Tyndall Investment Management’s Post

Simon Murphy, manager of the VT Tyndall Unconstrained UK Income Fund, comments on the impending Budget on 30th October including the speculation and uncertainty around tax increases, the decline in confidence from both consumers and business leaders and finally the re-acceleration of outflows from UK equity funds. The above notwithstanding, Simon notes there are reasons to have some optimism citing that a return of confidence is key but overall we remain positive on the outlook for the UK economy and UK consumers specifically. Read more below: #activemanagement #ukequityincome

Morning all. Mansion House speech tonight from the Chancellor. This morning there's lots of coverage of her plans to create mega-public-pension funds to drive scale and encourage investment into infrastructure. Sadly, nothing so far on the state of the UK equity market. In the always excellent monthly report courtesy of Numis's Ash N. this morning, she highlights that since the beginning of 2022 (to September), equity funds in the UK have seen cumulative outflows of £44bn - of which 82% have been from UK funds. Good chart from that report below. Meanwhile, as Charles Hall pointed out in a post last week, UK equities saw a further (just shy of) £1bn of outflows in October (courtesy of Calastone). That's 41 (forty-one) consecutive months of outflows. This matters. It is driving valuations in the UK ever lower. This means a higher cost of capital for businesses seeking to raise capital via the UK's stock markets. The UK has some great businesses. They are being penalised by this relentless selling pressure. I am not suggesting mandating investment into UK equities, but the government could certainly create an environment far more welcoming to both domestic and overseas capital. "Financing Growth" (link in comments) - Labour's plan for Financial Services promised much. It's a shame we're continuing to see the UK's public equity markets continuing to be neglected - to the detriment of the entire UK economy. Crescendo blog on this to follow tomorrow! Ben

This is a great example of where a strategic, targeted approach to FPS FDI could lead to far greater investment in the wider UK economy. The underpinning research is a new way of capturing the value of foreign sovereign investors - in the past decade this FDI has created more than 3,200 jobs through £1.7bn of investment. But this hugely underestimates the wider impact of the investment. Those sovereign investors who have established a UK office, over the past decade, have more than doubled their UK investments in the five years post establishment. That’s been worth £13.4bn across sectors such as infrastructure, tech and renewable energy. If we have a strategy to encourage the establishment of UK offices by sovereign investors through FDI, it could bring in up to £7.7bn of additional investment by 2030. Take a look at all the findings and reccomendations here - https://lnkd.in/em3G-eBY

In the wake of the UK’s 2024 Budget, Tatler explores strategies for navigating an evolving economic landscape. Peter McLean, Head of Multi-Asset Portfolio Solutions from our Investment Management team, highlights the importance of diversification, noting, “We encourage investors to look beyond the UK’s borders, particularly to the US, where American companies continue to deliver above-average returns.” Read the full article here: https://lnkd.in/dti87JFN #London #Europe #InvestmentManagement #StonehageFleming #WealthManagement #Budget2024 #GlobalInvesting

Let me share with you a secret that professional investors like me have known for years: the real treasure trove lies in tertiary markets, particularly tax-distressed properties. Here's why: 1. Untapped Potential - In the world of investments, less competition usually means better deals. Tertiary markets are often overlooked by large-scale investors, leaving a wealth of high-potential properties ripe for the picking. With careful planning and informed decisions, you can capitalize on these overlooked opportunities and unlock their true potential. 2. Affordability - High-end investments are often associated with high prices. However, tax-distressed properties in tertiary markets offer premium investments without the premium price tag. This means you can get more for your money and broaden your portfolio without breaking the bank. 3. High Yield, Lower Risk - One of the essential rules in investing is understanding that risk and return go hand in hand. However, because of the lower costs associated with tax-distressed properties, it's possible to achieve a high ROI, thus making your investment more profitable. In addition, diversifying your portfolio with investments in tertiary markets reduces your exposure to volatility in the market, further lowering your risk. 4. Tax Bonuses - Let's not forget about the tax benefits. Tax-distressed sales offer enticing incentives and potential deductions, making them even more financially appealing. This can include everything from lower transaction costs to property tax reductions. 5. Hero Status - There's nothing like the feeling of knowing your investments are making a positive impact. Investing in tax-distressed properties in tertiary markets often benefits underserved communities by revitalizing neglected properties and boosting local economies. This is what I call a win-win scenario; you enrich your pockets while contributing to community development. Of course, like any investment, it's critical to do your homework. It takes time and effort to research properties, understand local tax laws, and evaluate potential returns. But for those willing to put in the work, rich rewards await. #realestateinvesting #taxliens #foreclosure #propertytax #equitycrowdfunding

📚 𝗦𝘂𝗻𝗱𝗮𝘆 𝗿𝗲𝗮𝗱𝗶𝗻𝗴 𝗶𝗻 𝘁𝗵𝗲 𝗙𝗧 today 𝘀𝗽𝗮𝗿𝗸𝗲𝗱 𝗮 𝘁𝗵𝗼𝘂𝗴𝗵𝘁: Do people understand the term 'risk premium'? 🔍 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗮 𝗥𝗶𝘀𝗸 𝗣𝗿𝗲𝗺𝗶𝘂𝗺? In financial markets, the risk premium is the extra return investors demand to take on more risk. Think of it as a buffer that compensates for uncertainty – like holding UK government bonds if markets expect higher borrowing or fiscal instability. 🔹 When there’s perceived risk in an investment – maybe due to political or economic factors – investors look for higher returns as compensation. Without that extra return, there’s little incentive to hold assets with added risk. 📈 𝗥𝗲𝗮𝗹-𝗪𝗼𝗿𝗹𝗱 𝗘𝘅𝗮𝗺𝗽𝗹𝗲: If yields on UK gilts (government bonds) rise due to concerns over borrowing levels, that’s a risk premium in action. The yield adjusts upward to attract investors who need assurance before taking on higher risk. 🔗 𝗪𝗵𝘆 𝗜𝘁 𝗠𝗮𝘁𝘁𝗲𝗿𝘀: Understanding the risk premium is essential in evaluating bond markets, equity pricing, or even corporate debt. It’s a key factor in assessing investment choices and setting pricing models. So next time you hear about yields moving or spreads widening, think about what that extra return is signaling. Is it a risk premium at work? https://lnkd.in/eX7VU2bB #Finance101 #RiskPremium #FinancialMarkets #SundayReads #Investment

With the Consumer Price Index (CPI) now at 2.3%, approaching its target and lower interest rates anticipated, economic news headlines are likely to become less gloomy - BUT there is also the potential impact of the upcoming UK election to be aware of... Justin Rourke, Head of Advice at Armstrong Watson Financial Planning and Richard Cole, CFA, Fund Manager at Future Money, give their commentary: https://lnkd.in/eb3VgGVR #investment #update #wealthmanagement

Since 1963, UK investor participation in Britain’s equity markets has fallen from 54% to 11% in 2022, according to figures from the Office for National Statistics. Other sources indicate that only 25% of UK taxpayers proactively invest compared with 60% in the US. As reported by Paul Killick of Killik & Co in another Financial Times article: “British governments bear a good deal of responsibility for what has happened. Following pressure from large institutional investors, both in the UK and the EU, they have used #taxpolicy to encourage retail #investors to put money into collective #investment schemes and out of direct investment.” “These investors, however, have very little say in the running of the companies contained in their funds, unlike direct shareholders. This is a troubling phenomenon when it comes to the investor-investee relationship and the governance of UK business.” The Labour Party now in government has a unique opportunity to act quickly to remedy the situation, which will strongly support its aim to grow the economy while meeting other crucial objectives including meeting #innovation and #netzero goals. #automotiveindustry #futuremobility #decarbonisation #privateequity #venturecapital #angelinvesting #EnterpriseInvestmentScheme https://lnkd.in/e5iZp8bu

Chancellor Rachel Reeves said "I believe that our financial services sector is the jewel in the crown of the UK economy, but we need to stay competitive in a very competitive landscape." She’s encouraging the FCA and PRA to review our regulations to ensure we are competitive and ramp up growth in the City of London. That would be nice, but unlikely to be a game changer and probably take time to have an effect. A quicker route to improved competitiveness would be remove stamp duty on UK equity purchases, provide tax benefits on UK dividends, raise the minimum contribution into auto enrolment, and require state funded pension schemes to have a greater weighting to the attractively valued & internationally competitive UK equity market. #investmentweek #ukequities #competitiveness #cityoflondon #alignmentofinterests For financial professionals only https://lnkd.in/eJfqPs5k

Is the “boring” UK market starting to attract investors? This is a topic we have covered recently: the apparent "boring" nature of the UK stock market and its potential attraction for private and institutional investors. In a world of mega high-tech companies dictating stock-market performance, a growing number of investors are starting to see the benefits of a more stable background. Recent UK performance While critics would suggest this is "cherry picking", the FTSE All Share has outperformed the Stoxx 600 and the S&P 500 over the last six months. When you consider the significant underperformance in recent years, this is encouraging. Many people are now starting to appreciate the relative discount on which many UK companies trade compared to their international counterparts. Political stability Even though there is a degree of controversy, it is safe to say that the incoming Labour government has not been afraid to make difficult decisions. This is likely to continue when we have the budget on 30 October, with rumours and counter-rumours about potential changes in tax regulations. Even though many in the UK will struggle with taxation changes, international investors are starting to see the UK as a possible safe haven. Interest rates and economic growth Even before winning the election, the Labour government provided a breath of fresh air, suggesting that their main focus would be on growth in the UK economy. Since then, we have seen interest rates turn downwards, consumer confidence improve, and the pound remains relatively strong. Further interest rate reductions are expected in the short to medium term, which is also encouraging for markets. Institutional investor sentiment While private investors do have a role to play in the long-term recovery of the UK stock market, much of this will depend upon institutional investor sentiment. Even though we have been here before, there are signs of real change, with institutions turning net buyers of UK stocks since May. Conclusion In a perfect world, all of the pieces of the UK economy and stock market jigsaw are coming together. The problem is that we have been here so many times before, with the UK having traded at a discount to international counterparts for some time now. If this really is a turning point and the obsession with tech stocks is reducing, this could get interesting. It's important to seek advice from your financial adviser before committing any funds and to consider diversification.