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Taking Stock

Our quarterly investment trust magazine.

Changing times – Investing for a new world order?

If this edition had a theme tune it might be something like Bob Dylan’s 1960s classic The Times They Are A-Changin’. Or at least that’s how it feels to many of us.

US protectionism, Trump-style diplomacy, North Korea, Iran, Syria, Russia, China, Brexit, Facebook, Cambridge Analytica. These have all been headline makers for 2018 so far, and some have undoubtedly been implicated in increased market volatility.

Around the world the political and economic power of nation states has always ebbed and flowed. Alliances are made and undone. And the fortunes of individual corporations rise and fall. But the question for investors today is, are we just looking at a variation on a theme of business as usual for the world’s established economic power base? Or is something else going on? Are we on the cusp of some more fundamental change in the world economic order?

Highlights:

  • Looking beyond the noise – Sam Morse, Portfolio Manager for Fidelity European Values PLC, explains why he continues to look beyond the economic and political noise, concentrating instead on the real-life progress of listed businesses in Europe, and their capacity for consistent dividend growth.
  • Why aren’t we Facebook friends? – The so-called FANG companies (Facebook, Amazon, Netflix and Google) have been favoured by many investors in recent years. But Alasdair McKinnon of The Scottish Investment Trust takes the contrarian view. He reviews why these tech behemoths may now be under threat.
  • In search of safety? – Earlier this year many investors flocked to ‘safety’ as the prospect of a US vs China trade war and tensions over Syria triggered a wave of unrest. Alliance Trust Savings’ Sara Wilson takes a closer look and reviews some of the routes traditionally used for managing downside risk.
  • Finding opportunities in the chapters of Brexit – Mark Barnett, Head of UK Equities at Invesco Perpetual, is not discouraged by the Brexit gloom and doom narrative apparently undermining confidence in the UK economy. He highlights three sub-plots that he believes, by driving and distorting UK markets, are creating opportunities for investors.
  • Still finding winners in the UK – Simon Gergel, Portfolio Manager at The Merchants Trust PLC explains why he sees the corporate appetite for UK PLC undiminished by Brexit and other political shocks, backing the Trust’s own view that the UK stock market is, in fact, one of the cheapest in the developed world right now.
  • Quality control: a re-evaluation of risk – As monetary policy becomes less benign to markets, Bruce Stout, Senior Investment Manager at Murray Income Trust PLC explains why it is so important for investors to ensure that companies are genuinely delivering high and sustainable earnings rather than trading on past success.
  • Appetite for disruption – With much of the developed world looking forward to longer life expectancy, Tony DeSpirito, Portfolio Manager for the BlackRock North American Income Trust plc explains why he believes that companies embracing disruptive technologies could be a valuable source of future income.
  • Growth from different perspectives – When assessing the growth potential of a company in a globalised world, the managers of Monks Investment Trust believe it is ridiculous to focus on headquarter location, or to assume it shares similar characteristics with others in the same sector. James Budden of Baillie Gifford elaborates.
  • The search for future winners ahead of the crowd – Lucy Macdonald, Portfolio Manager for The Brunner Investment Trust PLC considers the longevity of Investment Trusts, how successfully many have navigated the market conditions history has presented them and the potential benefits to investors of a robust, bottom-up approach to stock selection.
  • Tips for uncertain times – No one can ever be quite sure what political and economic developments will mean for markets. But there are some basic tips that can help you make the most of your money whatever the future may bring. Alliance Trust Savings’ James McCafferty explains.

Please remember the value of your investments and any income from them can go down as well as up and you may get back less than the amount you originally invested.

All investments carry an element of risk which may differ significantly. If you are unsure as to the suitability of any particular investment or product, you should seek professional financial advice.

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Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.