Welcome to the new morningstar.co.uk! Learn more about the changes and how our new features help your investing success.

Fund Firms Join Forces in Tough Times

Editor's Views: The merger of Premier and Miton is a sign of the times for asset managers, why Lindsell Train's Prada bet could be risky and why we've gone back to basics this week

Holly Black 6 September, 2019 | 10:08AM

editor

The merging of fund groups Miton and Premier is just the latest in a run of M&A activity in the funds sector. And I think it’s a really interesting indicator of where the industry is at.

More Mergers

Competition has forced fund fees down in recent years and at the same time there has been little to no consolidation in the number of funds available to investors. Instead, we have seen a boom in low-cost exchange-traded funds, which have attracted investors in their droves. Add into the mix a steady stream of regulation – Mifid II, PRIIPS and GDPR, to name just a few horrible acronyms – and you start to see the challenges facing fund firms. Against that backdrop, it’s not difficult to understand why we are seeing a run of mergers and acquisitions.

Hopefully, with these mergers we will see businesses streamline their offerings, reducing the number of funds in a Darwinian-type exercise, which with any luck leaves only the best behind. Increased scale should also help costs come down even further.

The biggest negative I can see is how long fund group’s names are getting. A few mergers down the line and we could have Aberdeen-Standard-Columbia-Threadneedle-Miton-Premier Asset Management – and that’s just silly.

Is Now the Time to Bet on Luxury?

When your job is to buy and sell company shares, it shouldn’t be big news if you buy or sell a share. But this week saw Nick Train add a new name to his Silver-rated Lindsell Train Global Equity fund portfolio for the first time in two years.

For Train, the consummate buy-and-hold investor, this is indeed big news. The manager is known for his penchant for big brands; it’s why his concentrated portfolio is filled with names such as Heineken, Unilever and Diageo. The addition of luxury brand Prada makes complete sense alongside that line-up, and also introduces some lustre into the portfolio.

But it’s an interesting bet at a time when the word recession is rearing its head on an increasingly regular basis. In times of recession investors typically look to defensive staples – utilities, supermarkets and telecoms, the things you have to keep spending on even during the midst of a downturn. I’m not sure that’s true of designer handbags.

Back to School

I hope you’ve enjoyed our Back to School week series this week. One of my biggest bugbears about the investment industry is how little it does to help new investors. The amount of jargon and number of acronyms used is not only aggravating and unnecessary, but it also completely alienates anyone who isn’t on the inside.

So a huge thank you to our talented young interviewers this week who forced our analysts to speak in plain English and cover some of the investment basics that we all need to know. If you missed anything you can head here to our special report page, which has all our Back to Basics videos as well as our how to guides and fund picks for new investors.

And if you already know all this stuff, send the link to someone who doesn’t, because everyone has to start somewhere.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites