View more on these topics

Investment view

After what seems far too long a period of leading a somewhat introspective life, last week found me back on my feet addressing a group of IFAs. On this occasion, I was part of a double act, with Baring chief investment officer Michael Hughes providing the serious meat for consumption. Needless to say, I was on my mettle as a consequence.

In preparation, I consulted Gerrard chief economist Simon Rubinsohn. Perhaps it was because he had only just returned from holiday but he was remarkably upbeat, something I have found increasingly difficult to achieve as the FTSE 100 index fails to make any real progress. Overall, his view was that, while we should not expect fireworks, the second half of the year should be better than the first and he considers that the index should finish the year higher than it started.

His belief that equities should outperform bonds accor-ded with Hughes&#39 scenario. It worries me when there is too much agreement around but I must say I found the arguments convincing. The rise of Chinese economic power should do much to balance the decline in the traditional industrial nations. Witness the behaviour of scrap iron. It has been soaring in value due to Chinese demand.

Little wonder in circumstances like these that Baring prefers Eastern equities to Western equities. Moreover, the expectation is for real assets to outperform financial assets, according to Hughes. It seems as though a bout of selective inflation encompassing, among other things, commodities, will provide opportunities for investors at a time when the recovery in economic activity in the developed world is slowing, in part due to the dearer cost of oil. Inflation, though, was unlikely to re-emerge as a serious problem, in Baring&#39s view.

Catching up with the views of other investment commentators, it is hard not to reach the conclusion that many are struggling to say anything overly positive for the market as a whole. The best I can glean is that current conditions favour stockpickers. With so few available that have a long track record, it is little wonder that investors are increasingly interested in structured, guaranteed and “alternative” investments, which naturally includes property. This is one area that Hughes expects to deliver superior terms as a “real asset”.

However, even house prices appear to be stalling, according to the most recent survey from the Royal Institute of Chartered Surveyors. The housing market has continued to del-iver positive returns during the last quarter overall but the rate of increase has slowed. More important, the performance achieved in London and the South-east has at best been a standstill, at worst a modest decline. This may simply be a straw in the wind but we need to watch the health of the residential property market closely.

The real indicator that the game is up in property will, of course, come from a sharp reduction in buy-to-let purchases. Although there is no sign that this is starting to happen, anecdotal evidence suggests that property sales in the home counties have ground to a halt. This may simply reflect temporary nervousness as homebuyers reflect upon the additional costs that higher interest charges will impose. But even a price standstill could deter buyers from adding to their rental portfolios and a ready market for those wishing to move will dry up.


Single minded

Why don&#39t you have a poll of readers and ask them if they would vote for a merger of Money Marketing and Financial Adviser? The advantages, as I see them, are many. Instead of having to read two weekly trade papers, busy IFAs would only have to read one to get all the news. Product […]

Clarkson Hill teams up with Mortgage Alliance

The Clarkson Hill Group is teaming up with The Mortgage Alliance to create a new white label mortgage club. Clarkson Hill Gold will be open to Clarkson Hill&#39s 120 mortgage advisers who can access a range of services including a whole of market option of more than 40 lenders from leading firms, conveyancing services and […]

Release business to hit £1bn

Over £1bn of equity will be released from homes this year, according to the Key Retirement Solutions UK equity-release monitor report. The value of equity-release plans rose by 7 per cent to £289m in the second quarter of this year, from £270m in Q1. The total value of plans sold in the first half is […]

Legal & General – Capital Protection Plus 6

Type: Guaranteed equity bond Aim: Growth linked to the performance of the FTSE 100 index Minimum-maximum investment:£500-no maximum, Isa £7,000 Term: Six years Return: The greater of 26% of original investment or 50% growth in index Guarantee: Original capital returned in full along with 26% growth at end of term regardless of index performance Closing […]


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