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David Cowell: show me the dividend cover…


Footsie for income? Look at the dividend cover, there isn’t any:


Source: Thomson Reuters, SLI, Trustnet

SCM Private has racked up £2.5 million of cumulative losses, according to Companies House. They have been in business for five years now and the penny doesn’t appear to have dropped. They have been vocal supporters of low cost investment management but perhaps it’s time they realised that even the HMRC believe that business is defined as an activity carried out with a view to profit. At what point will HMRC decide that their business is a hobby and refuse tax relief? I can think of a number of much larger businesses which are so-called wealth managers, who may need intensive care. It makes one wonder if doing business with them is a good idea. Due diligence is a wonderful thing.

BoJ governor Haruhiko Kuroda has pledged to cap 10-year government bond yields at 0%, which means the government is promising to buy any bonds offered for sale at that price, the FT reports. The BoJ will maintain its government bond buying programme in line with the current pace of ¥80trn a year, but will buy fewer very long-term bonds, which should allow the yield curve to steepen and make it easier for banks to earn profits as they borrow short and lend long.

While Albert Edwards, SocGen’s head of strategy,  commends the UK’s ‘excellent record’ of migrants thriving in higher education, which typically spills across to employments opportunities, he is disturbed by the lack of opportunity in the EU. ‘Let’s not beat about the bush: the educational and job prospects for the children of migrants in many eurozone countries are disgusting, disgraceful, and frankly dangerous,’ he said. He shows a chart which I agree is damning as to the treatment of migrants in most EU countries. And old drunken dive-bomber has the cheek to castigate the UK.

In most discussions of the economic implications of a “hard Brexit,” the focus is on the long-term damage that would be done to the UK; particularly in Britain’s financial sector.

As the FCA reported on Tuesday, nearly 5,500 British registered companies use “passports” to access the EU market. Passporting allows banks, insurers and asset managers to operate smoothly across the EU from a base in the UK and the lack would do significant damage to financial services, which account for a third of the UK’s services exports to the EU.

However, it is important to remember that a hard Brexit would not just harm UK. As the Financial Times points out in an analysis of the passporting regime, a lot of damage would also be done to EU companies doing business in the UK.

It somehow reminds me of Fred Trueman’s method of painless dentistry.

Aegon is continuing to charge clients the same level of fees despite switching them from an active to a passive North American fund. I would be interested to hear their rationale. Perhaps it is the worm turning and the charge to lower fees has reversed. As they say in Yorkshire, you don’t get owt for nowt.

Husband to wife: “What have you been doing with all the grocery money I gave you?”

Wife to husband: “In the bedroom is a full-length mirror. Go in there, turn sideways and look in it!”

Have a good weekend.

David Cowell, Director, Myddleton Croft Investment Managers

Leeds, 0113 274 7700