On eToro's Website Capital at Risk. All investments carry a varying degree of risk and it’s important you understand the nature of the risks involved. The value of your investments can go down as well as up and you may get back less than you put in. 3 May: Fundscape Warns Of Tough Year Ahead For Platforms Assets held on investment platforms offering their services direct to consumers (D2C) have dipped below £300 billion in what could be a tough year for providers, according to Fundscape. The fund research analysts says rampant inflation, fuel price increases, National Insurance hikes and the cost-of-living crisis have taken a toll both on investor sentiment and market prices in the first quarter of this year, even before factoring in the effect of the Russian invasion of Ukraine. Fundscape says the overall result has led to a 6% reduction in the combined assets under management held on D2C platforms from approximately £315 billion to £297 billion at the end of March 2022. D2C providers tend to earn the bulk of their revenues during the Individual Savings Account season between January and March each year, heightening the damage caused by a sluggish first quarter. Fundscape’s Martin Barnett said: “The first quarter of the year is the bellwether of investor sentiment and sets the tone and pace of investments for the rest of the year. 2022 could be a tougher year for many D2C houses, especially the robos.” Robos, or robo advisers, provide an automated, half-way house option for investors looking for an alternative either to do-it-yourself investing, or delegating the full-blown management of their investments to a professional adviser. 28 April: CFA Reports Leap In Trust For Financial Services A new Chartered Financial Analyst (CFA) Institute study shows that 51% of UK retail investors now trust the financial services sector, compared with just 33% in 2020. The CFA Institute is a global body of investment professionals, which administers CFA accreditation and publishes regular investment research, including its biennial report on investor trust. According to the latest report, the majority of UK retail investors (59%) now believe it’s ‘very likely’ they will attain their most important financial goal. For 58%, this is saving for retirement, while a further 12% are prioritising saving for a large purchase such as a home or car. The CFA surveyed over 3,500 retail investors across 15 global markets, and found that trust levels have risen in almost every location. On average, 60% of global retail investors say they trust their financial services sector. The CFA study views last year’s strong market performance as a key driver for investor trust. In 2021, both the S&P 500 and NASDAQ achieved average returns of over 20%, while the FTSE 100 returned 14.3% — its best performance since 2016 (although global markets have since suffered falls in line with the general economic downturn). Another factor is the uptake of technologies such as artificial intelligence-led investment strategies and trading apps, which can improve market accessibility and transparency. Half of retail investors say increased use of technology has instilled greater trust in their financial advisor. The study also revealed investor desire for personalised portfolios that align with their values. Two-thirds say they want personalised products, and are willing to pay extra fees to get them. Investment strategies that prioritise ESG (Environmental, Social, and Governance) credentials are a key target area for this personalisation, with 77% of retail investors saying they are either interested in ESG investment strategies or already use them. Rebecca Fender, head of strategy and governance for research, advocacy, and standards at the CFA Institute says: “The highs we’re now seeing in investor trust are certainly cause for optimism, but the challenge is sustaining trust even during periods of volatility. “Technology, the alignment of values, and personal connections are all coming through as key determinants in a resilient trust dynamic.” 20 April: AJ Bell Aims Trading App At Market-Shy Investors Investing platform AJ Bell has launched what it claims is a “no-nonsense” mobile app aimed at investors with considerable sums to invest, but who are daunted by the prospect of stock market trading. AJ Bell is hoping that its Dodl app will appeal to savers disappointed with low returns on their cash and who are looking for an easy way both to access the stock market and manage their investments. City watchdog, the Financial Conduct Authority, recently identified 8.6 million adults in the UK who hold more than £10,000 of potentially investable cash. Research by AJ Bell prior to the launch found that about a third of people who don’t currently invest (37%) are put off from doing so because of not knowing where to start. About half (48%) said being able to choose from a narrow list of investments would encourage them to start investing. Dodl will therefore limit investors to a choice of just 80 funds and shares that can be bought and sold via their smartphone. In contrast, rival trading apps offer stock market investments running into the thousands. The app will offer several products that people need to save tax efficiently, including an Individual Savings Account (ISA), Lifetime ISA and pension. Dodl will also feature “friendly monster” characters that aim to break down traditional stock market barriers and make it easier for customers unfamiliar with the investing process. AJ Bell says a Dodl account can be opened via the app in “just a few minutes”. Customers are able to pay money into accounts via Apple and Google Pay, as well as by debit card and direct debit. Dodl has a single, all-in annual charge of 0.15% of the portfolio value for each investment account that’s opened, such as ISA or pension. A £1 per month minimum charge also applies. The annual cost of holding a £20,000 ISA via Dodl would be £30. Buying or selling investments is commission-free, and no tax wrapper charges apply. AJ Bell says customers investing in funds will also be required to pay the underlying fund’s annual charge as they would if they were investing on the company’s main platform. Andy Bell, chief executive of AJ Bell, said: “Investing needn’t be scary. In developing Dodl, we’ve focused on removing jargon, making it quick and easy to open an account and narrowing the range of investments customers have to choose from.” 14 April: Market Turbulence Takes Toll On Wealthy Investors Millionaire UK investors experienced greater losses compared with their less well-off counterparts since the start of 2022, with market volatility doing more damage to riskier portfolios favoured by those with greater amounts to invest. Interactive Investor’s index of private investor performance shows that those of its customers with £1 million portfolios experienced losses of 4.2% in the first quarter of this year. By comparison, average account holders were down 3.6% over the same timeframe, while professional fund managers had lost 3.7% of their money. Figures stretching back over longer periods reveal an improvement in overall performance figures. Typical customers experienced losses of 1% over six months but were up by 5.4% over the past year. Professional managers fared marginally worse, being down 1% over six months and up 5.3% over the last 12 months. Stock markets worldwide have endured a troubled time in the first quarter of this year. According to investment house Schroders: “Russia’s invasion of Ukraine in late February caused a global shock. The grave human implications fed through into markets, with equities declining.” Richard Wilson, head of Interactive Investor, said: “The horror unfolding in Ukraine has framed what was already a torrid time for markets. So, it’s no surprise to see the first quarter of the year chart the first negative average returns since we first started publishing this index. “Markets don’t go up in a straight line, and this index is a sobering reminder of that. It’s also a reminder of the importance of taking a long-term view, and not putting all your eggs in any one regional basket.” [] In recent months, those with money in savings have become more wary about investing in markets. Hargreaves Lansdown (HL), the investment platform, said that roughly one-third of investors who put money into a stocks and shares ISA this year have kept their money in cash rather than investing it. In the previous two years, HL said that about a quarter of investors have favoured cash over markets-based investments. 1 March: Global Dividends At Record High In 2021 Payouts to shareholders made by companies out of their profits surged to a record level in 2021, but global growth in dividends is forecast to slow sharply this year. According to investment manager Janus Henderson, this trend was in evidence even before Russia’s invasion of Ukraine. The company’s Global Dividend Index reported that companies paid out $1.47 trillion to shareholders in 2021, an increase of nearly 17% on the year before. The figure represents a major rebound from the sharp cuts imposed on dividends by companies during 2020, when their preference was to retain cash due to the effects of the Covid-19 pandemic. Dividends are a common source of income for investors, especially as part of a retirement planning strategy. Janus Henderson said payouts reached new records in several countries last year including the US ($523 billion), China ($45 billion) and Australia ($63 billion). In the UK, dividends rose to $94 billion, a 44% increase in 2021 compared with the previous year. The recovery came from a base of particularly severe cuts during 2020 that meant payouts still lagged pre-pandemic levels. Janus Henderson said that 90% of companies globally increased or held their dividend steady during 2021. Banks and mining stocks alone were responsible for around 60% of the $212 billion increase in last year’s payouts. Last year, BHP paid the world’s largest-ever mining dividend worth $12.5 billion. For the year ahead, before Russia’s attack on Ukraine, Janus Henderson had forecast dividend growth at a more moderate 3.1%. The figure may now need to be trimmed further. Jane Shoemake at Janus Henderson said: “A large part of the 2021 dividend recovery came from a narrow range of companies and sectors in a few parts of the world. But beneath these big numbers, there was broad based growth both geographically and by sector.” 14 February: Bestinvest Spotlights ‘Dog’ Investment Funds Investment funds worth a combined £45 billion have been named and shamed as consistent underperformers by research from online investing service Bestinvest. The firm’s latest Spot the Dog analysis shows that fund groups abrdn and Jupiter and wealth manager St James’s Place and were each responsible for six relatively poor-performing funds out of 86 so-called ‘dogs’ identified by the twice-yearly report. The research defines a ‘dog’ fund as one which fails to beat its benchmark over three consecutive 12-month periods, and also underperforms its benchmark by 5% or more over a three-year period. A benchmark is a standard measure, usually a particular stock market index, against which the performance of an investment fund is compared. Bestinvest said the funds, despite their underperformance, will generate £463 million in management fees this year, even if stock markets remain flat. The analysis highlighted 12 funds that were each worth over £1 billion. These included JP Morgan’s US Equity Income fund worth £3.93 billion, Halifax UK Growth (£3.79 billion) and BNY Mellon Global Income (£3.47 billion). Also featured in the analysis were Invesco’s UK Equity Income and UK Equity High Income portfolios, described by Bestinvest as “perennially misbehaving funds”. Bestinvest’s previous Spot the Dog report last summer identified 77 funds worth just under £30 billion. The company says the reason for an increase in the number of poor performers is because of additions from the Global and Global Equity Income investment sectors. Jason Hollands, managing director of Bestinvest, said: “Spot the Dog has helped shine a spotlight on the problem of the consistently disappointing returns delivered by many investment funds. In doing so, not only has it encouraged hundreds of thousands of investors to keep a closer eye on their investments, but it has also pushed fund groups to address poor performance. “Over £45 billion is a lot of savings that could be working harder for investors rather than rewarding fund companies with juicy fees. At a time when investors are already battling inflation, tax rises and jumpy stock markets it is vital to make sure you are getting the best you can out of your wealth.” 3 February: Half Of DIY Investors Unaware Of Risk Of Losing Money Nearly half the people who make investment decisions on their own behalf are unaware that losing money is a potential risk of investing, according to new research from the UK’s financial watchdog. Understanding self-directed investors, produced by BritainThinks for the Financial Conduct Authority (FCA), found that 45% of self-directed investors do not view “losing some money” as a potential risk of investing. Self-directed investors are defined as those making investment decisions on their own behalf – selecting investments and making trades without the help of a financial adviser. In recent years, do-it-yourself trading has become increasingly popular among retail investors. The research says “there is a concern that some investors are being tempted – often through misleading online adverts or high-pressure sales tactics – into buying complex, higher-risk products that are very unlikely to be suitable for them, do not reflect their risk tolerance or, in some cases, are fraudulent.” It added that self-directed investors’ investment journeys are complex and highly personalised, but it was possible to categorise investors into three main types: ‘having a go’, ‘thinking it through’ and ‘the gambler’. The FCA used behavioural science to test various methods of intervention to help investors pause and take stock of their decisions before committing in “just a few clicks”. It found that adding small amounts of ‘friction’ to the online investment process, such as ‘frequently asked questions’ disclosures about key investment risks, warnings and tick boxes, helped investors comprehend the risks involved. 26 January: M&G Partners With Moneyfarm On Consumer Investment Service M&G Wealth is teaming up with financial app Moneyfarm to provide a direct digital investment service aimed at meeting a range of customer risk appetites and profiles. It will offer a collection of multi-asset model portfolios, backed by a range of actively managed and passive funds. Multi-asset investing provides a greater degree of diversification compared with investing in a single asset class, such as shares or bonds. Passive funds typically track or mimic the performance of a particular stock market index, such as the UK’s FT-SE 100. Moneyfarm will deliver the operating models, including dedicated “squads” to support the technology platform and customer relationship management, together with custody and trading services. Direct investing in the UK has witnessed rapid growth in the past five years, with an annual average increase in assets under management of 18% to £351 billion at the end of June last year, according to researchers Boring Money. David Montgomery, M&G Wealth’s managing director, said: “With the launch of a direct, mobile-based investment platform, our customers will be able to access the channel, advice and investment proposition that most suits their financial situation and needs.” Moneyfarm was launched in Milan in 2012 and has 80,000 active investors and £2 billion invested via its platform. 25 January: Bestinvest Relaunches DIY Investment Platform Bestinvest, part of Tilney Smith & Williamson (TS&W), is relaunching its online DIY investment platform with new features including free coaching, ready-made portfolios and a range of digital tools. The company says it is revamping its existing platform into a “hybrid digital service that combines online goal-planning and analytical tools with a human touch”. Customers can ask for help from qualified professionals through free investment coaching. If desired, clients can also choose a fixed-price advice package covering either a review of their existing investments or a portfolio recommendation. Bestinvest said one-off charges of between £295 and £495 will apply depending on the package selected. The new site will go live to coincide with the end of the tax year on 5 April. A range of ready-made ‘Smart’ portfolios offering a range of investment options to suit different risk profiles will accompany the launch. The portfolios will be invested in passive investment funds, while being managed actively by TS&W’s investment team. Passive funds typically track or mimic the performance of a particular stock market index, such as the UK’s FT-SE 100. The TS&W team will adjust portfolios’ exposure to markets and different asset classes according to prevailing investment conditions. Bestinvest said the annual investment cost will range between 0.54% and 0.57% of each portfolio’s value. From 1 February, the company added that it is reducing its online share dealing costs to £4.95 per transaction, regardless of deal size. Bestinvest produces a twice-yearly report on underperforming or “dog” investment funds. It said it wants to bridge the gap between existing online services for DIY investors and traditional financial advice aimed at a wealthier audience. Helping You Make Smart Financial Decisions Get the Forbes Advisor newsletter for helpful tips, news, product reviews and offers from a name you can trust. Subscribe