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Cut investment funds on offer by a third, says Axa

Axa Wealth has called for the number of investment funds available to be cut by a third to help boost private investment.

In the white paper, Wealth Management – from recession to recovery, published today Axa Wealth chief executive Mike Kellard says too much choice is hindering rather than helping investors and fund managers.

He says: “Investment managers in the UK are very good at launching new funds when they have perfectly good existing ones doing almost exactly the same thing. We need to rationalise the amount of funds on offer – too much choice is not necessarily a good thing for either the customer or the fund manager.”

The paper says that increased use of multi-manager and guided architecture will help reduce the “bewildering choice” available in the market.

It says the biggest barrier to investment is financial jargon and lack of understanding surrounding charging and says product solutions must address consumer inertia and fear of loss.

The paper also calls for a review of some aspects of regulation, arguing that the current amount is stifling innovation.

It says: “The upside is being lost in the rush to limit the downside of investments.”

The paper also urges the investment industry to battle against any government changes that could water down the impact of the FSA’s retail distribution review.

It calls for action on an industry-wide standard definition of risk which is being driven by the Association of British Insurers.

It says: “A standard definition of risk would help restore investor’s faith in the industry and allow them to easily understand and compare funds.”

The paper also warns that RDR changes pose risks to middle market investors.

It says: “Axa Wealth is concerned that the industry has lost sight of the middle market and how access to advice can be widened to ensure professional support is available to as many consumers as possible.”

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Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.

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