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I know what you did this summer

04/09/2019

The first week of September is traditionally associated with fresh beginnings, whether that’s the start of Autumn, a return from holiday, back to school, or, like me, a new role with a new company.

I am very pleased to have joined my former colleagues here at Research in Finance to take on the newly created position of editor and head of content, working with the outstanding research team here who have been busily supplying high quality insights to the financial services industries for the past six years.

The first projects I will be working on include updating RiF’s highly successful Wealth Manager Review, previously published in 2017, and will be looking for spokespeople within the distribution teams of asset management houses as well as wealth managers and discretionary fund managers.

Please get in touch via nataliekenway@researchinfinance.co.uk if you think you can help.

I will also be helping with content surrounding the Responsible Investment Review 2019 so please also contact me if you have comments on ESG or responsible investing.
As we settle back behind our desks, I thought it would be timely for my first blog to provide a snapshot of the major events of the summer:

Political drama prompts sterling to slide further

You may have noticed the UK appointed a new Prime Minister in early summer and Boris Johnson, as previously predicted, wasted no time in getting behind making sure Brexit was delivered by the new deadline of 31 October.

The pound slumped below $1.20 on Tuesday (3 September) morning but had pulled back a little last night after the House of Commons voted 328 versus 301 to take control of the Brexit agenda, allowing MPs to bring forward a bill to force another Brexit delay.

A snap election is increasingly likely so further swings in sterling throughout autumn are inevitable.

FCA to review ACDs after Woodford crisis

Following the suspension of the LF Woodford Equity Income fund on 4 June, the fallout has been far reaching with the regulator and the industry criticising actions by Woodford Investment Management, Hargreaves Lansdown and the fund’s authorised corporate director (ACD) Link Fund Solutions leading up to the suspension.

As manager Neil Woodford continues to liquidate the portfolio and look to larger-cap stocks, the Financial Conduct Authority has reportedly told ACD companies, which are appointed to ensure open-ended funds stick to regulatory rules and protect their investors, to expect a wider review of the sector.

The topic of buy lists also came under scrutiny and with RiF’s 2017 Wealth Manager Review finding that 96% of DFMs use a central fund buy lists, we will be looking at whether processes have been changed in the revised edition (coming soon).

Consolidation continues with Tilney/S&W and Miton/Premier announcements

Hot on the heels of the announcement that Neptune Investment Management was being acquired by Liontrust in late July, Tilney confirmed it was in merger talks with Smith & Williamson to create a £45bn wealth management business, while just this morning Miton and Premier announced an all-share tie-up. Set to complete in Q4, the move will create an £11.5bn asset manager branded Premier Miton Group.

As previously indicated in the 2017 Wealth Manager Review, consolidation in the market will ease firms’ huge regulatory burden so M&A activity will be making the headlines for many years to come but should we be concerned about the pace?

Bond fund rush

The UK’s political turmoil rising tensions surrounding trade wars meant investors begun to adopt a more cautious stance throughout Q1 and Q2. The first Wealth Manager Review said DFMs were largely underweight bond funds in 2017 but Morningstar figures released last month show $487bn piling into fixed income funds in the first half of the year, while stats from the Investment Association showed fixed income was the highest selling asset class for the fourth month in a row in June. And, in another show of investor caution, Money Market funds were the third best-selling asset class.

We will be looking to update DFMs’ asset allocation views and much more – I will be in touch!

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