Of course we wave goodbye to the EU later tonight, embarking on a period of certain uncertainty for the pound until those trade deals shape up. The poor old pound is down about 10% against both the Euro and the dollar since the referendum and we expect some bumpy times ahead.
The pound has always been a barometer of what dispassionate external observers think of the UK’s economic prospects. The more uncertainty or doom and gloom, the more investors look for other places to stash their cash. And lower demand = lower prices which people will pay to get their mitts on sterling. So the exchange rates fall.
Although a lower exchange rate makes that holiday in Europe a bit pricier, it’s not all bad news for savers. Because the main firms in the FTSE 100 make so much of their money abroad, when it’s time to tot up the numbers for the annual accounts, suddenly those US profits look healthier in £ terms – so the FTSE has traditionally done well when the pound slumps.
Grim yet expected news this week for holders of the artist formerly known as the Woodford Equity Income fund. Launched in 2014 with a price per unit of £1, one unit today is worth about 21p and investors will receive a payout in coming days of about 58p per unit (exact amount depends on where you bought the funds – it could be as little as 46p). The remaining value is tied up in illiquid funky stuff whose value is anyone’s guess really – so time will tell how much of that gets returned. All in, those who bought at launch will probably lose about 20p out of every pound. And more if you bought in the fund’s heyday in 2017.
A huge thank you to the hundreds of readers who filled out our survey last weekend on their future investment intentions. We are digesting and will share some highlights back next week. What is clear is the widespread anger even disgust felt by the whole Woodford episode.
On how people's views of the investment industry have changed
"Woodford and Hargreaves Lansdown have generated negative publicity, but fees generally seem to be coming down."
On switching to a new provider
"[Vanguard] is very cheap, has good ratings and could be a good place to put a lump sum in perhaps a LifeStrategy fund."
I am desperately trying to think of something jolly to sign off with but am struggling. It’s cold. It’s January. And the thought of Boris cooing with narcissistic orgiastic delight about his Prime Ministerial Address to The Peasants tonight is more than I can bear. I think I’ll watch Love Island instead.
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