Page 4 - DIY Investor Magazine | Issue 33

....AND THEN THREE COME ALONG AT ONCE
I can find no record of anyone having drawn a parallel between black swans and buses, but those mopping their brow as the pandemic receded may have been discombobulated to see it so closely followed by a global energy crisis, rampant inflation and a vicious war in Ukraine.
Those seeking an edge in the pub quiz may like to know that the collective noun for swans can be any one from a bevy, herd, game, or flight; Bent Flyvbjerg (honestly), a professor at Oxford Business School suggested that in the current context perhaps it should be an ‘apocalypse’.
You will not struggle to find an old lag in a City watering hole who has ‘seen it all before’; however, whilst basic principles still apply, investors should exercise great caution as they seek to exploit the opportunities arising from this extraordinary combination of circumstances.
Markets around the world are reeling from the situation in Ukraine; many companies, particularly in the UK are trading at ‘bargain-bin’ prices, and now could be the time for savvy investors to make hay.
Commodity markets such as crude oil have surged with investors benefiting from companies buying back shares with windfall profits and the expectation of high dividends this year.
Should we really ‘celebrate’ the performance of fossil fuel companies on Earth Day? Simon Gergel of Merchants Trust, contests that companies like BP and Shell have the assets and skills to take carbon out of the economy.
ESG will inevitably be a dominant theme as the government’s ten-point ‘Green Industrial Revolution’ sets about tackling climate change; PWC believes this will cost £400bn just in the UK over the next decade.
In this issue Kepler Trust Intelligence makes the case for healthcare and biotechnology as countries devote an increasing proportion of GDP to the sector; HANetf describes how its latest thematic ETF seeks to take advantage of India’s rapid ascent in e-commerce and technology platforms.
Thematic ETFs have grown rapidly in the past three years with AUM quintupling to £29bn, delivering exposure to sectors such as space, energy transition and robotics.
Defence spending would seem to be a logical place to look for future returns as the ripples emanate from Ukraine, with funds taking away some of the ‘excitement’ of individual equities.
Global equity markets have fallen 7% since the beginning of 2022, and gold prices have risen commensurately to $1953 a troy ounce. However, those seeking this traditionally safe haven are being warned to exercise caution because the price of gold has not weakened as the yield on US Treasuries has increased, as would normally be expected.
If there is opportunity in ‘value’ stocks, the Telegraph reports a less positive phenomenon as ‘soaring prices have pushed DIY investors into beat-up shares’ - suggesting people are investing in risky stocks to try to exceed what is a 30-year high inflation rate. There are stocks that may be undervalued, and there are stocks that are cheap for a reason; caveat emptor.
When it comes to having ‘seen it all before’, having increased its dividend in each of the past 39 years, Merchants Trust is one of AIC’s Dividend Heroes - investment trusts that have increased their dividend for more than 20 years in a row.
We look at the 2022 Income and Growth Rated Trusts.
Having grown by 34% last year, DIY investing remains in rude health with Arbuthnot Latham reporting 8m people using related search terms.
DIY Investor will be here to help them – and hopefully allay any cygnophobia*
*fear of swans
MAKE SURE YOU DON’T MISS AN ISSUE; CLICK HERE TO RECEIVE DIY INVESTOR MAGAZINE TO YOUR INBOX
DIY Investor Magazine · Apr 2022 4