Short positions... investors bolster their defences

⬛ European investors are increasingly putting their money into exchange-traded funds (ETFs) tracking the defence sector, says the Financial Times. The three available ETFs had net inflows of $189m by 22 April, putting them on track to match the record haul of $321m the three funds made in March. This increase in investment coincides with a rise in defence spending by European governments after Russia invaded Ukraine. The VanEck Defence Ucits ETF is the largest fund, with retail investors owning about 60% of it. Wealthy clients of private banks, family offices, and independent wealth managers are also keen on the industry. Pension funds have traditionally excluded defence stocks, but some are rethinking this stance. Tom Bailey from HANetf, the issuer of the second-largest defence ETF, the Future of Defence Ucits ETF, said clients see them as a “hedge against geopolitical risk” and as a “long-term structural story”. ⬛ St James’s Place’s customers pulled £3.26bn from the UK’s largest wealth manager in the first quarter of 2024 amid an overcharging scandal, says The Telegraph. Net inflows at the FTSE 100 firm declined to £710m from £2bn in the same period last year. St James blamed its performance on clients withdrawing savings owing to the cost-of-living crisis and higher interest rates. But inflation has declined to a two-year low. The company has set aside £426m in redress for customers who have paid annual fees for advice they were not receiving. The company had said it would overhaul its fee structure and agree to cap charges for advice and funds to comply with the Financial Conduct Authority’s new “fair value” rules. Funds under management increased by 16.5% to £17bn. It has nearly 960,000 customers.