What caught my eye this week.
Some good news for investment trust fans this week, as the Financial Times reports:
The UK government has exempted investment trusts from onerous cost disclosures in a move analysts believe will boost the £260bn industry and could support trusts’ share prices.
In a joint statement this week, the government and Financial Conduct Authority said investment trusts will be excluded from European regulation that affects how their charges are reported.
The rules on packaged retail and insurance-based investment products, or Priips, meant that investment trusts appeared more expensive than other types of financial product.
This is because institutions such as wealth managers and private banks would have to include the cost of investment trusts in their “ongoing charges figure” for clients, while shares and other types of investments were excluded from the fee.
Investment trusts were brought into the Priips regulation a decade ago. But this has deterred institutions from buying them due to having to report artificially higher costs, analysts said.
Will this tackle the wide discounts that have plagued trusts for the last couple of years?
It can only help.
But trusts have suffered from a pile-up of other problems too – not least the bear market for British shares since late 2021, and more widely all things not-Big-Tech.
Still, the industry seems ecstatic.
One manager, William MacLeod, compared the rule change to the Big Bang of the 1980s. MacLeod is quoted in This Is Money as saying:
“What’s happened today is a lot less dramatic than the big bang in the 80s, but for those of us in the sector and all investment company investors, it is no less seismic.
“It is momentous breakthrough that is long overdue.
he campaign group – helped immensely by the support and dedication of Baronesses Bowles and Altmann – has worked tirelessly for these changes for a number of years now and today is a day of both relief and celebration.
“Righting this wrong is profound for the UK market, the sector, and investors of all sizes.”
There’s plenty more jubilation where that came from, and elsewhere:
Christian Pittard, head of closed-end funds at abrdn, said:
“The new Government has made boosting economic growth – by channelling capital into areas like renewable energy and infrastructure– its raison d’etre.
“These funds already invest billions into these areas – delivering crucial economic growth projects.
“However, cost disclosure rules, which have amounted to a distortive ‘double counting’ of costs, have negatively impacted investor sentiment, therefore choking flows into investment trusts. They have been a key cause of these three lost years of infrastructure investment.”
Made in the UK
Most Monevator readers are (rightly) passive investors, so you may meet this excitement with a shrug.
But even if it doesn’t affect your investing directly, trusts are important for the British stock market – with their £260bn in assets representing 30% of the FTSE 250 index – and arguably for the UK economy, by funnelling capital towards infrastructure, renewables, property, and other investment.
Trusts still have 99 problems – everything from the shift to indexing and consolidation among wealth managers to recent poor returns – to overcome.
But at least cost disclosures now ain’t one.
As I wrote in Moguls a while back, there’s seemingly value on offer with many investment trusts.
Some have since recovered, but many extra-wide discounts persist. Perhaps this move on disclosures will be a catalyst to reverse things?
- Read the press release from the FCA (if you’re having trouble sleeping)
How to back Monevator versus the robots
Talking of hidden value, it’s been a while since I did a housekeeping note on our membership service.
Monevator member numbers are still inching higher.
But we do seem to have hit a newsletter industry-wide plateau that predicts a maximum percentage of free email subscribers will pay the minimum £3 a month we ask for.
Nevertheless, we’re still thrilled so many of you have signed up!
Which is why I want to remind members again that:
- If you’re having any kind of log-in problems as a member, it will almost certainly be a cookies issue. Please clear your cookies (at least the Monevator ones) and make sure you allow third-party cookies. Also turn off ad-blocking for the Monevator website. Logged in members see an ad-free Monevator anyway! The cookies are needed for the software to show you member content. If you are fanatically opposed to all cookies, you can still read our member content via the emails…
- …on which note if you’re not getting member emails despite being subscribed to free Monevator emails – and you’d like be emailed both – then please let me know in the comments below or use the contact form to tell me. There’s a couple of dozen members not getting member emails, and I can change that if I know who you are and what you want.
Rise of the robots
Again, please do consider signing up to at least our Mavens member tier if you’ve not already done so.
There’s more than a year’s worth of Mavens and Mogul articles ready for you to tuck into.
Meanwhile, Google is now inserting huge AI summaries at the top of all its search results in the UK.
This means Google gets to sell advertising to web searchers without those searchers ever seeing the work of the people who actually put the knowledge online.
It’s early days, but I could see us eventually paywalling the whole of Monevator.
Obviously as someone who has shepherded two to three free articles a week on to this website for the past 17 years, that’s the last thing I want to do.
Our whole modest mission was to do our bit for everyone’s financial savvy, as best we could.
But I’ll be damned if I’m going to slave to keep training a robot to parrot my stuff while Monevator visitors dwindle to zero.
It may ultimately be futile to resist the AI-era, but if it comes to it we’ll try writing only for the real flesh-and-blood people who value us most, not for a mega-corp’s bottom line.
Sorry for the downbeat note, which is hopefully over-pessimistic.
Have a great weekend!
From Monevator
No Cat Food retirement portfolio update 2024 – Monevator [Members]
Passing investing, edge, and market efficiency – Monevator
From the archive-ator: How to spot a bull market top – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
US Federal Reserve goes big with a 0.5% interest rate cut… – CNBC
…but Bank of England keeps UK rates on hold at 5%… – Guardian
…with core and services inflation in the UK still too hot – Portfolio Advisor
Nearly 2.1m British savers set to pay tax on their cash interest – This Is Money
British government debt hits 100% of GDP – Reuters
Consumer confidence plummets ahead of ‘painful’ Autumn Budget – This Is Money
Stablecoins are crypto’s breakout profit machine – Sherwood
‘Buy the dip’ has a patchy record [Note: ‘buy the dip hit ratio’ axis is LHS] – Goldman Sachs
Products and services
Four questions to ask a potential financial advisor – Which
Fixed mortgage rates fall again, but at a more subdued pace – Mortgage Advisor
Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
The 15 towns set to get a new banking hub – This Is Money
Supermarket Christmas savings schemes explained – Be Clever With Your Cash
Get £100-£2,000 cashback when you open a SIPP with Interactive Investor (T&Cs apply. Capital at risk) – Interactive Investor
How to get 10% cashback from UK attractions with American Express – Which
Homes for sale with first-time buyer incentives, in pictures – Guardian
Comment and opinion
An app for that? No thanks Vanguard! – Simple Living in Somerset
Invest like the worst: wealth-destroying concentration – Acadian
The important parts of investing you can’t quantify – Morningstar
Why Britain has stagnated [Long report] – Sam Bowman et al. at Foundations
Are demographics destiny for the stock market? – Of Dollars and Data
Only investing at the peaks: animated edition [with video] – A.W.O.C.S.
Choose boring over exciting – The Financial Bodyguard
A deep dive into the Renter’s Rights bill [Podcast] – The Property Podcast
Five strategies for reducing an inheritance tax bill – The Orchard Practice
Are passive investors affecting the stock market? [Podcast] – Rational Reminder
Exploring the ‘hidden’ risks of lifestyle pension funds – This Is Money
Does the so-called behaviour gap really exist? [Research] – SSRN
Naughty corner: Active antics
Growth isn’t enough when it comes to a good stock pick – Humble Dollar
Nick Sleep’s Nomad Partnership letters [Podcast] – Founders
Startup mortality rates and venture capital investing – AVC
Veteran value investor Bill Nygren [Podcast] – Behind the Balance Sheet
A profile of AQR’s Cliff Asness – Institutional Investor
Kindle book bargains
What They Don’t Teach You About Money by Claer Barrett – £0.99 on Kindle
Quit: The Power of Knowing When to Walk Away by Annie Duke – £0.99 on Kindle
The Good Enough Job by Simon Stolzoff – £0.99 on Kindle
Grit: The Power of Passion and Perseverance by Angela Duckworth – £0.99 on Kindle
Environmental factors
Is it time to invest in the UK’s green transition again? [Search result] – FT
It’s getting wet out there – Klement on Investing
ESG is dead. Long live ESG – FT
Only 2% of $3 trillion in green bonds drives real climate action – Bloomberg
Fossil fuels mini-special
Fossil fuel rollercoaster – Cold Eye Earth
The sort-of environmental case for US fracking – Slow Boring
Robot overlord roundup
Why Microsoft’s co-pilot AI falsely accused court reporter of the crimes he covered – The Conversation
Engels, agriculture, and AI – Fork Lightning
Off our beat
Young women are starting to leave men behind [Search result] – FT
Statistics: may contain lies [Podcast] – Decision Nerds
Amazon orders its 350,000 employees back to the office, five days a week… – Sherwood
…which makes it a ‘dinosaur’, says UK management expert – Guardian
Are we too impatient to be intelligent? – Behavioural Scientist [h/t Abnormal Returns]
How to avoid ‘sanewashing’ politicians – Poynter
Avoiding Alzheimer’s – Humble Dollar One and Two
Moments that change your life – We’re Gonna Get Those Bastards
Take something away – Collaborative Fund
And finally…
“Don’t tell me what you think, tell me what you have in your portfolio.”
– Nassim Nicholas Taleb, Skin in the Game
Like these links? Subscribe to get them every Friday. Note this article includes affiliate links, such as from Amazon and Interactive Investor.
‘Sorry for the downbeat note, which is hopefully over-pessimistic.’
Take that sentence out. Don’t end on an apology. The points are all fair.
What am I missing? Less cost disclosures makes me more suspicious of investment trusts.
@PC The cost disclosures for Investment Trusts under the previous rules were unfair, there was an element of double counting.
I would not be suspicious of Investment Trusts but do you need to use them ?
I am very grateful to investment trusts, they allowed me to retire in my late 40’s, there were few passive funds available to private investors at that time.
I have a copy of the July 2007 Association of Investment Trusts data and it shows we have more Investment Trusts now than then, by about 50% and the market cap has grown substantially as well, by a factor of about 4.
Yet looking at F & C Investment Trust for example, a bellwether Trust, the trust has shrunk the number of shares by about 25%. ( It performed in line with the World Equity Index after charges)
We seem to have a lot more specialist trusts, VCTs etc and glancing down the Ongoing Charges figures, some are reasonable F&C is 0.49% but there is an awful lot in the 1% to 3% range, the average is 1.2%
Monevators advice that most investors would be better off in a Passive Index fund has much merit. I note my own costs are .1 % on my largely passive portfolio.
That 1% difference is significant over the longer term.
Is that exemption from European financial regulations a Brexit benefit?
It is noticeable that Continental Europeans are very much more protection oriented in so many ways and not in just in financial areas
No doubt a reaction to their long history of their nations being continually overrun by various autocratic neighbours for long periods unlike their British and American counterparts
We seem to have a much more bent to less regulation,free trade in our psyche
Another accident of our shared history ?
xxd09
The FT article was excellent, if a bit concerning for males (and parents).
Part of me would like university to renamed as “7th form” and “university proper” – it’s not sensible to compare university when 15-20% of the population attended versus 40-50%.
Some countries have over 50% which must mean students with IQ of 100 or below attend. In the mid 80’s we had CSEs and O levels – a CSE grade 4 was the assumed level for IQ 100, and a CSE grade 1 was deemed equivalent to an O level grade C.
I’m all for education and training but something needs to change.
Finally, how great are women – more education, more earnings, less unemployment etc etc. perhaps boys/men need a alternative path, 4 years in the forces or voluntary service to grow up and fix some of their flaws/genetic predisposition
Thanks for the ‘Take Something Away’ article from Collab Fund. I’m sometimes tempted to add more complexity to my DC pot but when I step back and consider DB+DC, it would probably be a waste of time and attention.
+1 for Jonooooo – TI you’re self-employed in other aspects of life, so you must know the downsides of undervaluing what you do for others.
People used to bitch about the faceless gatekeepers of the analogue world, the broadcasters, the publishing houses, the news desks. Well, you got what you wanted, a zillion channels of shit and discovery getting harder and harder in the face of AI filtering and dreaming up ‘content’, what used to be known as plagiarism.
AI seems terrific at raising the noise level in the information space. What used to be known as intelligence, not so much. It’s slightly dispiriting that so many so-called intelligent tech bros either can’t tell plagiarism/parroting apart from intelligence or are fundamentally sociopathic in an ends justifies the means way.
You can stop Google AI (and other AI) from scraping your website for content by amending your robots.txt file
I don’t get member emails (I do get the free ones). May I be subscribed to all please. Thank you
To disable Google AI within Google search see https://www.androidauthority.com/how-to-turn-off-ai-overviews-google-3445771/
The ‘Why Britain has stagnated’ article was excellent. Thanks for sharing.
Maybe an option would be more content behind the member wall – the draw-down portfolio series being a good example here – but keep this weekly news letter and some of the more widely applicable content – like the accumulation portfolio series, broker table, ISA vs SIPP, &c. – freely available as the shop window? (And accept feeding these to the AIs as a cost of doing business in this day and age.)
@TI @David Saunders: once subscription came in my concern was that @TI was too generous with what’s available for free and, given the ever worsening copyright theft in training LLMs and the use of so call ‘AI’ (i.e. Machine Learning) tools, it’s not sustainable (at least anymore) to try to keep 98% of the 2,000+ articles free on the open web (and 1% each for Mavens and Moguls behind a paywall).
I realise that there’s an advertising hit to begin with; but Google, Meta and co-conspirators are the main culprits in the “enshitification” of the internet (e.g., Twitter, Facebook, YouTube, Tick Tok).
In the face of both that and the assualt on content creators by the likes of OpenAI, it’s time to face up to the reality that the barbarian bot horde is at the digital gates and is ready to plunder and loot the citadel at will.
An ironclad paywall may be the only option left.
I’d humbly suggest for ~20% to be left on the open internet (in particular the broker table and cheapest tracker pieces) and the remaining ~80% to be locked up behind the paywall for Mavens and Moguls.
You can then lock comments on the (~20% of) free articles in order to prevent the spam tsanumi, and keep the comments open on the expanded body of articles behind the paywall.