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Holly's Blog: UK surge in flights to Nepal

11 July, 2017

Well, you don’t need me to tell you that the election results are in. The Tories have a mandate. Brexit will be actioned. A sense of certainty returns to markets.

There are endless column inches covering this today, from hoards of experts all telling us what this means and how we should feel. For my part, I’ll let Lord Blackadder speak for me. Ho Hum. Let’s move on to some facts.

The Boris Bounce

Financial markets have reacted positively. The pound has risen in value and is now worth about $1.35. And the FTSE 100 is up nearly 2% today as I write. Any UK investor with a pretty mainstream portfolio will end today with a notably higher balance than they had yesterday.

More interesting is that the broader FTSE 250 – a bigger mix of companies, typically with a more UK focus – has bounced by over 4% today. Banks and house-building companies have done well, indicating increased investor appetite for the UK as certainty returns. As threats of nationalisation evaporate, British Gas parent Centrica, along with BT and Royal Mail, have all surged by about 8% as the potential Corbyn smother blanket is removed. Markets have breathed a collective sigh of relief and prices have risen in the exhalation.

A return to value?

If we think about the broader implication of this for mainstream UK investors, I think it is timely to take another look at the type of funds we invest in. 2019 has been a story of growth funds.

Growth funds are the cool, sporty kids. The Jocks. Backing big international corporate names with stars in their eyes, promising future riches and growth. Amazon, Google, Facebook blah blah.

'Boring old' value funds – the squares of the investment fund world – buy shares in largely unloved companies and sectors that they believe are cheaper than they should be, and expect that at some point this anomaly will correct. Movements today suggest growing momentum in the inevitable future shift back towards value investing. Yup, sometimes it’s cool to be square. More on this next week.

Solace in sequins

In a desperate bid to find temporary solace in the form of sequins, this week sees the results of the other national vote which has had us gripped from the start. Yes, the Strictly champion will be announced. I’m gunning for Karim who made Mummy look twice last week when the cutesy kids TV presenter turned all manly in his Argentine tango – pa ha ha! Go, el pocket-o rocket-o!

Have a great weekend everyone.