Scottish Daily Mail

Could cider drinkers and posh handbags boost your pension?

- h.black@dailymail.co.uk By Holly Black

THE main driving force behind the world’s recovering economies is the good old consumer.

With unemployme­nt down, wages up, the housing market strong and oil prices low, shoppers are set to spend even more in 2016.

That trend is clear not only in the U.S., but also in the eurozone, according to Luca Paolini, chief strategist at Pict et Asset Management.

And t he massive market of China is moving towards a consumer-oriented economy, from one which has relied on exports and commoditie­s.

The Pictet Premium Brands fund is one way to tap into this trend. It invests in luxury labels such as Burberry and Christian Dior as well as more accessible brands including Nike and L’Oreal.

The fund had a tough time in 2015 and is down 5 pc over the past 12 months, but as the consumer continues to drive the world recovery, now could be its time to shine.

Another bet on consumers, says Alex Wright, manager of the Fidelity Special Situations funds, is C&C. It’s the Irish firm which produces popular drinks brands such as Bulmers and Magners cider.

Its share price was more or less flat last year, but the company has recently signed along-term partnershi­p agreement for the sale and distributi­on of its ciders in the U.S ., which could be big business.

BOOM IN SHOPS AND OFFICES

THE expected recovery in commercial property prices is estimated to be around 18 months behind that in the residentia­l market, which suggests there is a lot of growth to come.

While interest rates are likely to increase this year, experts believe that rises will be minimal, meaning that mortgage loans will still be incredibly cheap to repay, compared with most other points in history.

And some hold the view that regulatory changes may put a dampener on building, which could drive rents up as supply tightens even further.

The key is to have property in a desirable location. That doesn’t just mean prime sites on the High Street, it means well-located warehouses and industrial units and buildings with higher yields. Hugo Machin, manager of the Schroders Global Real Estate Securities fund, says: ‘You need to look for properties with pricing p o wer. Why should an occupier pay more f or a building when a cheaper rent can be found next door? You need to give occupiers a reason to pay rents.’ Tom Stevenson, investment director at Fidelity, likes the SLI Ignis UK Property Feeder fund. It owns a number of properties across the country, including Leamington Shopping Park in Warwickshi­re, an office in Mayfair, Central London, and a Sainsbury’s Superstore in Suffolk. The fund has returned 8 pc over the past year.

There are some risks to investing in property, though.

First, most funds own actual buildings, so there is always the danger that you might not be able to get your money out when you want to because the fund can’t sell its assets quickly enough to meet any redemption­s.

Second, if you own a house then your savings are already incredibly exposed to the property market, so if you put the rest of your cash in a property fund, you have all your eggs in one basket. If you are keen on property investment and want to go ahead, ensure you deploy only a small percentage of your money.

Many investors are still nursing wounds from the banking crisis when some funds stopped savers from withdrawin­g their money as prices plummeted.

IS NOW THE TIME TO INVEST IN OIL?

IT WAS a hideous year for oil investors in 2015. They saw the price of the black stuff halve since the previous autumn. But does that mean it’s time to buy?

One of the main problems for the commodity i s oversupply. More oil i s being produced than consumed.

This is partly due to the increased use of f r acking in t he U. S., and partly because of a refusal from some of the oil-producing nations to cut back production, despite a glut.

Supply will eventually be more scarce again — already 1,000 oil rigs in the U.S. have been taken out of production. But i t could be mid-2017 before things balance out. Even so, there may still be opportunit­ies in the industry.

Big firms with a limited amount of debt could continue to pay the healthy dividends which investors have come to rely on them for.

Mr Wright likes Shell, which is expected to yield around 7 pc.

He says: ‘Global oil production will soon be lower and this means that prices have a good chance of recovering.’

But beware — the price could fall further before it begins to recover, so savers should brace themselves for a bumpy ride.

Brian Dennehy, director at Fund Expert, likes the Artemis Global Energy fund. It invests in gas companies as well as oil, so is not wholly exposed to the fortunes of just one type of energy.

LAND OF THE RISING PROFITS

INvESTORS may easily have overlooked Japan in 2015.

The country had planned major reform to boost inflation and get consumers spending — but it ended up only narrowly avoiding a recession in the year. Despite this, Japan funds did incredibly well, with an average return of 14 pc. Many experts are predicting 2016 as the year when positive changes begin to take effect in Japan.

Its government is determined to see wages and spending increase — and wants to boost tourism.

Those wanting to bet on Japan could try Schroders Tokyo fund.

Its biggest areas of investment are cars and electronic­s. It also has money in firms including Toyota, Sumitomo Mitsui Finance and East Japan Railway. It has returned 46 pc over the past three years.

Brian Dennehy likes the Baillie Gifford Japanese Smaller Companies fund, which invests in firms such as baby products producer Pigeon and microscope-maker Jeol.

He says: ‘While many still fret about Japan, it appears to have a growing pool of companies which are often overlooked and under-researched.’

EUROPE MAY YET BE A GOOD BET

THE economies across the globe which have recovered more quickly after the f i nancial crisis are generally those where there has been quantitati­ve easing.

The U.S. and UK, for example, are two of the strongest economies in the West. Europe finally began pumping money in to its economy so now should be a prime opportunit­y for savers to benefit.

Although there are concerns about an influx of migrants, worries about Greece have cooled since it signed a new bailout package last summer and employment, consumer confidence and wages are picking up.

Darius McDermott, director at Fund Calibre, likes the BlackRock Continenta­l European fund, which invests in big French, Swiss and German firms such as brewer Heineken, pharmaceut­ical firm Novartis and bookmaker Betfair. It has returned 12 pc in the past year.

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