Nationals round-up: Terry Smith delivers on his promises, a comparison of equity release and downsizing and what the eurozone crisis means for your clients.
A year on from the launch of his low-cost, commission-free equity fund, and Terry Smith appears to be delivering on his big promises. As the Guardian reported, Fundsmith Equity is enjoying a year-on-year gain of 6.4% at a time when the 2,300 funds investors can choose from have delivered an average loss of 11%. Around £200m has already been invested into the fund and Smith remains critical of other managers for trading in and out of shares too quickly and driving up costs. His fund stripped out trading costs.
Surviving the credit crunch
It seems to be a foregone conclusion among many observers that we're about to enter a second credit crunch. With this in mind, the Telegraph gave a brief guide to riding it through. Savers were reminded of the £85,000 FSCS compensation limit for deposits, while homeowners were told of the benefits of overpaying their mortgages. In terms of investments, the key message was not to make any knee-jerk reactions although, if they haven't been reviewed in a while, now was the time to get on the phone to a financial adviser.
What if the euro collapses?
"A disintegration of the eurozone hits companies' earnings, depresses shares and sinks firms. Cross-border bonds and other ‘paper assets' lose their value or become entangled in litigation." This is the nightmare scenario set out by the Mail on Sunday if the euro collapses. The paper also speculated on how people with holiday properties could see their values slashed, while anyone with cash in international bank accounts could also suffer from a fall in the value of the currency.
Downsizing v equity release
Anyone looking to unlock the value of their property to get them through retirement would have found an interesting piece in the Independent on Sunday, comparing downsizing and equity release. With the former, the consumer retains ownership of their property, although agency fees, valuation fees, stamp duty and legal fees can eat away at any profit. Meanwhile, equity release, through a lifetime mortgage, can offer a steady income, but at the expense of a big chunk of the property itself.
Another week and another stab in the dark by economists as they attempted to predict when there will be any movement in interest rates. According to the experts the Sunday Express spoke to, the record low 0.5% rate could be here to stay until 2014, although we could see yet more quantitative easing in the New Year. The Bank of England's Monetary Policy Committee meets this week, so we should find out more when its minutes are released later this month.
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