The major talking point this week has been the increasing probability of an independent Scotland, with UK markets and sterling both falling on news that the referendum is likely to be much closer than most anticipated. Outside of politics, Monday was an eventful day in its own right following news that FE Alpha Manager Julie Dean had quit Schroders and her £2bn UK Opportunities fund.
Here’s our take on these two events, and a few more besides:
Buy, hold or sell: What should you do with Schroder UK Opps now Julie Dean has left?
Starting with Dean, we asked a collection of industry experts what they think investors should do with her UK Opps fund following her departure.
Most said they would hold onto it; however, though the portfolio has performed very well since Dean took over in 2002 relative to both the sector and its benchmark, question marks remain over its recent poor performance.
Performance of fund versus sector and index since Dec 2002
Source: FE Analytics
In an article earlier in the week, we also looked at a number of alternatives to the Schroder fund – including Miton UK Value Opportunities and Old Mutual UK Alpha. http://www.trustnet.com/News/544345/dean-exits-schroders-alternatives-to-her-2.1bn-schroder-uk-opportunities-fund/
Gleeson: Investors to pay the price of an independent Scotland
Back onto the issue of Scottish independance, head of FE Research Rob Gleeson said UK investors are likely to be adversely affected if Alex Salmond and his party are victorious next week.
The comments came in light of an FE Trustnet poll which showed that only 23 per cent of readers were preparing their portfolio for a yes-vote.
Anxiety about an independent Scotland seems to be growing – the same poll posted in August highlighted that only 17 per cent were preparing their portfolios for secession.
Which UK funds should you buy in a Scottish independence-led sell-off?
It’s not all bad news for investors according to head of Trustnet Direct John Blowers, who said Scottish independence could present investors with a buying opportunity.
“The best buying opportunities occur when emotions get the better of markets,” Blowers said.
“When panic selling ensues, that’s often when there’s money to be made.”
“The Scottish referendum has the potential to be an opportunity. In the build up to the vote some stocks have already sold off significantly, and if there is indeed a “Yes” vote, you’d expect some of these to sell-off to an even greater extent.”
“While the “Yes” vote has got some momentum behind it, it will still be a shock to markets if Scotland does become independent.”
What a weaker sterling means for your portfolio
Following a period of almost unprecedented strength, sterling came tumbling down on Monday on the back of the YouGov poll.
Performance of sterling vs the dollar in 2014
Source: FE Analytics
Many experts don’t expect sterling to start strengthening again anytime soon, so FE Trustnet asked the experts which areas of the market are going to benefit, or be hindered, by the weaker currency.
Among the winners were large-cap multinationals that derive a lot of their earnings overseas, while traditional bond funds could be losers as a weaker sterling could put upward pressure on inflation.
How I tried and failed to beat Neil Woodford at his own game
Editor Joshua Ausden put an investment theory to the test last weekend and saw whether there was any merit in bypassing a star manager’s fund and investing in their 10 best ideas instead.
Bargain hunters look away now. In the case of Neil Woodford at least, the real thing has been much better than the cheaper alternative.