‘The next financial crisis.’ That’s the headline of an article in the Sunday Times Business section, which asks whether central banks’ response to the global crisis and stock market collapse of 2008 may have “lit the fuse for a new crash”. In essence, it’s all about QE and, whatever the rights and wrongs of it, whether the world can go cold turkey and wean itself off cheap money – without triggering a new collapse. There are no answers of course, just a reminder that QE is reducing in the US, has been shelved in the UK and is expected to end in Europe by the end of the year and all whilst interest rates have risen and are expected to rise further.
The Sunday Times Money section leads with a report on how posts on social media platforms such as Facebook or Twitter can have financial implications if they’re seen by crooks, insurers or divorce lawyers. It offers wise advice to be careful about what we post, as there can be financial consequences. We’ll spare you the details here as its unlikely to be of widespread interest, but if you want to know more you can read the article.
Ian Cowie is back at his desk writing his Personal Account column in the Sunday Times Money section. As always, Cowie makes some interesting points. This week he is reflecting on the 10 year anniversary of the collapse of Lehman Brothers, with three tips for coping with stock market volatility. He reminds us that many currently fear that a stock market correction may be imminent – himself included – but that it’s not a reason to be fearful of investing. His tips are all sensible as you’d expect. Point one is not to get too caught up with short term volatility – and to focus on the five to ten year horizons. Secondly, his advice is to spread risk and diversify and thirdly if you’re “in doubt do nowt” and wait for the storm to pass rather than panic sell.
It is the activities of rogue heir hunters who are in the Sunday Telegraph’s spotlight this week. The warning is that there has been an influx of amateur “heir hunters” who are looking to make some quick money and that people should be on their guard if contacted by such individuals. The article reports that the problems involved range from dubious expenses being charged, taking short-cuts in research as well as flagrant fraud in some cases. It’s unlikely to be of huge interest to advisers but if you do want to know more then you know where to look!
Writing in the Financial Mail on Sunday, Jeff Prestridge has an interesting interview with Terry Smith, founder of Fundsmith. Smith is based in Mauritius, running the business from the island paradise. The company is set to launch the Smithson investment trust which will invest in a mix of small and medium-sized global companies. Smith talks to Prestridge about life on the island, how he runs money and the business – and how the new trust will be run by two new recruits. As Prestridge explains, unlike previous Fundsmith offerings, Smithson will not be managed by Smith. Instead, Will Morgan and Simon Barnard have been brought in from Goldman Sachs to run the trust although, as Prestridge says, nothing is done at Fundsmith without Smith knowing about it – and approving it. Whether or not the new trust will live up to its billing, only time will tell, but the interview makes for good reading.
Also in the MoS, the fund focus column looks at Baillie Gifford UK growth Trust. Previously known as Schroder UK Growth, the trust’s board took the unusual step earlier this year of sacking the incumbent manager following a sustained period of underperformance against similar funds. Baillie Gifford were installed as the new managers.
The MoS reports that since the end of June, the new managers – Iain McCombie and Milena Mileva – have overhauled the portfolio. Of the 52 stocks inherited from Schroders, all bar a handful have been sold with the result that they will run a more concentrated portfolio of growth companies. The change has triggered a sharp reduction in the discount that the shares trade at – double figures last year and now down to around 5%.