You would be hard pushed to believe they do, looking at how the FTSE 100 index performed last week. By the middle of the week, the 5,300 level had been regained. That was hardly a milestone but, with oil trading above $70 because of the disruption of supplies in the Gulf of Mexico, it was a remarkable performance.However, there was not a great deal remarkable about August. On average, world equity indices trended slightly lower. Of the developed markets, Japan delivered the best return, rising by 7 per cent over the month. But the best result came from Russia, where gains almost reached double digits. It is not hard to see why Russia proved such an attraction. Investment in the country’s oil infrastructure is starting to pay off and, as an oil-rich nation, it benefited from the star performer of the month. Of course, it is the after-effects of hurricane Katrina that brought about this rise. The vulnerability of US oil supplies has been brought into sharp focus. Not only is much of US oil production located in the Gulf of Mexico, directly in the path of the hurricanes that are formed in the Caribbean, but the ports which handle the imports from foreign countries and the refineries, which deal with both sets of supplies, are also clustered in this region. But financial markets in the US also appeared sanguine in their reaction to events. As the news unfolded, leading equity indices barely shifted. Nor were bonds affected by the likely cost of the disaster. The US bond market is the site of one of the strangest scenarios being played out. Despite protestations that growth is robust and further monetary tightening is inevitable, longer-dated bonds are pointing to lower interest rates, with the yield curve inverting over certain durations. Such a scenario does not help the business of asset allocation. But the appetite for equity investment is returning to private investors, as was revealed by last week’s sales figures for unit trusts. That is not necessarily an encouraging sign. Private investors are notorious for piling in at the top of the market. Still, the belief is growing that markets are capable of producing positive returns, notwithstanding the gains already delivered this year.
Have bacon sarnies and Resolve at the ready next Wednesday following the industry bash of the year, indeed, of the last 20 years – Money Marketing’s 20th birthday party – to be held at London’s Somerset House (above). The Diary expects to see many new friends and long-time cronies.
One of the frustrations in fund management is when a promising fund manager loses momentum and the success with a small fund gives way to mediocrity after strong asset growth. Sometimes this is ascribed to cashflow issues but sometimes the problem is more permanent, the process has simply run out of capacity.
Intelligent Finance is reducing its Offset 80 tracker mortgage two-year discounted rate by 0.4 per cent, to 4.99 per cent. The company says the move shows it going one step further than its decision earlier in the month to pass on the Bank of England’s 0.25 per cent base-rate cut to all its variable mortgage […]
SVM plans to set up a UK alpha fund this month with a go-anywhere mandate in response to market enthusiasm for large-cap stocks. The firm offers a UK opportunities fund run by David Stevenson, investing in small and mid-cap companies with scope for an improvement in value but SVM says it has noticed increasing de-mand […]
Fiona Tait – Pensions Specialist, Royal London The DGS is more than just a pretty website, it can help you to target those clients who are most likely to be affected by the proposed cut in the Money Purchase Annual Allowance MPAA). Clients who have triggered the MPAA When it was launched Royal London automatically uploaded […]
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The government will look at how individuals who exercise pension freedoms can be given “a further nudge” to take guidance, pensions minister Guy Opperman says. During the second reading of the Financial Guidance and Claims Bill in the House of Commons, Opperman shed light on how the government’s view on guidance is evolving. He made […]
It is that time of year again when the pundits clamour to deliver their predictions and the anti-pundits line up to proclaim their disdain for such utterances. So I will seize the opportunity to add to the largely pointless noise with some forecasts for our sector. My first prediction is that markets will continue to move […]
Old Mutual has called on the FCA to reverse its decision not to create a standalone equity release qualification for financial advisers. The call follows figures published today from the Equity Release Council which show a record quarter for equity release activity in Q4 2017. The total amount of housing wealth unlocked by over-55 homeowners […]