Market Statistics

ETFs and Index Trackers – More Dangerous Than You Think

Lots of financial pundits have encouraged investors to be “passive” investors rather than try to pick stocks, or invest in funds that do that latter (“active” funds). Even the FCA has recently criticised active funds for being more expensive and the additional management fees end up impacting negatively on overall returns over time. So persuasive writers such as John Bogle have convinced many to take the “no brainer” route of buying Exchange Traded Funds (ETFs) or other index tracking funds. But there ...

Asset Management Market Study

I commented previously on the FCA's Asset Management Market Study, which suggested there was weak competition in this market. Needless to say, most asset managers do not seem to agree. ShareSoc has now submitted a response to the questions raised in that document which you can read here: Asset-Management-Market-Study-Response-2017-02-21. In summary, we agree with the general conclusions and support regulatory intervention where necessary. We also note that although the study does not address the issue directly of financial education, it is our view ...

FCA Study of Asset Management – Interesting Interim Results

The Financial Conduct Authority (FCA) has published an interim report on its Asset Management Market Study. Some of the results are not that surprising, but others are. For example, it reports that around half of retail investors were not aware that they were paying fund charges. Needless to point out perhaps that can be linked to another conclusion. Namely that there is weak price competition. How can investors be expected to compare prices when they are not even aware of the charges? Indeed ...

Do Active Funds Underperform? But Costs are the Real Problem

On the 24 October the Financial Times FTfm supplement led with a front page article that was headlined "99% of Active US equity funds underperform". It also had a sub heading of "Almost all UK, global and EM funds have failed to outperform since 2006". So I sent a letter to the Editor which said the following, much of which they have published today (31/10/2016) plus letters from other writers making the same point. This is what my letter said: "Your headline in ...

Cash or Shares. Which is Better?

An interesting article in Saturday's FTMoney (18/6/2016) by Paul Lewis suggested that you might be surprised to learn that if you had invested £10,000 in a cash account in 1998, you would have done better than investing in a FTSE-100 index tracker. It's surely odd for the Financial Times to persuade their own readers that cash is better than equities because a choice of cash might mean they no longer needed to read the FT - they could just use a ...

Can you make money in the FTSE100?

Can you make money by investing in the FTSE100? This thought came to mind when looking at some of the recent market statistics. It's quite an important question because most stock market investors are heavily biased to that segment of the market (as opposed to FTSE250, small cap or AIM stocks) simply because the market cap of the FTSE100 is a very high proportion of the overall UK market. For example, it's about 80% of the FTSE AllShare. So if you ...

A Dream Become a Nightmare – And a Plug for ShareSoc

There was a good article in the Daily Telegraph on Sunday (17/5/2015) explaining how Thatcher's dream of a share owning population has become a nightmare. She tried to create a nation of investors by privatisations and regulatory changes to improve business competition but instead many companies have ended up being sold to foreign buyers. Even worse there has been a collapse in private share ownership. The reported proportion of UK shares held by individuals has collapsed from 20% in 1994 to 11% ...

2014 Review and New Year Resolutions

Now's the time of year to look back on the performance of the stock market in 2014, and look at plans for the future. Last year was undoubtedly a disappointing year for the UK stock market. The FTSE All-Share index was down 2.45%, worse than many other major markets. The cause was undoubtedly that the All-Share index is dominated by large mega-cap FTSE-100 companies such as BP, Shell, Glaxo and Tesco. The first two have been badly hit by the decline ...

Better Finance Press Release and ESMA Report

Yesterday Better Finance (a European representative body for individual shareholders of which ShareSoc is a member) issued a press release. It is worth repeating here:"European Financial Regulator fails to recognise the mounting losses hitting European savers and investors - Brussels, 4 September 2014Better Finance welcomes the new "Trends, Risks and Vulnerabilities" report released today by the European Securities & Markets Authority (ESMA).But the ESMA press release does not say a word about individual investors’ trends and risks.Moreover, and of additional concern, ...

Are you a speculator or investor?

There was a very interesting article in a recent edition of Investors Chronicle. Stephen Wilmot reported the views of Interactive Investors, one of the major execution-only brokers, on their client profiles. They apparently classify half their clients as "traders" (i.e. speculators) or investors. In the former, half of those only buy or sell one stock which are companies such as Blinkx (now where have we heard that name before), Gulf Keystone, Quindell or Xcite Energy, with the rest speculating on small ...