What caught my eye this week.
Some good news for investment trust [1] fans this week, as the Financial Times [2] 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 [3] 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 [4] 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 [5]:
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 [6], 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 [7], 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 [8] (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 [9] 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 [9] at least our Mavens member tier if you’ve not already done so.
There’s more than a year’s worth of Mavens [10] and Mogul [11] 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 [9], 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 [12] [Members [9]]
Passing investing, edge, and market efficiency – Monevator [13]
From the archive-ator: How to spot a bull market top – Monevator [14]
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 [15]
…but Bank of England keeps UK rates on hold at 5%… – Guardian [16]
…with core and services inflation in the UK still too hot – Portfolio Advisor [17]
Nearly 2.1m British savers set to pay tax on their cash interest – This Is Money [18]
British government debt hits 100% of GDP – Reuters [19]
Consumer confidence plummets ahead of ‘painful’ Autumn Budget – This Is Money [20]
Stablecoins are crypto’s breakout profit machine – Sherwood [21]
[22]
‘Buy the dip’ has a patchy record [Note: ‘buy the dip hit ratio’ axis is LHS] – Goldman Sachs [23]
Products and services
Four questions to ask a potential financial advisor – Which [24]
Fixed mortgage rates fall again, but at a more subdued pace – Mortgage Advisor [25]
Open an account with low-cost platform InvestEngine via our link [26] and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine [26]
The 15 towns set to get a new banking hub – This Is Money [27]
Supermarket Christmas savings schemes explained – Be Clever With Your Cash [28]
Get £100-£2,000 cashback when you open a SIPP with Interactive Investor [29] (T&Cs apply. Capital at risk) – Interactive Investor [29]
How to get 10% cashback from UK attractions with American Express – Which [30]
Homes for sale with first-time buyer incentives, in pictures – Guardian [31]
Comment and opinion
An app for that? No thanks Vanguard! – Simple Living in Somerset [32]
Invest like the worst: wealth-destroying concentration – Acadian [33]
The important parts of investing you can’t quantify – Morningstar [34]
Why Britain has stagnated [Long report] – Sam Bowman et al. at Foundations [35]
Are demographics destiny for the stock market? – Of Dollars and Data [36]
Only investing at the peaks: animated edition [with video] – A.W.O.C.S. [37]
Choose boring over exciting – The Financial Bodyguard [38]
A deep dive into the Renter’s Rights bill [Podcast] – The Property Podcast [39]
Five strategies for reducing an inheritance tax bill – The Orchard Practice [40]
Are passive investors affecting the stock market? [Podcast] – Rational Reminder [41]
Exploring the ‘hidden’ risks of lifestyle pension funds – This Is Money [42]
Does the so-called behaviour gap really exist? [Research] – SSRN [43]
Naughty corner: Active antics
Growth isn’t enough when it comes to a good stock pick – Humble Dollar [44]
Nick Sleep’s Nomad Partnership letters [Podcast] – Founders [45]
Startup mortality rates and venture capital investing – AVC [46]
Veteran value investor Bill Nygren [Podcast] – Behind the Balance Sheet [47]
A profile of AQR’s Cliff Asness – Institutional Investor [48]
Kindle book bargains
What They Don’t Teach You About Money by Claer Barrett – £0.99 on Kindle [49]
Quit: The Power of Knowing When to Walk Away by Annie Duke – £0.99 on Kindle [50]
The Good Enough Job by Simon Stolzoff – £0.99 on Kindle [51]
Grit: The Power of Passion and Perseverance by Angela Duckworth – £0.99 on Kindle [52]
Environmental factors
Is it time to invest in the UK’s green transition again? [Search result] – FT [53]
It’s getting wet out there – Klement on Investing [54]
ESG is dead. Long live ESG – FT [55]
Only 2% of $3 trillion in green bonds drives real climate action – Bloomberg [56]
Fossil fuels mini-special
Fossil fuel rollercoaster – Cold Eye Earth [57]
The sort-of environmental case for US fracking – Slow Boring [58]
Robot overlord roundup
Why Microsoft’s co-pilot AI falsely accused court reporter of the crimes he covered – The Conversation [59]
Engels, agriculture, and AI – Fork Lightning [60]
Off our beat
[61]
Young women are starting to leave men behind [Search result] – FT [62]
Statistics: may contain lies [Podcast] – Decision Nerds [63]
Amazon orders its 350,000 employees back to the office, five days a week… – Sherwood [64]
…which makes it a ‘dinosaur’, says UK management expert – Guardian [65]
Are we too impatient to be intelligent? – Behavioural Scientist [66] [h/t Abnormal Returns [67]]
How to avoid ‘sanewashing’ politicians – Poynter [68]
Avoiding Alzheimer’s – Humble Dollar One [69] and Two [70]
Moments that change your life – We’re Gonna Get Those Bastards [71]
Take something away – Collaborative Fund [72]
And finally…
“Don’t tell me what you think, tell me what you have in your portfolio.”
– Nassim Nicholas Taleb, Skin in the Game [73]
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