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Investment view

I was encouraged to read in last week&#39s outpourings from Lombard Street Research that consumer demand in the UK is continuing to forge ahead. Apparently, this particular measure of the economy rose by 1.3 per cent in the third quarter alone. Given that mortgages are at a 40-year low and that there is usually a lag between cheaper money and any stimulus it may have on consumer spending, there seems little reason to believe any slowdown is likely. Indeed, demand for credit is growing unsurprisingly fast. None of this spells good news for inflation but it suggests the Chancellor may not have been over-optimistic in forecasting only a modest slowdown in domestic economic growth.

Of course, the big question mark is now the extent to which New Labour will be returning to tax and spend. If they do, we should not be overly surprised. Gordon Brown has turned out to be a canny remover of money from our wallets, with the additional tax on pension funds that came about through the ending of advance corporation tax a prime case. Few noticed quite what he was up to at the time but in the end we all pay.

We hit the festive season with more things happening around us than is fair for this time of year. Another Beatle has shuffled off this mortal coil. At my age – when pension taxation suddenly becomes a personal issue – such news simply reinforces images of mortality. If the stress of trying to make money in volatile markets does not get you, there is that nasty feeling that the new super-regulator will.

December is the month when we often benefit from a year-end rally. This is not Christmas spirit of the liquid variety getting the better of investment managers, rather a reflection of the fact that many investment funds have a year-end – or at least a quarterly reporting period – that finishes on December 31. Fund managers look at their portfolios and consider carefully how clients will react when they receive their year-end valuation. There is a tendency to undertake some window-dressing and, given that most institutional funds enjoy a positive cashflow, this can lead to money going into the market. Not so last year, though, when December recorded one of its rare down periods and you could not help wondering if portfolio managers were dumping stock they had no wish to appear before their clients or trustees early in the new year.

This year is harder to call. There is greater confidence in the market now. Witness the way in which bad news is largely being shrugged off. The market is higher than just before the terrorist attacks in September. In part, this is a natural reaction, given the monetary stimulus. But there will be plenty who, having seen the bounce from the September lows, will prefer to sit on their hands and wait to see real evidence that the US recession is about to come to an end. I think it is even money whether the market finishes December higher than it began or not.

I am entering the party season with some trepidation. Seldom has my diary been fuller. A conference here, a seminar there. Perhaps it is that feeling of vulnerability that tends to accompany news of a death of someone of a similar age that led me to turn on my heel and leave the highly impressive queue boarding the Money Marketing boat last week. It will have been as excellent a bash as ever – and I apologise to my hosts for not having given notice of my absence, as if you would have noticed, given the numbers I saw boarding. But the knowledge that my alarm was set for 4.45am made me take an uncharacteristically sensible decision and opt for discretion. Ah well, there&#39s always next year. And I wonder where the market will be then.


Cofunds buys its back office from M&G

Cofunds is to buy its back-office from M&G for a consideration of £3.7m next week.M&G was awarded the Cofunds administration contract last August, and will now hand the operations over to Cofunds. The deal will see the 200 admin staff switched onto Cofunds’ books, but they will remain located in Chelmsford.Cofunds chief executive Sam Jensen […]

Baillie Gifford – Investment Grade Bond Fund

Friday, December 7, 2001.Type: Oeic.Aim: Income by investing in investment grade fixed-interestsecurities.Minimum investment: Lump sum £1,000.Investment split: 100 per cent in investment grade fixed-interestsecurities.Yield: 5.5 per cent.Isa link: No.Pep transfers: No.Charges: Initial 3.5 per cent, annual 1 per cent.Commission: Initial 3 per cent, renewal 0.5 per cent.Tel: 0800 9174752.

Sedgwick advises on Equitable AVC action

Sedgwick Independent Financial Consultants is offering an independent financial counselling ser-vice to company employees with Equitable Life additional voluntary contribution schemes.The IFA says employers and trustees are being put under pressure to provide advice but the decision whether to stay in Equitable Life or transfer and face a penalty is often left to individual scheme […]

Thomas in attack on PIA over regulation

FSA head of regulatory events Lindsay Thomas has hit out at the PIA, criticising its emphasis on making IFAs write everything down to prove they are compliant.In the Money Marketing IFA UK Conference&#39s centrepiece debate, Thomas said the FSA and industry must agree on what regulation is trying to achieve.He said: “Requiring everyone to write […]


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