A WEEK into the Edinburgh Fringe Festival and one performance really stands out. This comedian really had them rolling in the aisles on Wednesday with his tales of farce on Threadneedle Street.
Any pretence that the governor of the Bank of England knows what he’s doing was destroyed in a series of comic vignettes that had the audience wondering if they were unwitting participants in a mock documentary.
Without spoiling it for you, I have to share some of the highlights:
Quantitative easing may not be having the desired effect, he admits, months after the rest of the country told him as much.
The UK economy is slowly healing, he claims, despite also slashing the growth forecast to zero, down from May’s 0.8 per cent figure.
The eurozone is a “saga that goes on and on”, he reveals, to gasps of astonishment.
In a stunning coup de grace, he produces an inflation report containing the shock revelation that the banks may use the Funding for Lending scheme to boost their own profits. Who saw that one coming?
There’s plenty more where that came from folks, and he’s here all month. In fact, he’s been with us for far longer than anyone would have expected. Somehow Sir Mervyn King remains, for now, governor of the Bank of England, from where his laconic delivery and devastating timing can have the maximum impact.
PRIVATE investors will not have been unduly concerned by the plunge in the Standard Chartered share price this week after it was alleged to have laundered up to £160 billion for Iran. But perhaps they should have been.
The accusation came from the US – which has sanctions in place against Iran – and raised the prospect of Standard Chartered possibly losing its New York banking licence.
Analysts Shore Capital described the news as “a hammer blow” to the bank’s investment case. Asia-focused Standard Chartered has retained a relatively low profile amid the banking turmoil of the past three years. However, it hasn’t been off the radar of the fund managers running billions of pounds in private holdings and pension savings.
Financials and Asia funds in particular have significant holdings in the bank. Financial Express singled out the Aberdeen Asia Pacific fund as one of several funds with more than 3 per cent of its portfolio’s assets invested in Standard Chartered. In fact, Standard features among the biggest holdings in 12 Aberdeen funds and its prominent in Asia Pacific funds run by other fund houses, too.
A number of funds in the popular UK equity and equity income sectors have hefty holdings in Standard too, including the Schroders UK Equity and F&C UK Equity Income vehicles.
The value of having at least an idea of where your money is invested is also underlined by the news that France is set to return to recession.
France was this week described by fundexpert.co.uk as a “lion in the grass, very dangerous yet unseen by many”. Its research highlights a number of European equity funds in which France figures strongly. More than half of the St James’ Place Continental European is invested in France, while two of the European funds at Scottish Widows have third of their assets invested in the country.
That’s not to say anyone with money in those funds should think about getting out. But it underlines how easy it is to sit on the sidelines watching events unfold without realising how much of a personal stake you may have in them.
INVESTORS face enough threats without creating risks of their own, yet the compulsion to repeat the same investment errors seems as strong as ever.
It suggests that too few are making the best value investment of the lot – quality financial advice.
Perhaps the perception that too many advisers still fall short of the standards required explains why more than half of consumers say they wouldn’t pay a fee for financial advice.
It doesn’t augur well for next year, when new advice rules come into force under the retail distribution review (RDR). The changes include a ban on commission payments from providers to advisers for selling their products.
Many IFAs have already moved to a fee-based model in anticipation of the new rules. In the process, however, many are taking their business upmarket, leaving banks to target an enlarged “mass market”.
Research by Deloitte underlines the challenge faced in boosting access to advice. It found that 54 per cent of consumers are unwilling to pay a fee for financial advice.
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Weather for Edinburgh
Saturday 18 May 2013
Temperature: 9 C to 13 C
Wind Speed: 18 mph
Wind direction: North east
Temperature: 9 C to 18 C
Wind Speed: 8 mph
Wind direction: North east