View more on these topics

Investment View

It is a tad ironic that at the time when any self-respecting fund manager should be watching his or her children windsurf at Rock or sipping pastis in a boulevard cafe in San Rafael, news by the bucketful descends upon the financial community with the interim reporting season setting off in earnest. The mortgage banks are usually first in the queue and this year they seem to be speaking with one voice. Sadly, analysts are uniform in their dismissive approach to this group of companies.

The likes of Abbey National, Alliance & Leicester and Halifax have had a tough old time of it of late. Bank shares have underperformed the FTSE 100, itself delivering scarcelystellar returns since the beginning of the year. Interest rates may have been rising but they remain low in the context of the last quarter-century while rising competition for mortgage business is shredding margins. This is a market which, with the best will in the world, is pretty mature. We have a high level of homeownership compared with continental Europe and, even if family units are becoming smaller in size, there is a limit to how much bigger the market can become. No wonder analysts have been almost bearish on this sector for some while.

The results delivered thus far have all been towards the top end of expectations. A buoyant economy and savage cost-cutting have helped but the fundamentals look as challenging as ever. You can understand why the likes of Abbey National are seeking to break into the small business market, where the old big four high-street names — Barclays, Lloyds, HSBC (Midland) and RBS (Natwest) – have a stranglehold. To think it was the lack of commercial lending, with its attendant credit risk, that made the building societies look so attractive when they elected to turn into banks.

With the growth of personal wealth expected to continue at a high level, acquiring funds under management through offering innovative personal finance products remains an attractive option for this part of the financial community. It is no wonder that Equitable Life is so much in demand. Surprising, too, the Halifax has ruled itself out of the running. Few in the IFA sector will mourn the passing of a mutual dedicated to direct selling and taking a rather “holier than thou” approach to business generation. The windfalls promise to be meagre although the level of interest could deliver some surprises on the upside.

Upside is where we need surprises in this stockmarket. We need to post a rally of at least 10 per cent if we are not to end the year lower than we began. My friends at Aberdeen Asset Management are generally optimistic. They are experiencing a steady and broadening flow of money into their funds, suggesting the savings message has struck home. They believe this is to be an industrywide experience, which will accentuate the attractiveness of asset management businesses. How foolish of me. I should have tackled them on their prognostications for the demutualisation of Scottish Provident. Now, that is a situation where I have more than a passing interest.

The City get-together which aimed to celebrate the life and passing of Peter Hall was no sombre affair, as befits a financial services professional who lived life to the full, despite severe underlying medical problems. Stories abounded – fishing, drinking, jokes – with only a tinge of sadness for those who acknowledged he had failed to make his half century and would have had more to contribute. Peter worked for a number of leading investment management houses, notably Save & Prosper and Baring, before electing to do his own thing – a brave decision in an industry with a notoriously short memory. There were enough of his friends present last Friday to show that individuals, at least, remember longer. And collectively we celebrated his memory to the full.


Virgin on the verge of selling through all IFAs

Virgin is considering offering its products through comm-ission-based IFAs because it believes the industry has cleaned up its act.The move follows the successful completion of a Virgin One pilot with Maddison Monetary Management.Virgin One managing director Jayne-Anne Gadhia says consumers need IFAs to guide them, especially using the internet. Although critical of IFAs in the […]

Friends Provident adds critical illness cover and waiver of premium benefit

Friends Provident is adding critical illness cover and waiver of premium benefit to its level term assurance and decreasing term assurance homebuyer protection plan.The critical illness element covers the core range of illnesses, including heart attack, cancer, stroke, major organ transplant, multiple sclerosis, kidney failure and coronary artery bypass surgery.The waiver of premium element contains […]

Franklin Templeton to offer fund prices via Wap

Fund manager Franklin Templeton is introducing Wap sites to keep investors up to date with its fund prices.The technology allows investors to access information via their mobile phones.Franklin Templeton&#39s menu-driven sites will be tailored to be user-friendly, with fund prices updated on a daily basis. The sites are designed to increase speed and allow for […]

Home a loan in a halfway house

The Treasury is not renowned for its finger on the pulse assessment of the personal finance markets but the revelation last week that it does not know what a mortgage is has to be one of the corkers of this administration.Joking aside, it is a bit worrying that a Government decides it will regulate a […]


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