This year started as last year ended: with concerns about oil prices and the Chinese economy, and fears about a new global recession sending share prices downwards.
As in any period of volatility there have been days when stock markets bounced back, but it is clear private investors need to brace themselves for a more difficult investment climate.
Against this background it is not surprising that there have been fund closures and manager departures but also new launches with investment firms trying to find gaps in the market with potential for growth.
Meanwhile the latest figures from the Investment Association showed a record year for some sectors of this market.
More Neptune Closures
Fund manager Neptune announced it is closing two further funds at the end of this month, as part of the restructuring programme it started last summer.
The fund management group will close its Cautious Managed fund - worth almost £850,000 - and the smaller Defensive Managed fund, just shy of £164,000. As a result of this decision the manager Ian Sealey left the company at the end of December.
Investors will be offered a free switch into another Neptune fund, or the opportunity to sell their holdings.
The fund manager said this decision wasn’t a result of poor performance - both are top quartile funds - but lower than expected demand meant it wasn’t cost-effective to run these portfolios.
Since it started the restructuring Neptune has now closed around a third of its funds.
New Fund Launches
With three months to go until the end of the tax year it is perhaps not surprising that there were a crop of fund launches this month.
What’s more surprising though is the remit of some of these funds. These are almost all UCTIS funds, which by their definition are geared at more sophisticated investors.
BlackRock has launched an ETF that tracks the Israeli stock market. This will track the largest 25 companies in the Tel Aviv Stock Exchange (TASE) This market is worth some $200 billion, but no company is allowed to form more than 10% of this index.
Nomura has also launched a higher-risk UCTIS fund, although one that is geared to more active investment strategies. Its Global High Conviction fund will invest in just 17 to 25 worldwide companies, picked by head of equity investment Tom Wildgoose - who’ll be backed by a team of 18 investment specialists. This Dublin-based fund will not have any sector, or region constraints.
Woodford to Run New Fund
It’s been a busy start of the year for veteran fund manager Neil Woodford.
He will be running a new fund, known as Omnis Income & Growth, which will invest in both listed and unlisted companies.
However this won’t be available directly to private investors. It can only be accessed by the 3,000 advisers that use the Openwork platform, and its investment proposition Omnis, which enables them to build multi-asset portfolios using funds from the likes of Schroders and Jupiter.
In addition, Woodford Patient Capital - the investment trust he runs - announced it is looking at further fundraising. In an update the trust’s board said that the £800 million which was raised during its IPO last year was now fully invested. It said it was looking at ways to raise further capital in the year ahead to take advantage of “a substantial ongoing pipeline of investment opportunities”. The initial fund-raising was increased from £500 million to £800 million to meet investor demand.
Banks Get Back Into Financial Advice
HSBC is the latest high-street bank to signal a move back into the advisory market. It will launch an investment advice arm later this year, aimed at more mass market customers, with less than £50,000 to invest.
Santander made a similar announcement earlier this month, while it has been reported that Barclays is interesting in offering advice services to those with £50,000 plus to invest.
This comes after all major banks pulled out of the financial advice market, following RDR. But with the regulator indicating that providers can offer ‘limited’ or simplified advice it is thought that this may be a more viable option again, particularly with the use of technology and so-called ‘robo-advisers’ and demand for this services from consumers, particularly in light of pension reforms.
2015 Winners & Losers
It was a record year for tracker funds, according to figures published by the Investment Association. The amount of money invested in these passive funds hit an all time high of £108 billion, while money market funds saw record net retails sales of £591 million.
European equity funds also saw strong sales, although UK Equity funds sales declined - from £5 billion in 2014 to just £1.9 billion last year. But despite this, the UK Equity Income sector retained its place as the best-selling sector in the market. In second place was the IA Targeted Absolute Return sector - which has no doubt profited from concerns about more volatile investment conditions. This was just the fifth most popular sector the year before.
