Price performance of index since 30 December 1999
Source: FE Analytics
The index currently stands at 6,949 but only time will tell whether this really is a “watershed” moment or whether it is a prelude to a correction.
Elsewhere, the Greek debt negotiations appear more positive as the chance of a ‘Grexit’ from the eurozone looks increasingly unlikely, while at the same time the oil price has continued its rebound.
All told, we have had plenty of things to write about and picking just five for this article was no easy task. However, here are some of our favourites. Have a great weekend!
FTSE breaches record high: A watershed moment or a walk into a bear trap?
Given that this was a fairly momentous week, we start with a round-up of the experts’ reactions to the FTSE’s new all-time record high.
The article, which was put together by news editor Gary Jackson, showed that opinion is split as some believe the UK equity market can now power forward while others are expecting a correction.
Adrian Lowcock (pictured), head of investing at AXA Wealth, said: “It is difficult to predict where the market will be by the end of 2015 let alone beyond that, but we could expect to see multiple new record highs this year.”
While on the other hand, Rowan Dartington’s Tim Cockerill was far more cautious.
“The market will in due course focus on reality rather than hope, which is where its focus seems to be right now ... the world has far more issues to contend with today than it had in December 1999, even allowing for the millennium bug,” Cockerill said.
The best performing UK funds and trusts since the FTSE’s record high
Following on from that theme, on the day the blue-chip index reached its new record high, we looked at the UK funds and investment trusts which have delivered the highest returns since the FTSE 100 was last at its peak 15 years ago.
As the table below shows, FE Alpha Manager Giles Hargreave’s Marlborough Special Situations fund has been the best performing open-ended fund over that time and the likes of Investec UK Smaller Companies, Invesco Perpetual Income and Fidelity Special Situations also feature on the list.
Source: FE Analytics
The three best performing investment trusts since 30 December 1999 are Fidelity Special Values, Perpetual Income & Growth and Aberforth Smaller Companies.
Can these multi-billion pound funds justify their expensive fees?
On a different topic, earlier this week head of FE Trustnet content Josh Ausden posed the question whether the likes of Jupiter Merlin Income, Aberdeen Asia Pacific Equity, M&G Optimal Income and Standard Life GARS should continue to charge above average fees given that they have such large AUMs.
“Blanket criticisms of expensive funds are flawed in my opinion,” Ausden said.
“Yes, higher ongoing charges mean fund managers have to work harder to generate returns for investors, but performance data is inclusive of fees. It costs money to run a successful fund, and if managers are able to justify their expenses with outperformance, fair enough. The argument doesn’t end there though. While there is a case for expensive funds, that doesn’t mean their cost base should be static.”
He added: “Funds that are able to grow their assets organically and through inflows benefit from economies of scale, but FE Trustnet research suggests that such benefits are often not enjoyed by underlying investors.”
Buxton’s Old Mutual UK Alpha tops managers’ list of favourite UK funds
Next up was a study to show which funds from the IA UK All Companies sector are used as a top 10 holding by the highest number of multimanagers.
The result was that Richard Buxton’s Old Mutual UK Alpha fund is the standout favourite, as 42 of them count it as a top 10 holding. Other funds which feature on the list include Majedie UK Equity, JOCHM UK Opportunities and Investec UK Special Situations.
Source: FE Analytics
Other interesting takeaway points from the study were that passively managed funds were becoming increasingly popular with experts looking for UK exposure, plus the professionals have been selling Schroder UK Opportunities and AXA Framlington UK Select Opportunities.
In an article today, we asked the experts whether private investors should be selling the AXA fund as well.
This market is “hideously disfigured”, warns Aberdeen’s Stout
We end this week’s roundup on a particularly negative note, as star manager Bruce Stout – who heads up the ever popular Murray International Investment Trust – told us that huge central bank intervention over the period since the financial crisis has “hideously disfigured” markets and the global economy.
“Having orchestrated a global collapse in sovereign bond yields through aggressive pursuit of reckless monetary policies, central banks continue to punish prudent savers to protect delinquent debtors,” Stout (pictured) said.
“Negative nominal interest rates are tantamount to theft as savers' capital is ‘confiscated’ by banks charging depositors to deposit funds. Against such a hideously disfigured economic and financial backdrop the priority for the trust remains capital preservation and dividend growth.”
Not everyone thinks that investors need to be too bearish however, as Rowan Dartington Signature’s Guy Stephens said they could take perma-bear Stout’s comments with a pinch of salt.
“When listening to bearish views it is important to remember that this is always an easier position to take than an overtly bullish one. Bears tend to remain bears and bulls tend to remain bulls, although the latter is quite a rare species in today’s environment of short-term performance measurement.”