Trends: the good, the bad and the ugly
The march of the ETF
My candidate for the “year in a word”, said Patrick Jenkins in the FT, is “ETF” – the abbreviation for Exchange Traded Fund. Invented in the 1980s as a “cheaper and more tradeable alternative to mutual funds”, ETFS can now be bought tracking everything from equities, bonds and precious metals to “Peruvian securities”. They continued to sell like hotcakes in 2016. “ETFS are portrayed by their fans as a force for democratisation”, but the scale of the $3trn industry has sparked concern that ETFS may be driving “the valuation of many stocks and sectors, rather than just reflecting it”. Regulators are on alert. “2017 may be the year when we find out if the sceptics’ fears are justified.”
City bonuses
2016 was a year of mega-deals, said William Turvill in City AM. So why all the whingeing in the City? Because, despite a “record year for global M&A”, senior M&A bankers took a 20% bonus cut – the average payout fell from £100,000 in 2015 to £80,000, according to Emolument.com. No wonder 60% proclaimed themselves unhappy. M&A bankers will probably get a boost next year “when deals close and fees are paid”. Meanwhile, they can console themselves that they’re better off than some. Origination bankers took a 30% bonus cut to £45,000; and 77% of trading specialists complained about their average £65,000 payout. Of course, it may be that moaning about bonuses is simply endemic among bankers, even when they get a raise. Research specialists “enjoyed a 12.5% lift” to £45,000. Yet 71% still grizzled about it.
Hatching plans
Christmas came early for Spin Master, the Canadian maker of this year’s must-have toy, the Hatchimal – a furry creature that hatches from an egg, said the FT. Shares have jumped 70% this year. Needless to say, getting your hands on a Hatchimal is now impossible unless you’re prepared to pay “ridiculous money” on ebay, said Simon Robb in Metro. If you succeed, take my advice and stash it in the loft: when it comes of age as a collectible in a generation’s time, your child might even thank you.