Stock Markets and Investments in the year ahead – Please forgive me if my blogs’ have become increasingly investment biased, many clients are worried about their investment and pension portfolios and I have had many requests to provide further blogs’ on this topic.
What is our view on investment markets? Well naturally we were pleased that we got the market outlook right in 2015 when we suggested moving away from investing in shares via collectives and increasing exposure to alternative investments, as this has saved our clients a great deal of money and heartache. We are a little less confident at this point in predicting what the market will do from here.
You may have got used to our increasingly gloomy predictions over the past six or seven months , at one point it seemed we where a voice in the wilderness, and I got no particular joy that the markets proved my predictions right.
I advise a company on their group personal pension and twelve months ago I told them to ensure they invested cautiously and stuck to their low risk profiles as the market would drop in 2015.
I reminded them of this recently and a lady gave me a strange look and said ” How did you know?”. I assured her that it wasn’t through any black art – after all the years that I have been advising clients – you simply get a feel for the markets. It helps of course that I get my information from informed and reliable sources.
Yet even now after the recent blood bath of the stock market collapse – some high profile IFA advisers are suggesting that all is well with the investment markets-astonishing!
My top tip last year was Tritax Big Box REIT – this is now at a premium of 10% and so should be avoided by new investors. However existing investors can buy additional units on the cheap as Tritax is undergoing a corporate action. As always take advice.
Looking ahead we prefer stock markets to bonds, European and Japanese equities appear to offer reasonable value, however the U.S. stock market appears fully valued. It is difficult to see where fixed income investments are going to go now, yes we dumped a great number of clients in these – simply to avoid the loss of value with equities, but I am increasingly unsure of whether to hang on in there- probably not.
We believe a safer bet at this point in the market is to consider Absolute Return Funds, however you need to be very careful with your fund selection. Also consideration could be given to Infrastructure funds and Property Funds that invest in prime property.
We mentioned that you should be careful with your fund selection as good fund managers are hard to find. Take the UK All Companies sector which has around 235 companies in it, most of these under-performed but 49 fund managers managed to achieve 50% or more over the last five years.
Finding a good fund is one thing but what if the manager moves elsewhere, do you stick with the fund or follow the manager?
That is a difficult question to answer.
As an advisory firm its natural that we have access to data not available to retail investors and before we select a fund we do our best to select a fund that will increase in value by selecting a fund manager who adds value using a measure called Alpha.
The selection of investment trusts is a bit of a dark art as there are so many variables to consider but always remember what Jim Slater (RIP) stated – “any investment Trust with a discount of 25% or more, must be seriously considered”.
If you are concerned about your investments you can always get in touch. http://wgn.f95.myftpupload.com/contact/