The era of quantitative easing programmes have had a distorting effect on markets since the 2008 financial crisis has given value investors a torrid time in the past decade. The nearconstant sugar-rush of liquidity has served to de-link valuations from underlying fundamentals prompting a huge bias towards growth. While pockets of investors have been braced for a long-expected correction that has never really materialised, the recent sharp increase in inflation may constitute

BHP is one of the largest dividend paying companies in the world and its cash flow has been a huge boost to most UK investors in recent years because of its place in the UK stock market indices.  However, because of pressure from hedge funds the company is proposing to drop its primary listing in the UK so that its only main listing will be in Australia. As a consequence, this move if approved by shareholders, means it would no longer be part of the UK indices and therefore a

In 2020 the UK economy is expected to shrink more than in any year for the last 300 because of the Covid Crisis. Three centuries ago the UK was over-indebted after years of wars but the financial world was about to be transformed by a clever scheme that became known as the South Sea Bubble. For a while it looked like Britain’s financial problems could be solved simply by some clever financial engineering. Today even more advanced financial schemes have kept the UK stock marke

The Covid-19 crisis has demonstrated that share prices are not determined by executives, so why then are so many executive remuneration schemes linked to this measure? This is the time of year when companies sent out their annual report which include their remuneration report. These days they are long, complex and almost always include two elements; one that relates bonuses to share price performance (usually referred to as TSR, Total Shareholder Return) and another that give

Past performance is no guide to future returns we are warned by the finance industry at every opportunity. But is that always the case? Financial returns are the net product of two factors; the return of the asset class (known as beta) and additional returns (known as alpha) from selecting only a few, or avoiding some or even most, securities within that asset class. Alpha is not always positive of course. There is now a large body of work that includes the perennial Barclay

Whether a fund is run actively or passively the question of balancing between faithfully following the model or process and incurring trading costs is a perennial one. Although it might seem that traditional market capitalisation trackers might not have a problem with this in practice they are faced with many of the same issues as active managers when it comes to index rebalancing, new issues, rights issues and other corporate actions. At the heart of the dilemma is the ques

Equity investing is for the long term; at least ten years and preferably longer. That is far too long for many commentators and observers to wait before remarking and attempting to analyse performance and determine why a portfolio has under or outperformed a particular benchmark. Leaving aside the issue of how much risk a portfolio has embraced, or rejected, to achieve a specified return there is another factor that needs to be understood by anyone seeking to understand perfo

Brexit delivered a shock to the political and financial world in the UK. No one expected it, although the vagueness of opinion polls should have been a warning. The immediate aftermath was a sharp fall in the value of sterling and UK equities followed by a recovery of UK equities in sterling terms although not when measured in other leading currencies. With hindsight it looks as if some large traders were positioned the wrong way ahead of the vote and had to unwind positions

Over the last few years the salient feature of equity investing has been the outperformance of the small and mid-cap stocks at the expense of large cap shares. The simplest way to demonstrate that is to contrast the 25.3% total return of the FTSE 100 over the last five years to 31st May with the 63.5% return of the FTSE 250 over the same period. During that same time the FTSE Small Cap index increased 59.2% so it is not a straight forward case of saying the smaller the comp

Few things whet the appetite for investors quite as much as yield. Hefty dividends and or chunky interest payments can go a long way to compensating for the volatility and risk of capital markets. Nowhere is this more pertinent than in equity income funds. The attractions of this category mean that they merit not one but two sectors in the UK; Equity Income and UK Equity & Bond Income where the labels are fairly self-explanatory. To put them into context the average yield for