QROPS Advice: Investment News: WORLD'S BEST MARKETS

A good index-tracking fund can and should be one of the core components of any diversified portfolio. But there's a problem with ETFs. They provide a simple, efficient and cheap solution to lots of investment difficulties yet private investors have been slow to buy them. There are several reasons for this including our continued love affair with star fund managers.
But a bigger problem is probably what's been called the 'biscuit tin' problem – defined by one chief executive of an ETF firm as "investors not knowing what the heck our ETF actually tracks. We'd say it tracked the so and so MSCI index and they'd look at us blankly".
This brutal assessment gets to the heart of the problem. To get the best from low-cost trackers, you need to understand what the fund is actually tracking first.
It's all about the index
Indices are not all equal. Track an imperfect index that's poorly constructed, overweight in just a few shares (say banking stocks in 2008) and you'll end up destroying a large chunk of your money despite all the academics' talk about efficient markets and perfectly optimised portfolios. But there is a huge range of major markets that can be tracked using mainstream indices – nearly all the big asset classes and markets boast an index that's become a part of everyday language. In the US, for example, the level of the Dow Jones Industrial Average or the S&P is the subject of intense daily discussion on a number of major news programme s, while here in the UK all the major news organisations talk hourly about the current level of the FTSE 100 index of major London listed blue-chip companies.
The key for investors is to work out which indices – and markets – really matter and then work out how best to invest in these markets. FTSE Group alone calculates more than 120,000 indices.
In many liquid, mature markets index-tracking funds are probably the cheapest and arguably the best way of buying long-term exposure. Remember that an index-tracking fund will only ever buy the most popular stocks that are increasing in value – it's a giant weighing machine that is heavily influenced by momentum, so if a market and thus an index is overweight popular mining stocks, expect the ETF to be equally overweight.
by: David Stevenson

QROPS Advice: Investment News: The case for multi-asset funds

The first month of 2010 has been marked by a deluge of multi-asset fund launches. A week ago, Heartwood Wealth Management announced the launch of its CF Heartwood Cautious Multi-Asset and Growth Multi-Asset Funds, which will be followed soon with the launch of the Balanced and Balanced Income Funds. The new multi-asset funds will invest primarily in third party funds, including alternatives, structured products and derivatives as appropriate.
Other recent launches include Prudential's range of five multi-asset funds with different risk levels: Defensive, Cautious, Cautious Growth, Balanced and Adventurous, and Scottish Widows Investment Partnership (SWIP)'s SWIP Multi-Manager Optimal Multi-Asset Fund, a higher risk/return follow-up to its cautious SWIP Multi-Manager Diversity Fund launched in 2007. Allianz Global Investors is another provider expected to launch a multi-asset fund.
The recent hike in multi-asset fund launches brings some truth to predictions by industry players and independent financial advisers (IFAs) that multi-asset funds will be the "hot financial product" of 2010. The term 'multi-asset funds' refers to funds which invest across several asset classes and fund managers, which means investors are not exposed to the market gains or losses of just one asset class. Ultimately, multi-asset managers create the potential for capital growth and the conditions where the better performers may offset the poor performers.
Investors' desire to spread investment risk, coupled with the low interest rate environment in which it is hard to get returns on cash, have been touted as some of the reasons behind the increased focus on diversified strategies.
Another, more pressing, reason behind the spate of launches is the need for IFAs to meet the demands of growing regulation, such as the Financial Services Authority's (FSA) Treating Customers Fairly (TCF) initiative and the Retail Distribution Review (RDR). These require IFAs to ensure a fair deal for consumers and consider as wide as possible a range of investment products to meet client risk and investment objectives.
So what benefits do multi-asset funds hold for the private investor?
By: Leonora Walters

QROPS Advice: Investment News: Spotlight on Technology Funds

Following the much-publicised bursting of the 'dot.com' bubble in 2000, many investors have understandably ignored technology funds as being part of their investment portfolio. Catastrophic losses followed unprecedented excitement around a new sector that promised so much yet ultimately delivered, for some, almost nothing.
Technology funds became a victim of their own success in a very short space of time, in January 1999 investors put just GBP5m into technology funds, in January 2000 they attracted GBP238m (source: Investment Management Association (UK)). The future value of technology equities was vastly over estimated, and when these expectations were not met, the industry duly collapsed.
However, anybody that has kept a close eye on the development of technology funds since 2000 will know that it now represents a very real, if not relatively unknown, investment opportunity (the Lipper Science and Technology Funds sector average returned 69.31percent in 2009). Learning from the mistakes of a decade ago, technology companies started focusing on profits and cash flows rather than just revenue growth, so much so that the technology sector is now in very healthy financial shape, with either little or no balance sheet debt. More importantly, valuations based on technology companies represent an honest reflection of future worth, unlike they did 10 years ago.
Whilst the sector didn't escape the effects of the recent global recession, it has emerged relatively unscathed owing to an almost unique appeal to both retail and business markets. Consumers' seemingly insatiable appetite the latest technology gadgets; mobile phones, multi media and gaming consoles, plasma and LCD TVs etc., coupled with need for IT infrastructure solutions to accommodate the rapid growth of many financial centres based in emerging market economies, has served as a regular and diverse income stream for many new and established technology firms.
From innovative smartphones to 'tablet' computers and 3-D TV, technology consumers and investors have a lot to look forward to in 2010 and beyond. Warren Tennant, manager of the Hansard Invesco Global Technology fund (MC23, available in both HIL and HEL) has greater confidence in the medium-term outlook and continues to be encouraged that the coordinated global stimulus will positively affect the global economy. Going forward, he sees the possibility for improvements in credit markets, stabilisation of demand patterns and conditions for secular growth. And have consistently highlighted the long-term positive trends for technology in the team outlook.
Hansard has a variety of fund links across a diverse range of asset classes, whether your clients have a conservative, balanced or adventurous outlook. To find out more about any of our fund links please contact your Hansard Account executive who will be able to assist you further.

QROPS Advice: Investment News: Home prices in 20 U.S. cities rose in November

Home prices in 20 U.S. cities rose in November for the sixth consecutive month, signalling the industry that precipitated the worst recession since the 1930s is stabilizing. The S&P/Case-Shiller home-price index increased 0.2 percent from the prior month on a seasonally adjusted basis, after a 0.3 percent rise in October, the group said on Tuesday. The gauge was down 5.3 percent from November 2008, exceeding expectations and the smallest year-over-year decline in two years.

QROPS Advice: Investment News: France's growth may exceed forcasts

France's 2010 economic growth may exceed the government's 1.4 percent forecast, President Nicolas Sarkozy said. France's economy emerged from recession last year, growing 0.3 percent in the second and third quarters, and prompting the government to double its economic forecast. Sarkozy was more confident than his finance minister on employment, pledging an end to job losses in the "coming weeks, months."

QROPS Advice: Investment News: German business confidence rises

German business confidence rose more than economists forecast to an 18-month high in January as the global economic recovery boosted exports. Rising foreign sales, fuelled by Asian demand, may help offset a slide in domestic spending and ensure Germany's economy continues to expand. The government said last week it will raise its 2010 growth forecast to 1.5 percent from 1.2 percent even as some of its stimulus measures expire. Europe's largest economy shrank 5 percent last year, the most since World War II. Tuesday's report "laid to rest some of the concerns that the economy is running out of steam," Carsten Brzeski, an economist at ING Group said.

QROPS Advice: Investment News: Chinese banks have begun restricting new loans

Chinese banks have begun restricting new loans, responding to a push by regulators to contain credit after a surge in lending in the first half of this month. The China Banking Regulatory Commission last week said lenders that failed to meet any of more than a dozen regulatory requirements have been told to limit lending. The watchdog said not all banks have been asked to rein in credit. "Five major banks we have contacted today all suggested they received instruction from banking regulators last week to slow down new lending, but not stop new lending," HSBC Holdings Plc economist Hongbin Qu said.