When Investment Week was launched on 30 January 1995, the industry was less than a decade into its life under the Financial Services Act and many advisers and product providers were getting used to the brave new world of polarisation.
So then, just as now, much of the industry debate is about the regulatory status of the distributors – financial advisers in their numerous guises.
What was apparent to us, and the reason we established Investment Week, was not enough attention was being paid to the fundamental component of many financial services products – the investment.
We argued back in 1995 that a pension was merely an investment with a complex and attractive tax wrapper. Many investors and advisers had begun to realise Peps were exactly the same, if not much simpler to understand and there were other versions – Tessas, Business Expansion Schemes (BES) and later VCTs and EIS.
Up to this point, significant market corrections had been only generational, meaning the life company with-profit model of being able to offer smoothed returns had been very attractive.
In the last 15 years, successful investment management has been about asset allocation and we felt the more advisers understood about this through the views of fund managers talking about their portfolios and the markets they invest in, the more informed decisions that could be made.
We were right and we continue to believe this will be the case going forward as volatility is an opportunity of the present and the future of investment markets.
It is always difficult and often a waste of time to try and predict the future but there are areas we feel sure will increase in importance for investors – be they professional or private.
We live in a generation of debt and it will take between 10 and 20 years for that to unwind and developed nations get back to more normalised ratios of debt to GDP. That would seem to imply strategies that can play this scenario successfully will offer investors good returns.
This arguably means fixed interest in its broadest sense, but specifically credit and global bond mandates are likely to become an integral and larger part of many portfolios, rather than the current peripheral position.
The cult of the equity may be temporarily dead, but equities per se are not. The equity markets will always be a valuable way of raising finance, meaning the way many listed companies are likely to tempt back investors is with dividends. Do not write off the equity dividend – it has been a useful mechanism for well over 100 years to attract investors and will remain so for decades to come.
15 years ago, emerging markets – which meant the dragon and tiger economies of South East Asia and a handful of major Latin American nations – were described as being for ‘widows and orphans’ and came with wealth warnings.
In the last decade and a half, and surely for the next decade and half, to view emerging markets in their wider sense in the same way will be to miss huge areas of growth potential. The risk factor in such markets is always open to debate, but given the risk that became obvious in every asset class from cash to corn in the wake of the Lehman collapse, it would be wrong to dismiss emerging markets purely on historical risk perceptions.
Newer asset classes such as climate change and commodities are now part of the investment landscape and will continue to be so because the global economy is driven by structural themes in which individual asset classes play a part. The planet’s rise in population and the rapid development of ‘middle-class consumers’ in developing economies will mean commodities and the climate will become crucial.
So, looking further to the future, it seems to us asset allocation or multi-asset investing will grow in significance and legitimacy as a way for investors to build an investment portfolio that can look after them in retirement.
The number of fund managers will continue to grow, making it increasingly difficult for any adviser to differentiate the excellent from the mediocre, so we believe Investment Week will continue to have much to write about in print and online.
We may in the near future see a return of a kind of direct consumer investment business driven by the web and low-cost propositions such as ETFs and index funds, but the majority of investors will still look to professional advisers for their investment advice.
After a consumer’s health and family, their wealth is their most important concern, and over time they will begin to understand paying for investment advice is a valuable service and not something they can scrimp on.
We feel the outlook for good advisers and good asset managers is very positive and Investment Week will continue to play its modest part in reflecting this future.
