Where to start? This has been a week of FUN and EXCITEMENT!
First I went to the garden centre on Thursday. In 2020 this is the new equivalent of dropping acid with Marianne Faithfull / doing lines with the Gallaghers / steaming your doo-dad with Gwyneth / drinking kale juice with Joe Suggs (*delete according to age/ preference).
Just when I thought life could get no better, I also happened to secretly eavesdrop on my son’s online sex education lesson, which included a discussion on the vernacular for Boys’ Bits. Needless to say I excelled at that and am proud to report I was a hidden winner in this most excellent of quizzes.
With my academic credentials firmly established, let’s turn our thoughts to the markets.
First up GDP. The results for the first quarter were predictably grim. This measure of how much we collectively make and consume was 2% lower than the previous 3 months. Doesn’t sound too bad but of course the economic shutters were only really firmly pulled down in the last week of March. March itself saw a 6% drop compared to February. Gulp. It’s like hearing the very quiet start of the Jaws music whilst the sea has but a few ripples on the surface.
It's Q2 which will be the real write-off and the Bank of England has estimated the economy will shrink by one quarter. Also announced this week were retail sales which fell by 20% in April. (I’m surprised that fall is not higher – what the hell is everyone buying other than sherbet lemons and wine!?)
We have a slightly odd situation where in one corner the economy is moaning and groaning. But in the other corner stock markets are pretty gung-ho, all things considered. Shares in Asia have been creeping higher on early signals that China’s economy could be recovering. And this morning things in Europe were more buoyant as we look ahead to looser lockdowns. The FTSE 100 is up by about 4% over the last four weeks. So things are relatively benign and we are “only” 23% down for the year! Those with globally diversified portfolios will of course have taken a lesser hit – the main US index is off about 12% since January.
Investor activity in March and April has been pretty frenzied, with dominant platform Hargreaves Lansdown riding high, reporting £4 billion of new client money on their platform over the last 4 months. Trading activities have soared. March and April saw monthly dealing levels more than double the highs ever experienced before this period. Caramba. With year to date revenue for the UK’s largest investment platform 13% higher than last year, as Rome burns around it, it is perhaps not unjustified to ask when their admittedly excellent but pricey service might have its charges reassessed?
So – back to trading – and what are we all buying? It’s a mixed bag of passive funds and some perennial active favourites. According to Interactive Investor, appetite for UK funds has waned in April as global funds and some technology funds pick up the slack. Across multiple platforms we can see that Fundsmith Equity, Lindsell Train UK and also Global, Baillie Gifford American and Global Discovery funds and Legal & General’s Global Technology fund are all consistently popular. Along with Vanguard’s low-cost, ready-made/pick ‘n’ mix 'LifeStrategy' funds.
One final figure which caught my eye this week. Across the world, $385 billion flowed out of investment funds in the first three months of the year. OUCH. At the same time, $46 billion flowed into sustainable funds. I firmly believe this style of investing will continue to rise, driven by both customer appetite for a ‘better world’, and by hardened old investor sceptics who nonetheless see the financial sense in backing businesses and sectors with strong future-facing models (clue: not tobacco, oil or coal).
That’s it for this week, folks. I leave you with a request. We are taking the temperature of investors (metaphorically only) and have a final set of questions for you. This will allow us to track sentiment from March (when we first asked), April and today. This short survey will take about 5 minutes of your time and would help us immensely. We will bring you a summary of the findings next week – what do you guys think the future looks like? How confident are you? And how are you shifting your investments (or not)? OK I’ll help – hit me with it.
Thanks as always for your interest and support – we appreciate our readers. Have a great weekend (well – as great as they get these days!)
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