Oil and Chinese markets have continued plummeting this week maintaining a dreary theme that at present looks set to dominate markets in 2016.
The FTSE 100 has been one of the many markets caught up in this and has seen volatile movements on a daily basis with mining and commodities firms dominating the panic selling.
The Dow, the DAX and the Nikkei 225 have also been hit hard this week but the most dramatic falls come from carmaker Renault which saw its shares fall 22 per cent with the news police had raided a factory in what investors will worry is a spill-over investigation a la VW.
If that has left you all depressed, cheer yourself up with some our best stories of the week.
From all at FE Trustnet, have a great weekend!
Five FE Alpha Manager funds hoarding cash for 2016’s choppy market
First up, senior reporter Daniel Lanyon kicked off the week revealing which top-rated managers had been busying keeping some powder dry recently and upping their cash levels.
Cash can protect against a market fall as well as providing a boost to returns in a recovery with managers taking advantage of low valuations.
The list includes the likes of GAM UK Diversified, Man GLG Undervalued Assets and Henderson Diversified Growth whose respective managers are sitting on their highest levels of cash for at least three years.
FE Alpha Manager Andrew Green who runs the former says he has increased cash primarily because he is worried about markets falling further.
“It is the belief of the investment team that preservation of capital should take precedence in the decision of whether or not to hold elevated levels of cash, even if that means incurring a potential opportunity cost in the short term,” he said.
Click through to see the other funds and managers.
The most popular UK income fund with the professionals – and it’s still not Woodford
As we do every year at this time, news editor Alex Paget scrolled the data to see which is the most widely held UK equity income fund with fund of funds managers.
The fund that came out on top in the study was Threadneedle UK Equity Income, which is managed by Richard Colwell, as 29 multi managers count it as a top 10 holding.
Source: FE Analytics
That means the fund has overtaken Artemis Income, which has fallen to fourth on the list. Interestingly, given Neil Woodford’s track record, the hype surrounding the fund’s launch in June 2014 and its stellar track record over that time, you could be forgiven for thinking it was at the top of the popularity tables but it currently ranks in fourth place.
Like last year, though, very few fund of funds managers hold Mark Barnett’s Invesco Perpetual income portfolios which FE Trustnet will be investigating in an article next week.
Stephen Bailey: The sectors I’m investing in to avoid value traps
Earlier this week, reporter Lauren Mason spoke to FE Alpha Manager ‘Hall of Famer’ Stephen Bailey, who heads up the Liontrust Macro UK Growth and Liontrust Macro Equity Income funds.
Despite negative market sentiment at the moment, he says that there are still plenty of opportunities for UK equity investors providing they are selective in terms of the sectors they’re looking in.
“While we see a sustained period of very low interest rates, I think it will be quite supportive for other means of investment and I think equities as an asset class will still look excellent value,” the star manager said.
“It’s very hard to be particularly bullish when there are so many areas of the market that we’re not that keen on, but I think I would regard ourselves as being selectively bullish.”
Bailey is avoiding tobacco, oil & gas and mining due to low dividend covers and few growth opportunities, but says there are three main sectors that are set to benefit long-term investors’ portfolios.
FTSE hit by two-year rough patch but these UK funds thrive
Those investing in UK equities have gone through a tough couple of years, with the FTSE All Share rising just 2.17 per cent over 2014 and 2015 while the FTSE 100 lost money. However, a number of funds have managed to hand their investors double-digit returns over this challenging period.
Editor Gary Jackson looked at which IA UK All Companies and IA UK Equity Income funds have done the best over the past two years and found that FE Alpha Manager Mark Slater’s £338.3m MFM Slater Growth fund tops the tables with a 38.47 per cent total return.
The manager specialises in finding companies that have reliable, above-average earnings growth supported by healthy cash flow. He will only invest in these businesses when the price/earnings ratio is attractive relative to the growth rate.
As Gary showed in the article, this approach has paid off over the long term as well as in recent years.
However, it is not the only stock-picking fund to have done well with the likes of CF Miton UK Value Opportunities, Premier ConBrio Sanford Deland UK Buffettology and Montanaro UK Income also appearing in the list of top performers.