Making money: what the experts think
Oil shock
The Opec cartel confounded analysts by emerging from a meeting in Algiers with a tentative deal to cut oil supply. Markets reacted positively to news that could signal the end of a two-year supply glut that has crushed prices, says Jason Hollands in Money Observer. Brent, the international oil price, rose steadily to go back above $50. The FTSE 100 also surged back above 7,000, with energy companies such as BP and Shell gaining 5% in a single session. “But there are two sides to every story”, and airlines, which will see fuel costs rise, were among the losers. Investors also “need to be aware” that inevitably higher inflation will hurt the investment case for already low-yielding bonds.
Funds recover
Generally, the improved sentiment towards markets and the economy that has built over the summer has seen the fund industry “regain its post-brexit vote losses”, says The Times. Net sales to retail investors came in at £1.7bn in August, with an inflow of £1.1bn from institutions taking the total under management to a record £1trn. That’s not to say that British investors are gung-ho, or that they are especially positive on their home market. Net sales of safer fixed-income funds dominated, accounting for £1.2bn of the inflow from retail investors, while the measly £121m that went into equity funds masked ongoing withdrawals from most sectors. The “biggest outflows were from UK equity funds”, at £162m.
Buy as you go
Housing associations are trying to persuade the Government to support the roll-out of a new product to help lowincome households get on the housing ladder, says The Times. The National Housing Federation describes it as “buy as you go”, and says it will be aimed at a “coping class” of key workers, such as bus drivers and care workers, who struggle to afford the deposit for a home. Under such a scheme, they would not need a mortgage or to pay anything up front: instead, they would pay 90% of the market rent, up from a current maximum of 80%, with the extra 10% surcharge being used to build up equity and buy the house over a 25- to 30-year period. The scheme would require government money to get off the ground, in the form of upfront grants “to pay for construction”.