The death of retirement, active management's comeback and investing in AI - here's our weekly heads-up on the financial stories that may have caught your clients' attention over the weekend …
Millennials, your retirement is dead in the water
"Are we witnessing the death of retirement?" asks this Sunday Times article, which will have made especially grim reading for any millennial clients you may have on your books. In it, London Business School professor of management and author Lynda Gratton examines whether retirement is still a reality for millennials - or if more time should be spent building intangible assets, such as health, education and skills, so people are able just to keep on working.
The piece chips away at the hopes and dreams of millennials readers, pointing out slow wage growth throughout the decade since the financial crisis has made for a tough start to the working world, while sky-high property prices could see many still paying rent at an age when previous generations were finally in a position to save meaningfully towards retirement.
"With no real solution to the dilemma of stagnating wages - rising at 2% a year, they are outstripped by 2.6% inflation - and higher outgoings, a pay packet can only stretch so far," the piece continues before concluding: "Possibly the greatest financial challenge is that today's 20-somethings are expected to live into their 90s. We need to completely rethink the way we live all of our lives."
Active management stages a comeback
Active asset management appears to be closing the gap on passive investment, suggests this Financial Times article. In the first six months of the year, it reports, passive funds attracted 1.4 times the level of new cash of active funds - significantly less than the whole of last year, when passive saw 5.1 times the inflows of new cash their active counterparts did.
JP Morgan Asset Management chief executive Mike O'Brien is quoted as saying that, while the industry went through a post-financial crisis "shakedown", current market conditions should allow for active outperformance. He argues rising markets, particularly in the US, may have only so far to go, offering more opportunities for active managers to showcase stockpicking skills.
Turning to fixed income, Morningstar associate director of passive strategies Jose Garcia-Zarate suggests this is an area where active funds still have "a bit of an edge". "Compared with equity, fixed income is an area where active managers find it easier to defend their work," he tells the FT but continues: "The passive fund industry has become really innovative, and so I would expect many things in product development on the passive side in years to come — particularly in non-plain vanilla exposures."
Buy these seven shares to profit from driverless cars and artificial intelligence
While looking specifically at technology investments may bring back painful memories of the dotcom boom and subsequent bust at the turn of the century, this Telegraph article suggests investing in businesses that make "enabling" tech - the components and software used in advanced developments, such as autonomous vehicles and artificial intelligence - represents a better and more modern approach.
By asking assorted technology fund managers to name some of their favourite stocks that fit the "enabling" technologies bill, the piece arrives at a list comprising four US businesses, two UK companies and one that is listed in Germany. Unlike many of the darlings of the dotcom boom, most of these businesses are already profitable with two of them each posting pre-tax profits approaching £2bn in 2016.
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