View more on these topics

Fast food

Commodities and property have been in the news in recent days, perhaps as a consequence of investors looking for an asset class unlikely to be sullied by the sub-prime meltdown. Both these potential homes for what appears to be a never-ending tide of liquidity have not been without their problems, however.

Property has suffered as investors attempt to lock in profits or reverse a too recent jump on to a bandwagon reportedly running out of steam. Falls in the share prices of property giants such as British Land and Land Securities show how nervous investors have become. Declines of a quarter or so over the past six months contrast with a rise of close to 10 per cent in the wider index. Could now be the time to pile back in – assuming you had the foresight to bale out in the first place?

Property funds have been even more testing. By moving to a bid basis on pricing, managers are acknowledging that there are more sellers than buyers. Demand has been hit by growing realisation that domestic commercial property is far from cheap. Unlike the quoted property companies, however, no appreciable gap has opened between the price investors pay for a fund and the value of the underlying assets.

Commodities are a more difficult call. Recent results demonstrate that demand, particularly from China, remains robust but for how much longer? Shares like BHP, RTZ and Anglo American remain close to all-time highs but some pressure points are emerging. Steel has been softening in price, primarily as a consequence of too much capacity coming on stream in China. Oil is retrenching, having enjoyed a resurgence in demand during the spring. Some point to the market in these basic commodities reaching the end of an impressive bull run encouraged by unprecedented merger activity and the listing of many businesses, some in quite esoteric locations.

Little wonder there has been a growing focus on so-called soft commodities. Agricultural goods have been rising sharply in price, driven by demand from the Far East, and the launch of agricultural funds has become a popular pastime among fund management houses. There is every reason to believe that agricultural product inflation could be with us for some little time.

At a seminar last week hosted by Barclays Financial Planning, New Star’s Theodora Zemek painted a gloomy picture for the bond market based on the premise that inflation had returned as an issue for investors. According to information she dealt out to an audience of Barclays customers, vegetable prices have risen by nearly 10 per cent since the start of the year, bread is up strongly in price and the severe wet weather in this country has generated a pea shortage, with all the consequences that will bring about.

Her conclusion was that real assets – commodities, real estate and equities – will continue to make the running for the time being. Food price inflation is expected to add 20 to 50 per cent to the cost of the average shopping basket over the course of the next decade. Not that there is really any such thing as the average shopping basket, with personal inflation running at anything from 2 to 10 per cent depending on who you are and what you spend your money on.

Food has declined in importance as a component of the average weekly spend in this country over the course of the past 50 years. More efficient farming methods, better distribution and, of course, the massive expansion of the supermarket trade have all combined to suppress food price inflation. But an expanding world population, wealthier and more demanding consumers in the developing world and the diversion of vast tracts of land to growing bio-fuels could mean that food once again becomes an important part of the inflation calculation. Investors need to factor this into their strategy.

Brian Tora ( is principal of The Tora Partnership


F&C’s 130/30 fund will target purely equities

F&C has plans to launch what it believes will be the first 130/30 fund to invest purely in UK equities.The F&C UK enhanced alpha portfolio is set to be launched in August under the management of Luke Newman and Makis Kaketsis.The fund will hold 40-60 long positions and 10-15 short, with Newman and Kaketsis applying […]

Quiz night teams are left stumped

The Lifesearch, Royal Liver and Aegon quiz night got off to a great start with the silver screen round but it was all downhill from there on for the two Money Marketing teams which came sixth and last.A downmarket rival publishing house came top, with appropriately named team Poorly Presented coming a close second, just […]

The links effect

After returning to Carnoustie in Scotland for the The Open golf championships recently, I have no doubt that many people were tired of the re-running of the fateful 18th hole of the final round as played by Jean van der Velde the last time championship was held at the course in 1999.

SG Wealth Management launches own FOF range

SG Wealth Management is to launch its own range of discretionary investment funds in early September.The funds will be run on a multi-manager fund of funds basis and will give investors access to asset classes including equities (both UK and overseas), fixed interest securities, property and commodities.There will be three funds initially; balanced, managed and […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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