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Daily Mail
6 days ago
- Business
- Daily Mail
Sun is shining on the Footsie - and YOU can cash in too..
The UK stock market has sprung a surprise this summer. Even against the background of gloomy GDP and other economic data, the FTSE 100 index – regarded as the bellwether of our economy – has soared by 11 per cent this year to reach a record high of 9222. The index has outpaced its US counterparts, staging a bounce back from its April 'Liberation Day' low of 7544 when tariff announcements sent shares tumbling. The FTSE All-Share index, which covers the top 600 companies quoted in London, has also executed a surprising recovery. In the face of the downbeat stream of news on debt, employment, tax increases and much else, many investors have withdrawn billions from UK funds this year. But the Footsie's feats may be causing some of them to reassess this strategy. Britain may face challenges, but nowhere is exempt from economic and geopolitical angst at present. As Helena Pomfret, of wealth manager Evelyn Partners, points out: 'The heightened levels of uncertainty across the world mean it's important to stay diversified.' A foray into UK markets is not an insular approach. The members of the FTSE 100 earn about 80 per cent of their revenues overseas, but the FTSE 250 and FTSE 350 are more domestically focused, spreading your risk. Laith Khalaf, of broker AJ Bell, argues that UK shares – particularly those in small and medium-sized companies – are 'pretty attractively valued just now'. He adds: 'When an index reaches a record high, that can be a signal for caution. But in the case of the Footsie, it's been slow to get there.' If you are contemplating forming a new and deeper relationship with the UK markets, here are some of the companies and funds to back. MAKE THE MOST OF MERGER MANIA One compelling reason to back UK PLC is the expectation that the takeover bonanza will continue. During the first six months of the year, there were £74billion-worth of bids for British businesses, driven by the view that their shares were trading at 'an extreme discount', as one expert put it. Companies such as the banknote printer De La Rue have been acquired by US private equity groups. Others including Alphawave, Deliveroo, Just and Wood Gp were snapped up by 'trade buyers' – firms in the same industry. Earlier this month the precision instrument maker Spectris finally succumbed to the largest US private equity player KKR at a price of 4,175p-a-share, 96 per cent above the price when predators began to circle in June. But it is likely that some companies will rebuff approaches they regard as opportunistic. In June, Craneware – which supplies software to US hospitals – rejected a £939m 2,650p-a-share bid from US private equity group Bain. Craneware shares stand at 2,270p. But analysts – who rate the stock a 'buy' – have set an average target price of 2,844p, suggesting that Craneware's bosses may have been justified in their stand. As a result of the frenzy, more and more companies are seen as potential targets. The list includes footwear brand Dr. Martens; Greggs, the sandwich-maker famous for its regular and vegan sausage rolls; Paragon, the bank; and Phoenix, the insurer. Such has been the gossip about a bid for oil giant BP that Shell was forced to deny that it was sizing up its rival. BP seems vulnerable because the US activist investor Elliott is using its 5 per cent stake to agitate for cost savings. But a decent set of first-quarter results and an exploration success seem to have improved the outlook, causing Maurizio Carulli, global energy analyst at Quilter Cheviot, to remark that 'the speculation may just end up being a blip in BP's long and storied history'. If you're tempted to back this great British business, analysts are targeting an average price of 450p, against the current 421p. The highest target price is 522p. TRY TAKING A DEFENSIVE STRATEGY Some private investors who were wary of the UK markets made an exception for defence stocks and have been richly rewarded. The FTSE All Share Aerospace and Defence index has risen by 71.9 per cent since January, driven by armaments spending uplifts in the UK, the EU and the US. If you are venturing into this sector, there may be further upside. Since January, aircraft engine maker Rolls-Royce has soared by around 93 per cent to 1,074p. But analysts have set a target price of 1,440p, even before the company's vow this week to become Britain's biggest firm through the development of small nuclear reactors to power artificial intelligence (AI) data centres. Shares in Babcock, another major defence contractor, have advanced by 96 per cent to 995p this year. But it too continues to be seen as a 'buy' with an average target price of 1,153p. If you are looking to take a stake in defence, but also want a spread of other UK companies, the top holdings of the Zeus Dynamic Opportunities fund encompass Rolls-Royce but also Chemring, another key defence group. At 535p, its shares are 65 per cent higher than in January, but analysts still consider them a 'buy' with a target price of 573p. Among Zeus Dynamic's other stakes are BP and Tesco – whose shares stand at 413p, 13 per cent higher than in January. Analysts believe the supermarket has further to go, however. Another option for exposure to Rolls-Royce and Tesco is the Ninety One UK Special Situations fund. GO FOR GOLD AND INCOME Going for gold has been another lucrative strategy this year. The metal's price reached a record $3,500 in April. Gold has regained its safe-haven status and is also in demand from the central banks of nations that do not wish to hold reserves in dollars. Fresnillo is a Mexican gold and silver miner, but the firm has been listed in London since 2008. Although its shares have soared 183 per cent this year, they are still regarded as a buy, given the forecast that gold could climb to $6,000 by the end of Trump's presidency. But there is also a focus on Fresnillo's dividends, another under-appreciated aspect of backing Britain – the income available at a time when deposit account rates are becoming less generous. The FTSE All-Share's constituents are expected to distribute about £91.3billion in dividends this year. In addition, they have already made £54bn in share buybacks, another form of returning cash to shareholders. The FTSE All-Share's dividend yield is 3.37 per cent. This compares with 1.21 per cent for the US S&P 500. To make the most of this mix of potential growth and income, Khalaf suggests three funds. They are: Fidelity Special Values, which seeks out unloved companies poised for a turnaround; Liontrust UK Growth, which favours mostly Footsie members; and the iShares UK Equity Index fund, a 'cheap and cheerful' way to take a stake in UK PLC. Pomfret's recommendations are: Artemis UK Select; Evenlode UK Income; and Redwheel UK Equity Income, which invests in BT, BP, Marks & Spencer, NatWest and Shell. The share prices of renewable energy trusts were badly hit when borrowing costs surged. But there is consolidation in the sector and the dividend yields are attractive. SDCL Energy Efficiency offers a 10 per cent yield. The hazard of investing in these trusts is considerable. But Susannah Streeter, of Hargreaves Lansdown, says they are among the long-term bets on Britain being taken by family offices that manage the money of the ultra-wealthy. Net Zero policies may be facing pushback, but they will continue to be implemented. I have been increasing my UK bets for years – to diversify, but also to do my bit for domestic growth and entrepreneurialism.
Scotsman
18-06-2025
- Business
- Scotsman
Does it still make sense to invest in AIM 30 years on?
There were high hopes when London's Alternative Investment Market was set up, so how is it doing? Adrian Murphy reveals all Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The world was a very different place when London's Alternative Investment Market (AIM) launched during June, 1995. Perhaps, then, it should be no surprise that three decades on there are legitimate questions over its future viability and its suitability as an investment proposition. Originally conceived as a sub-market of the London Stock Exchange, AIM's main purpose was to provide smaller, potentially high-growth companies with access to capital without the cost and regulatory requirements attached to listing on the main market. Later, AIM shares were given 100% exemption from inheritance tax (IHT) provided they were held for two years, in a bid to incentivise investors. Advertisement Hide Ad Advertisement Hide Ad But, it is difficult to say AIM has been a massive success on either front – particularly with the IHT relief being reduced to 50% from April next year. While the likes of Ladbrokes owner Entain have graduated to the main market over the years, the number of companies doing likewise has been diminishing. And AIM itself has been shrinking – the index had nearly 1,700 constituents at its peak, but today that has fewer than 700. AIM was conceived as a sub-market of the London Stock Exchange (Picture: Henry Nicholls/AFP via Getty Images) From an investment perspective, returns have also been poor – the FTSE AIM 100 sits far below its 2007 and 2021 peaks, and has delivered paltry returns over most timeframes. This has all but negated the IHT benefits offered to investors – in the majority of cases, you would have been better off investing elsewhere for a better return and paying any IHT due. Part of the reason for these performance issues is the profile of the companies on AIM. Their size has meant that trading isn't necessarily daily, leading to liquidity issues and the lower barrier to entry inevitably makes them riskier investments – in turn, rendering many unsuitable for the average investor and even less so for those in later life. Equally, investing in AIM means taking a highly concentrated bet on the UK. Combined, all UK indices account for just 3% of the global market – and the FTSE All Share represents that vast majority of that figure. Advertisement Hide Ad Advertisement Hide Ad While small-cap companies have tended to outperform their larger peers over the long term, there are other fund and ETF options which can provide that type of exposure without the risks that come with AIM – whether specifically in the UK or globally. Even the FTSE Small Cap could prove a more suitable choice, with superior historical returns – although these are no guide to future performance – and more diligence over the companies of which it comprises. There are more sustainable alternatives to AIM, says Adrian Murphy For investors with an eye on passing down wealth, capital preservation and income should be front of mind. And there are businesses that invest in infrastructure, renewable energy, and smart metering that may not have the allure of fast-growing companies, but have similar tax advantages and provide stable levels of income without the downside risk. If you're investing with IHT in mind, there are more sustainable alternatives to AIM. Weigh up your options and remember that the tax tail shouldn't wave the investment dog – don't let the opportunity to reduce a tax bill sway you away from a more suitable choice for your circumstances, which would ultimately more than likely deliver better post-tax returns in the long term.
Telegraph
01-05-2025
- Business
- Telegraph
The ultra-wealthy invest through family offices. Here's how to join them
Questor is The Telegraph's stockpicking column, helping you decode the markets and offering insights on where to invest for the past six decades. The concept of a family office can be traced back to Roman times, but the more modern versions originated in the 19th century with the likes of the Rockefellers, the Morgans and the DuPonts. Managing wealth over multiple generations requires an experienced team, a disciplined investment process, a long-term perspective and a capital preservation mindset. Luckily, this is readily available in the UK's investment trust industry – and you don't have to be a Rockefeller to benefit. Caledonia Investments (CLDN) and RIT Capital Partners (RCP) share similar DNA, employing investment approaches designed to both preserve capital as well as generate real returns over medium to long term. The ideal outcome for any investor is to participate in the positive returns of up markets but avoid the worst losses of down markets. Each of these trusts has demonstrated an ability to deliver attractive total returns – the five-year annualised net asset value (Nav) total returns of 13.6pc and 9.3pc for CLDN and RCP, respectively, have comfortably outperformed inflation and compare favourably with the 11pc annualised total return from the FTSE All Share index over the same period. Importantly, these returns have also been achieved with significantly lower volatility than broader equity benchmark indices. Examining the long-term performance of these trusts reveals their 'secret sauce'. Over the past decade, this column's analysis of monthly returns compared to the FTSE All Share index shows that these multi-asset, risk-aware strategies have captured between 50pc to 60pc of the index's positive returns while only experiencing 10pc to 30pc of the negative returns during down markets. This ability to navigate up and down markets is crucial, as it not only helps to protect capital, but also allows for market participation. CLDN has achieved this through a focus on exposure to high-quality companies in its global portfolio, and the blend of public and private equity. RCP also benefits from allocations to both public and private equity, but also employs 'uncorrelated strategies', including credit, government bonds and real assets as important diversified. Both investment strategies are naturally risk-averse, with management teams carefully monitoring the interaction between the different components in their portfolios and actively allocating capital to optimise risk and return. CLDN is a self-managed investment company overseen by Mat Masters (chief executive) and Rob Memmott (chief financial officer), and benefits from specialist teams focused on each of the portfolio's key asset classes of public companies, private capital and private equity funds, which each enjoy roughly equal allocation. The trust has a successful track record of delivering value from its private capital portfolio, generating a 12pc annualised total return over the past decade and realising £1.1bn in proceeds since 2012, with notable investments in 7IM, Park Holidays and BioAgilytix – and there is plenty left in the portfolio to excite: Stonehage Fleming, the largest independent multi-family office in EMEA; AIR-serv, a leader in air, vacuum and jet wash machines; Cobepa, a Belgium-based independent investment company; Butcombe Group, an inns and drinks business; and DTM the leading provider of outsourced tyre management services. RCP is also a self-managed investment company, overseen by Maggie Fanari (chief executive) and Nick Khuu (chief information officer), both of whom are experienced multi-asset investors. RCP has a larger exposure to public companies, comprising 44pc of its portfolio, and a similar weighting in private investments (33pc), but also has a quarter of its capital in uncorrelated strategies. The public equity portfolio includes exposure to opportunities in China and Japan, biotech firms, and a range of small and mid-cap companies. RCP has also been successful in generating value from its private investments. Notable recent portfolio events include the disposal of Xapo Bank, the listing of Webull and the takeover of Wiz by Alphabet. We see potential for this part of the portfolio to be an important growth driver, particularly in holdings Motive (leading software for the logistics industry), Kraken (cryptocurrency exchange) and Epic (category-leading US electronic health records business). Both trusts not only boast strong risk-adjusted returns, deep expertise and well-balanced portfolios, but also offer dividends. CLDN has increased its dividend for 57 consecutive years and currently yields 1.9pc, while RCP yields 2.1pc and plans to raise its 2025 dividend by 10.3pc. Wider than average discounts offer an attractive entry point for these strategies, in this column's view. Ten years ago, CLDN and RCP were trading on 16pc discount and 1pc premium, respectively, but since 2022, these discounts have widened dramatically – CLDN currently trades on a 32pc discount, while RCP is at a 27pc discount. In keeping with the wider trend across investment trusts, both CLDN and RCP have been actively buying back their own shares. In our view, these discounts are out of touch with the reality of the performance generated by these two portfolios, the future value drivers and the quality and experience of the teams. We believe this is a great opportunity to appoint your own family offices and benefit from a truly long-term perspective at a very reasonable price point. RIT Capital Partners Questor says: buy Ticker: RCP Share price: TBC
Daily Mail
24-04-2025
- Business
- Daily Mail
How to take advantage when stock markets are down: Financial planning moves that pay off
Stock markets have taken a tumble off the back of Trump's flip-flopping tariff announcements. While global markets have regained some ground, uncertainty remains. This was highlighted when Trump knocked US stocks again by calling Federal Reserve Chair Jerome Powell a 'major loser' for not lowering US interest rates. Investors, understandably, might be feeling a little sorry for themselves and their holdings, while pension savers too may have seen thousands wiped off their pots. The world's leading stockmarket, the S&P 500, is down 8 per cent this year, while the FTSE All Share is flat for 2025 but down 5 per cent on its early March peak. But such a market downturn also provides opportunities to make the most of a bad situation. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'Market downturns are times for steely resolve, and sticking with your long-term plan, but this doesn't mean you should do nothing at all. 'There are opportunities in down markets to make a few changes that can not only improve your investment prospects, but could help you save tax too.' Lump sum boosts With stock valuations dipping in recent weeks, sharp investors might want to take advantage of lower prices currently on offer. Stock market indices have recovered some ground but there are still many individual stocks, funds and investment trusts trading well below previous levels. The new tax year having just kicked off, so investors also now have the opportunity to make the most of their refreshed Isa and Sipp allowances. Renewed Isa allowances mean that Isa holders can invest £20,000 in stocks and shares via their Isa and up to £60,000 via a self-invested personal pension. Investing a lump sum at the start of the tax year can also offer better returns over time compared with investing a lump sum at the end of the year. Coles said: 'There are plenty of investors who view market falls as a buying opportunity. It's one reason why Hargreaves Lansdown had a record day of trading in the midst of the tariff trauma on 7 April, and most of those trades were people buying into investments.' Meanwhile, Lifetime Isa users can make the most of the 25 per cent top up offered by the government, while pension holders will also get rax relief. Coles said: 'Both will give you more bang for your buck, putting more money into the markets on day one. It means you can buy more investment units at a lower price and benefit more from market gains.' Protect your investments When investing, an Isa or pension wrapper offers protection from tax charges that you could face if your returns go beyond the annual dividend tax or capital gains tax allowances. With the new tax year's allowances in play, it can be a good time to shift any investments held outside of these wrappers into your shielded accounts. This transfer can be done using the Bed and Isa process which sees your assets sold outside of the wrapper and repurchased within, making them protected from any future tax liability. Coles added: 'You need to pay attention to the gains your investments have made. Ideally you want to move assets that have made gains below the annual allowance of £3,000.' Recent falls in markets means that any gains made are likely to be lower so you can move larger chunks of your portfolio without facing a tax bill. Time to rebalance Over time, investments perform differently, with some doing better than others. This can mean that what was once a diversified portfolio into an unbalanced one. Diversified investments are important to protect your funds from a poor performance from any one investment or geography. Significant market downturns can highlight if it is time to rebalance your portfolio. Coles said: 'They may have exposed how your investments have become unbalanced over time, and provided a timely reminder that some housekeeping is in order. 'Over time, some investments will do better, so they'll come to make up more of your portfolio that you might have initially planned. It will usually make sense to sell some of those that have done better, and rebalance your portfolio.' Carry your losses forward If you do hold investments outside of a tax wrapper, market losses can sometimes be beneficial for capital gains tax purposes. Coles said: 'It's never ideal to sell at a loss, but there are times when it can make sense for your overall investment strategy. ' If you are selling at a loss, you can offset the losses against any gains you have made in the same tax year, which could push you below the annual capital gains tax allowance. Coles added: 'Alternatively, make sure you report them to HMRC on your tax return, and they'll be offset against gains in future years.' Get your financial planning question answered Financial planning can help you grow your wealth and ensure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement, tax planning and inheritance. If you have a financial planning or advice question, our experts can help answer it. Email: financialplanning@ Please include as many details as possible in your question in order for us to respond in-depth. We will do our best to reply to your message in a forthcoming column, but we won't be able to answer everyone or correspond privately with readers. Nothing in the replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Telegraph
20-03-2025
- Business
- Telegraph
Stop missing out on the home advantage – this trust is primed for recovery
Questor is The Telegraph's stockpicking column, helping you decode the markets and offering insights on where to invest for the past six decades. The UK market remains firmly out of favour. Open-ended UK equity funds haemorrhaged £22.7bn in net outflows last year as retail investors pulled their cash. It is not hard to find reasons for this – the FTSE All Share has risen 82pc over the past 10 years, while the MSCI World index has delivered more than double that at 168pc, driven largely by stellar returns in the US. In addition, it is easy to dismiss the UK market for lacking the growth potential found in the US, given just 1.3pc of its value is represented by technology stocks. Questor recognises that GDP growth in the UK remains anaemic, while business confidence is suffering from rising taxes and the uncertain geopolitical environment. However, UK equity valuations have already priced in a lot of bad news, and it is worth recognising that more than 75pc of revenues of UK-listed companies come from overseas. The key catalysts for a recovery come in the shape of the wave of takeover approaches by overseas corporates and private equity, as well as the ongoing return of capital via share buybacks. These are already having an impact – the FTSE All Share is up 11.1pc over the past 12 months, beating the global market's 8.2pc. Questor believes a value investment approach is well placed to benefit in the current environment, and Fidelity Special Values investment trust – which recently passed its 30 th anniversary – offers precisely that. Over its lifetime the contrarian investment vehicle, focused on UK equities, has grown assets from less than £50m to more than £1.1bn. For the first 18 years of the fund's life, the portfolio was run by Anthony Bolton, one of the leading fund managers of his generation. He was never going to be an easy act to follow, but Alex Wright has continued to deliver strong performance since taking over as lead manager in September 2012, with annualised Nav total returns of 11.4pc versus 7.5pc for the FTSE All Share, outperforming in 8 of 12 financial years. The manager seeks out unloved companies trading at attractive valuations that are entering a period of positive change – ones the market hasn't cottoned on to yet. Utilising the resources of Fidelity's extensive research team, the investment universe includes large, mid and small-cap stocks, as well as up to 20pc in companies listed outside the UK. Risk is managed partly through diversification, typically holding 80-120 investments, with the largest representing less than 5pc of assets, a title currently held by Imperial Brands, at 4.5pc. In addition, stock selection focuses heavily on the potential downside risk. In part, this is achieved by buying companies that are valued cheaply relative to their history or peers, but also by avoiding businesses that are highly leveraged in order to limit the threat of permanent loss of capital. Furthermore, a strict sell discipline is imposed once a company's share price has recovered. Just 39pc of the current portfolio is invested in the UK's largest companies, compared with the benchmark's 86pc FTSE 100 allocation, demonstrating a bias towards the less well-covered mid and small cap stocks. The active management approach is illustrated by having no exposure at all to several of the largest companies in the FTSE All Share, including Shell, BP, HSBC and Unilever. As a result, the fund should not be expected to perform in line with the benchmark, and there will be periods of underperformance, as was the case during the Covid pandemic. By sector, the portfolio is typically overweight towards financials, and the largest holdings currently include Standard Chartered and NatWest, as well as Direct Line, which recently agreed a takeover bid from Aviva. However, some profits have been taken from banking shares over the past year following strong share price performance. As a result, the largest overweight sector is currently industrials, with holdings including Keller, DCC and Coats. By contrast, the fund is underweight towards energy and healthcare. Alex Wright also manages the £3.3bn open-ended variation – Fidelity Special Situations – which has a very similar portfolio. However, Questor favours the investment trust as it has a lower management fee and is currently trading at a discount to Nav of 5.6pc, with a commitment by the board to buy back shares to keep the discount in single figures. Over the long term the investment trust's performance has been enhanced by modest gearing – typically 10pc – and the ability to take positions in less liquid companies. Although the emphasis is on capital growth, it pays a yield of 2.9pc via semi-annual dividends, and has increased its dividend every year for the past 15 years.
