up in your activity list.

Not yet registered? Join for free today at www.ifacpd.com and access over 35 hours of independent, accredited CPD learning content. 

Learning objectives (full list of ApEx standards covered below)

Recommended

Barclays-Cash-Machines-2012-700x450.jpg

Barclays tops FCA complaints data again

Barclays has been named the most complained about financial services firm between July and December, with 309,494 complaints over the period and an uphold rate of 66 per cent. The number of complaints received by Barclays is down by 17 per cent compared to the first half of 2013, when it received 370,733 complaints and […]

Holly-Mackay-Platforum-MM-700.jpg

Aegon and Cofunds cut platform charges following Budget reforms

Aegon and Cofunds have reduced platform charges in the wake of the Budget, with Aegon becoming the first advised platform to introduce a cap on charges. Charges on Aegon’s One Retirement platform will be capped at £750 annually while charges on the Aegon Retirement Choices investment platform will be capped at £1,215 annually. There will […]

HMRC-Building-700x450.jpg

Tax avoidance firm stops issuing products after HMRC crackdown

Future Capital Partners, a promoter of tax avoidance schemes, will not issue any new product offerings following a crackdown on such schemes by HMRC. In an email to investors sent out yesterday, seen by Money Marketing, the firm says “unprecedented” moves by HMRC to tackle marketed tax avoidance schemes over the past year have had […]

Technology-Binary-Data-Tech-Code-700.jpg

MoneySupermarket buys finance app Ontrees

Price comparison website Moneysupermarket.com has bought website and mobile app Ontrees for an undisclosed sum.  The app has been bought from Associated Newspapers. The service, which launched in 2012, aggregates consumer bank account and credit card details and aims to simplify personal finance spending, budgeting and transaction monitoring.  Ontrees was the top-ranking finance application in […]

Guide

Guide: day-to-day tasks ​— can your system manage?

This guide from Johnson Fleming will take you through the required communication and also give ideas for additional actions that will ensure your auto-enrolment project is a success. As well as highlighting what is required from a system to ensure it is up to the tasks, an overview of the following is also provided: data validation; data categorisation; employee communication; opt-in process; opt-out process; produce contribution schedule; contribution reconciliation process; upload of member data to pension provider; upload contribution to pension provider; manage salary sacrifice process; enrolment process; re-enrolment process; and management of increased employee queries.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com