2013 Review: Investment Trusts

Abenomics, quantitative easing and asset allocation: Morningstar analyst Jackie Beard reviews this year - and debates which investment trusts will prosper in 2014

Jackie Beard, FCSI 12 December, 2013 | 10:14AM
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Yesterday I was joined on a webinar by Jeremy Tigue of F&C and Justin Urquhart Stewart of 7IM, to discuss the year in investment trusts, but also the year in markets and their views looking forward into 2014.

We covered more ground than I thought possible in just a 30-minute slot. We debated Japan and whether the third arrow of Abenomics is really going to deliver (listen to the recording to discover how this is linked to Royal Mail in the UK…). We also discussed Europe and the surprises it has brought this year—or rather, the lack of disappointment has been a surprise. When we surveyed the listening audience on their most favoured region, with the best investment opportunities for next year, we were all a little surprised at the overwhelming majority voting for pan-Europe.

For both gentlemen, the one thing 2013 will be remembered for, in their view, is Bernanke’s comments on May 22 and the reaction these prompted, as well as the widespread ripples that reached beyond the US and into emerging markets and currencies.

From an investment trust perspective, we noted that this year’s themes have been launches in alternative assets rather than mainstream equities—with a couple of exceptions, naturally—but also there has been a theme of the big getting bigger. That’s been a mix of funds trading at a premium and able to issue shares, as well as some of the more recent launches coming back to the market to raise more capital through C shares. Equally, Jeremy pointed out we have seen consolidation too, as some of the smaller funds have merged with their larger counterparts, for economies of scale.

Looking forward to 2014, Justin’s favoured area is Asia, but very country-specific. Next year is the Chinese year of the Wooden Horse and he’s not yet sure whether we’re seeing green shoots or advanced mould. There are a number of elections on the horizon too and politics could easily throw markets off their path.

The over-riding message was that we must focus on long-term investing, and that broad asset allocation works. There’s so much noise that can distract us as investors, so a clear strategy and long-term horizon are, as always, paramount. 

Listen to the recording here: https://www.brighttalk.com/r/KWR

Thanks to everyone who has listened in to the webinars run by the Best Advice: Closed end Fund Forum. We’ve had a lot of fun putting them together and have had some great speakers—we hope you have all enjoyed listening to them.

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.

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Jackie Beard, FCSI

Jackie Beard, FCSI  is Director of Manager Research Services, Morningstar EMEA

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