View more on these topics

Investment View

You have to smile, don&#39t you? The world&#39s greatest democracy cannot even elect a president. If it were not for the importance of the US to investors everywhere, I would have spent the past week rolling around the aisles.

Let us not forget the US stockmarket is worth more than all other stockmarkets put together. This is not just a by-pro duct of high share valuations and a strong dollar. The US has led in technological innovation, has created vast individual wealth and kept the world economy buoyant.

Markets are torn by the Gore/Bush debacle. Paralysis of government is generally viewed as a good thing. Less government, not more, has helped the US build its position as the epitome of successful capitalism. But that is not to say a vacuum at the pinnacle of power is to be welcomed. Markets dislike uncertainty and further progress will need a resolution.

At the end of last week, it was looking as though this story could run and run. One immediate effect was to give the dollar a touch of the jitters. Given the level of the balance of payment deficit, that may be no bad thing although any continued slide could choke off imports, which will hardly do much good for other exporting nations. In the short term, we must watch how the US market reacts to this unsatisfactory political situation. In the longer run, it may make little difference and it is worth remembering that president Clinton still holds the executive reins.

The other recent piece of important news was, of course, the so-called pre-Budget statement. It was Ken Clarke who tried to rationalise the Exchequer&#39s outpourings to the nation by merging the March Budget with the autumn spending review. Gordon Brown promptly separated them again and this year he has gone one better by delivering three financial statements. Brown is known for harbouring a delight in tinkering with taxes, so perhaps we should not be surprised that he enjoys also tinkering with the way in which the message is delivered.

He is a fortunate Chancellor. The embarrassment of riches he possesses, bolstered by revenues from the sale of mobile telephone licences, has allowed him to give away money. It represents a fair loosening of fiscal policy, so perhaps we should be relieved that the monetary policy committee decided not to react by putting up interest rates up when it met. But it will be monitoring the effects of higher public spending and tax giveaways very closely.

There was a welcome measure which will have implications for portfolio managers such as ourselves. The investment rules for Peps are to be brought into line with those of Isas. Clearly, simplification like this is a good thing, as is the merger of single-company and general Peps. Aside from anything else, single-company Peps can be dangerous. You cannot, for example, top-slice a successful holding. It is all or nothing if you wish to realise a profit and, of course, you then have to reinvest all into another single share. This can lead to some very unbalanced portfolios and investment decisions being taken for the wrong reasons.

Need it stop there? If Pep investment rules are the same as for Isas, why should Pep and Isa portfolios not be allowed to merge? This would have the ability of reducing administration costs for managers and the Inland Revenue, leading to lower charges. I hope on this occasion that good sense, which will benefit investors, will be allowed to prevail. In the meantime, at least we have a higher Isa limit for the foreseeable future.


Chase Fleming Asset Management – FF-US Strategic Growth Fund

Wednesday, 15th November 2000.Type: Sicav.Aim: Growth by investing in a growth style biased portfolio of US companies.Minimum investment: $5,000.Place of registration: Luxemburg.Investment split: Information technology 45 per cent, healthcare 19 per cent, consumer discretionary 14 per cent, industrials 8 per cent, financials 7 per cent, consumer staples 5 per cent, telecommunication services 1 per cent, […]

IFAs welcome five-year extension to Isa limit

IFAs and fund managers welcome Chancellor Gordon Brown&#39s decision to extend this year&#39s £7,000 Isa limit for the next five years.The move, announced in last week&#39s pre-Budget speech, will shelve original plans to reduce the limit to £5,000 for the tax year 2001/02, retaining the existing limits until April 2006. Investors can currently hold up […]

IHT strategy to hold clients&#39 interest

Aberdeen Asset Management has introduced the global champions fund to exploit the themes of globalisation, innovation and communication.Looking at how the fund fits into the market, Storer says: “Obviously, when equity investment is making people money, there is always room for new funds. But even if equities suffer a global wobble, there should still be […]

Chelsea capped and fixed loans are penalty-free

Chelsea Building Society is offering a new range of fixed and capped-rate mortgages.The fixed rates start with a 4.99 per cent mortgage fixed until 2003 up to 90 per cent LTV and a 5.49 per cent loan fixed until 2003 with no redemption penalty after the fixed period.There is also a 5.79 per cent mortgage […]

Welcome to The Brunner Investment Trust PLC

Welcome to the latest update for The Brunner Investment Trust PLC from the trust’s portfolio manager Lucy Macdonald. Market Review Global equities ratcheted higher throughout February, buoyed by optimism about global growth and corporate earnings. All regions advanced, although Japan tended to lag many other markets. In sector terms, healthcare, information technology, consumer staples 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