Making money: what the experts think
● Trust issue
One of the big questions for retail investors is whether to go for investment trusts (which can borrow money and which trade on the stock market like shares) or traditional open-ended funds, says Katie Palmer in The Sunday Times. Typically, the decision will come down to individual investment goals, and the fees involved. But analysis by AJ Bell of 40 pairs of long-established paired funds and trusts – where each portfolio has the same manager and investment strategy – suggests that investment trusts win out in the long run. In 30 out of the 40 “mirror portfolios”, the trust outperformed the fund over ten years. And in 24 out of 40, they were cheaper. The trade-off for this is a “bumpier ride”: in 90% of cases, the investment trust was more volatile.
● Open door
If confirmed as PM, Boris Johnson has pledged to increase the lifetime allowance which limits the size of a pensions pot to just £1.055m (it has fallen from £1.8m in 2012). Such action would be welcome, says Josephine Cumbo in the FT, not least because the low limit is driving highearners, including vital NHS doctors, to cut their hours or retire early. But should Johnson’s pledge be taken seriously? He has claimed he had “repeatedly” tried to persuade Philip Hammond to increase the pot limit. Mysteriously, though, the Chancellor said he’d received no correspondence or request for a meeting from Johnson on the subject. The demobhappy Hammond teasingly stressed that his door at No. 11 Downing Street was “always open” – for another few days, at least.
● Lender beware
Fears are growing over the safety of peerto-peer (“P2P”) lending, following the collapse in May of the property investment platform Lendy, says Marc Shoffman in The Times. To add to the jitters, the UK’s largest P2P lender, Funding Circle, halved its revenue forecasts last week. P2P platforms typically offer inflation-beating returns, but investors aren’t covered by the Government’s compensation scheme, so it’s “lender beware”. You can minimise risk by spreading your loans across different P2P platforms (specialist providers, such as Goji and Orca will do this for you). Or if you stick to one platform, make sure your loan is spread among several borrowers.