abrdn’s Post

#UKgovernment must address domestic institutional #disinvestment | UK #banks, #assetmanagers and individuals see better returns from dumping UK #stocks and #investing elsewhere, but the impact eventually becomes ruinous | Ondra Partners http://spr.ly/6042jogme

📈 Are #government #bonds back in play? Are they really a safe bet? Today, U.S. and UK 10-year bonds yield 4.11% and 4.18% respectively. Dive into the key insights of a recent Financial Times report on fixed-income markets. 💡 Why Gilts or #UK government bonds might become a serious investment choice again: 1. Bonds are running ahead of #inflation. At least now. With UK inflation projected to drop below 2%, Gilts' yield remains well above 4%, offering a real yield of over 2 percentage points. This makes them an attractive option for investors seeking stable returns in a volatile market environment. 2. #Geopolitical scenario. Recent global events, like the Ukraine conflict, have disrupted market confidence. However, wins in the French elections by the leftwing coalition and UK elections by the Labour party have brought stability to bond markets. If the political landscape remains calm, it could positively impact bond-holders' confidence. 3. Portfolio #diversification. Amid rising uncertainty, the demand for risk-averse investment strategies should grow. While all investments inherently involve risk, the importance of including bonds in a well-diversified portfolio becomes evident. Bonds are optimal to achieve diversification as they complement equity positions, helping to balance and mitigate overall risk exposure effectively. The initial two points are closely linked. Potential geopolitical escalations could cause a surge in inflation, prompting central banks to postpone the easing of monetary policies. This delay could further dampen investors' outlook. Increased inflation is likely to erode the real value of security maturities, especially as bonds typically have fixed face values. One mitigation strategy could involve investing in index-linked government bonds. While this approach might offer higher returns, it could also attract attention from institutional investors. 📢 What are your #thoughts on this market update? Share your opinion below! 🔗 If you are interested, read the full article here: [https://lnkd.in/dji_SzZM] #finance #markets

With the Consumer Price Index (CPI) now at 2.3%, approaching its target and lower interest rates anticipated, economic news headlines are likely to become less gloomy - BUT there is also the potential impact of the upcoming UK election to be aware of... Justin Rourke, Head of Advice at Armstrong Watson Financial Planning and Richard Cole, CFA, Fund Manager at Future Money, give their commentary: https://lnkd.in/eb3VgGVR #investment #update #wealthmanagement

#NegativitySells and when financial publications and professionals embrace hypotheses not supported by empirical data, lies become accepted conventional wisdoms... It does however not change the truth. Local assets includes entrenched risk premia and provides inherent protection against low probability events. A recent article from Thalia Petousis also highlighted the risk of the EFF "taking over" and although this is theoretically possible, it remains an extremely low probability outcome. When financial professionals support the hypothesis that local liabilities are covered by global assets, then the end investor oftentimes pays the price... At least this is what the empirical evidence shows Paul Theron Offshore investment has a place in a balanced financial plan but needs a local counter weight snd this is best determined by the investor liability profile. I wonder what drives the SA economy and currency over the long term? I can give you a hint - it is not politics or elections... These things are distractions that present opportunities to consistent investors. #AskBetterQuestions #RealYieldsMatter #NumbersDominateNarratives

Years ago Diana Mackay and I wrote a paper for ALFI on the tragedy of uninvested cash in Europe. This piece from the FT suggests the problem is still there, too much in cash over a long term means really missing out on a better financial future. Regulations, complexity, advice gap etc are all challenges but equally the whole industry needs to find a way to make communications around investing more interesting so people want to invest rather than it being a task they put off until tomorrow (which never comes). https://lnkd.in/e4W8qjfe

Our latest WeekWatch - A weekly round-up of key events in markets and personal finance news. #globalmarkets #personalfinance #moneymatters #wealthmanagement

Interesting article supporting our observations on inbound M&A into the UK. Both US and European trade and financial investors showing increasing appetite to buy UK private businesses #manda #mergersandacquisitions #investment

BULLETINS FROM THE UK FINANCIAL BALANCE SHEET The UK net international investment position (NIIP) deteriorated markedly last year, erasing all the post-GFC improvement and confirming the negative long-run trajectory. Over the past 2 years, UK net ownership of loans has halved while net holdings of equities and investment funds has switched from positive to negative. The zenith of the UK financial system, when its balance sheet was at its largest in relation to the M4 money stock, was way back in 2000, although 2005 runs it a close second. Notably, the value of equities, investment funds, insurance and pension assets as a ratio of M4 has dropped from 5.86 times in 2000 to 3.51 times using the most recent data. Since end-2021, the nominal value of UK financial assets has fallen by almost 8 per cent. The UK has suffered a de-rating and there may well be further to go. https://lnkd.in/emp_vGZG

🔻🔻🔻 Title: How Bonds Made a Comeback as a Serious Investment Choice - Financial Times Hey everyone, just came across this interesting article from the Financial Times about the resurgence of bonds as a top investment option. The piece delves into the shifting market dynamics and why bonds have become an appealing choice once again. It's a great read for anyone looking to diversify their investment portfolio. Check it out and let me know your thoughts - it's definitely worth a read! 💼📈 #Investment #FinancialTimes #Bonds https://ift.tt/409VCkl

The strongest force in the universe is COMPOUND INTERERST ~ Albert Einstein The tax free savings account (TFSA) is a savings program that was introduced in 2009 that can also function as an investment vehicle that enables Canadians to invest (tax free). Initially, the annual contribution limit set at $5,000, but it’s since increased to $7,000, with a total contribution limit of $88,000 as of the end of 2023. Most Canadians have taken advantage of this initiative― according to BMO’s Annual Investment Survey, nearly 60% of all Canadians have a TFSA account. The main benefit for a TFSA is tax-free compounding. For those investors who maxed out their annual contributions and had invested in the S&P 500 Index, the S&P/TSX Composite Index and the MSCI World Index since 2009, they saw their account values grow to $217,812, $129,026, and $166,358 respectively as of 2023. These returns were earned despite the amount of uncertainty we experienced in the aftermath of the global financial crisis, during which we’ve lived through three U.S. elections, the European debt crisis, the COVID-19 pandemic, and global trade disputes, not to mention the ongoing conflict in Ukraine and the Middle East. Best-selling author Darren Hardy described the compound effect as the principle of reaping huge rewards from a series of small, smart choices. There may be an important lesson to be learned here: Investors tend to associate investing with large sums of money, but that's not necessarily true. On the contrary, a series of small, smart investment choices can potentially lead to healthy returns through the compound effect. In our view, the TFSA can be a useful investment vehicle that can help Canadians achieve their hopes, dreams, and wishes. #markets #stocks #advisors #manulife #investing #economy #savings Manulife Investment Management Chart. Source: Bloomberg. As of December 31, 2023