Imminent market 'earthquake', uneasy fund managers and 'cash-trashing financial duds' - here's our weekly heads-up on the financial stories that may have caught your clients' attention over the weekend …
Top investor who predicted recent share sell-off says an ‘earthquake' is about to hit markets
To be honest, it was actually the Telegraph headline on Why it's harder than ever to be a DIY investor that first caught our eye but it is one of those premium articles that brings down the shutters after three paragraphs. As such, all we can pass on are dark mutterings about "increasing intervention from regulators who appear to want to cut off ordinary savers' access to investments deemed ‘too complex".
Then, just as Killik & Co founder Paul Killik notes "a lot of very intelligent private investors" in the UK facing "forces afoot that would rather retail investors bought products such as funds and not individual shares or bonds," forces of a different kind take over and instead we must turn to the warnings of Jonathan Ruffer that the recent sell-off was "only a taster" and an "earthquake" will hit markets within months.
According to this Telegraph article, the Ruffer LLP co-founder believes "the main danger is a gap between how risky investors think their portfolios are, and how risky they actually are". With "the majority of investors" judging risk by volatility, Ruffer explains, investors "have come to believe the assets they own are safer than they actually are", when in his view "a conventional mix of bonds, shares and alternatives such as property has become more dangerous".
Fund managers head for uneasy week in the City spotlight
Kapow. "Fund managers trouser fortunes even when they are diminishing your nest-egg," snipes this Observer article in a less-than-flattering review of the asset management sector. You get the feeling the writer has been waiting for a timely moment to put the boot in and a combination of the new disclosure rules recently introduced by the regulator and a handful of fund groups issuing trading updates in the coming week just about provides it.
Jupiter is on the receiving end of many of the Observer's barbs following its admission last month it had been "hit by customers pulling money out of its funds and by underperformance in the first quarter of 2018". "There is always some excuse for poor performance (Jupiter's was that other funds had taken more risk) but the truth is that, with a few notable exceptions, fund managers are better at charging fees than picking shares," the article sighs. Bam.
Handily for the Observer, Jupiter was also in the news last week after the Financial Conduct Authority issued a warning fraudsters were using its name for a ‘clone firm', thereby allowing the piece one final shot: "Apart from the oddness of pretending to be a firm in the middle of a bad trot, the notice also provokes another thought among City wags - unless Jupiter fund managers up their game, punters might just be tempted to give the scammers a try." Boom. Boom.
How to spring clean your finances
With this sudden lovely turn in the weather and the possibility winter might actually be behind us, this Mail on Sunday article suggests now is as good a time as any to get rid of unwanted financial products that could be holding people back as it lists: "Nine financial duds that may just trash your crash - and how to get rid of them."
Although some financial items may seem essential, the piece warns, they can leave people at risk of overpaying and over-insuring. Among its catalogue of "duds" are old savings accounts, packaged bank accounts and child trust funds.
The MoS argues child trust funds have fallen out of favour since the introduction of the Junior ISA, with leading Junior ISA provider Hargreaves Lansdown pointing out they are often more expensive, provide less choice and can offer savers lower interest rates than the government's more recently introduced alternative.
'Managed separation update'
The chairman discusses his surprise holiday job
Three months on
Regulator has stepped in