Ihope I am not tempting fate by suggesting that 2005 has been a good year before it has ended but I think it is probably fair to say that markets have surprised yet again.Notable rises have come from the more esoteric areas. For example, the United Arab Emirates’ Dubai index has risen by 209 per cent while the Egyptian index is up by over 146 per cent. Russia has continued its excellent run with a rise of 79 per cent. Some of these performances make the major markets look pedestrian but double-digit gains in the UK and Europe will help to bolster most portfolios. The one major market which has been disappointing is the US, hit by a double whammy of rising interest rates and oil prices, despite strong earnings growth from companies. The best-performing sector has been oil and resources. Fund managers who felt this sector was overvalued or off-limits because of yield criteria have mostly been left behind. Indeed, traditional income funds which follow strict yield criteria have been left out in the cold. Funds such as Newton higher income, New Star high income and Schroder income have had a harder time this year. Some UK growth managers with little exposure to this sector have also suffered, including Stephen Whittaker at New Star UK growth and Carl Stick at Rathbone special situations. But lack of exposure has not been fatal to everyone. Neil Woodford, with a huge weighting in utilities and tobacco but with no oil stocks whatsoever, has continued to perform with his income funds. Not surprisingly, the best unit trust of the year has been Investec’s global energy fund although, when I last checked, CF junior oils was not too far behind it. Latin American funds also have also done well although they are few and far between as so many companies closed their funds when the going got tough years ago. Nearly all the unit trusts have made positive returns, with only 20 making negative returns. These surprisingly include a number of bond funds. The fund manager merry-go-round continues, with well over 100 having moved. Against a background of over 2,000 funds, I suppose I should not begrudge this. However, brokers and clients feel that many managers care little about the people who pay their salaries – unitholders. Leigh Harrison’s move from Credit Suisse to Threadneedle was especially disappointing as so many of us decided to keep the faith and give him every chance. One welcome move was the return of William Littlewood, formerly of Jupiter income, to run a global hedge fund for Artemis. It is a shame he will not be truly available to retail clients but what a tremendous vote for Artemis, which continues to attract high-calibre managers, including James Foster and Alex Ralph from Foreign & Colonial earlier in 2005. Artemis remains for me the group of 2005, continuing an excellent run of performances despite attracting huge amounts of money. Another manager making the news was Anthony Bolton, with Fidelity’s proposal to divide his special situations fund into two. It seems strange to me that while Bolton feels he can continue to run a big fund, Fidelity has little confidence in any of its other managers to to do the same. I remain against this proposal on the basis that it adds extra complication to what was a straightforward decision of fund manager succession. This year saw the demise of DWS in terms of its retail proposition. It is an indication of how tough the retail environment is that a major player decided to withdraw from the market. Others have been trying to reinvent themselves. Henderson, so much loved of brokers in the 1980s, has been through a bear market, mainly of its own making, from 1987 to present day. But there is an enormous amount of change going on underneath. Perhaps for the first time in over 15 years, Henderson might just make a successful comeback. Big groups have not been the only ones to have problems. Both SVM and Neptune suffered an outflow of managers, showing even boutiques have problems in retaining staff if incentivisation and the working environment are not good enough. Venture capital trusts have had their biggest year ever on the back of income tax reliefs but so far the Chancellor has not announced what he may do in the next tax year. With pension legislation for A-Day still not fully known, it is a wonder that private business can operate when we have a Government seemingly on a go slow. This Government has proved none too helpful to our industry but then how can we expect it to understand savings when it has borrowed and spent more than any other Government in living history? One asset class continuing to draw huge amounts of money is commercial property. At least three major groups are launching overseas property funds, presumably on the basis that UK commercial property is now overvalued. Ten years ago, no one was interested in this asset class but now everyone tells me what a great diversifier it is. I remain of the opinion that UK commercial property is most definitely overvalued and is an accident waiting to happen. I wonder whether in a future investment review we will be talking about how clients’ expectations have been dashed, particularly if their advisers only talked of short-term past performance. Will they be having trouble extracting their money out of commercial property if it really hits the skids?