Indholdsfortegnelse for Issue 1018 i MoneyWeek

“Private equity might offer outsize returns – but mostly only for the managers” Listen to financial experts at the moment and you will regularly be told that you need a large part of your portfolio in alternative assets – and that one of the best is private equity. All the real growth in the corporate world is here – so your money should be too. The first bit may be true: listings are picking up now (see page 7) but good growth companies have been staying private longer than in the past. However, the second is not. The vast fees charged by private equity (think 6%-7% a year with performance fees, says Jonathan Ford in the Financial Times) tend to gobble any growth there is. There may be outsize returns…

A Chinese stamp collector had £400m-worth of rare items stolen in a burglary in Hong Kong “believed to be one of the largest ever recorded”, says Richard Lloyd Parry in The Times. The memorabilia –including calligraphy by Chairman Mao – date back to the Chinese revolutionary period and were stolen from philatelist Fu Chunxiao’s flat. Fu said the items were “invaluable”, calling the burglary a “huge blow”. Two burglars were captured on camera, but there have been no arrests yet. Canadian police suspect that a“sophisticated” network of criminals is targeting transport firms across the country, after seven hot tubs and C$230,000 (£134,000) worth of beef were stolen “in a brazen daylight theft”, says Leyland Cecco in The Guardian. The thieves stole the hot tubs, valued at over C$150,000 (£88,000), by…

Investors are souring on emerging markets. The asset class saw net outflows of about $30bn last month, says Edward Glossop of Capital Economics – the biggest outflow since the turmoil of March. Their caution is understandable, says Yen Nee Lee on CNBC. From Brazil to India, emerging markets are host to some of the world’s worst coronavirus outbreaks. Yet some markets remain in favour. Take China, South Korea and Taiwan, where exporters are cashing in on the “upswing in the tech cycle” and the virus remains under control, says Ben Powell of asset manager BlackRock. Investors’ growing pickiness is especially evident in debt markets, says Jonathan Wheatley in the Financial Times. Chinese government bonds attracted $89bn through the end of August; a ten-year bond at 3% per year evidently looks…

In Europe, the technology sector has surpassed the value of banks for the first time, reports the Financial Times. Ten years ago, tech accounted for just 4% of the MSCI EMU index, compared to 24% for banks, according to Morgan Stanley. Yet low interest rates have weighed on bank profitability, and the sector has tumbled by a third this year. Meanwhile, European tech stocks have advanced 11% in 2020. Hence the Refinitiv Europe technology index is now worth more (€842bn) than the banks (€822bn). A bias towards “legacy” industries such as banks has been a “significant driver” of the European market’s underperformance “over the last decade”, says Morgan Stanley. Yet with tech rising, things are changing on these bourses.…

Shares in Compass Pathways, which has patented a synthetic version of the active ingredient in magic mushrooms, jumped 71% to $29 in New York on its first day of trading on Friday, reports Bloomberg. Compass – whose pre-initial public offering (IPO) investors included Peter Thiel, co-founder of PayPal, and German entrepreneur Christian Angermayer – raised $127.5m by selling 7.5 million shares at a price of $17. The proceeds will help fund research and clinical trials into giving the compound, known as psilocybin, to patients with treatment-resistant depression. The firm is currently running a Phase IIb trial and reportedly hopes for US Food and Drug Administration approval in two to three years.…

The initial public offering of US technology company Snowflake last week was the equivalent of “yet more cases of champagne arriving at a party well after midnight when the guests are already several sheets to the wind”, says Robert Cyran on Breakingviews. The share price shot up by more than 150% at one point during the first day of trading. Even though shares subsequently fell back a bit, the company is now worth $63bn, compared with the valuation of just $12bn implied by a private funding round earlier this year. It’s no surprise that investors – which include Warren Buffett’s Berkshire Hathaway – are enthusiastic about Snowflake, says Dan Gallagher in The Wall Street Journal. The firm’s cloud-based software “allows enterprises to rapidly analyse business information faster than traditional database…

Until this week John Lewis seemed able to rise effortlessly above the existential crisis that has gripped every other major retailer. From its origins as a humble drapery shop on Oxford Street in the 1860s, it remained a primarily London-based business for much of its history. But in the last 20 years, it pushed relentlessly into new markets, opening 50 department stores across the country. Its Waitrose unit expanded even more aggressively and now has 350 supermarkets. While just about every other retailer had to cut back and retrench in the face of rising staff costs, punishing business rates, tepid consumer spending and ferocious competition from the internet, John Lewis sailed on regardless. It was as if it was in aparallel universe, where running shops was a great business to…

“Book value does a bad job of capturing the value of assets” One of the strange things you notice after meeting hundreds of fund managers is that most of them are apparently value investors. Even when the largest holding in their portfolio trades on 30 times earnings, it’s a value stock because the market is drastically undervaluing its ability to generate cash or its dominant long-term position, or some similar explanation. This has become slightly less common in recent years as value stocks have badly lagged the market (using astrict definition of value to mean stocks that are nominally cheaper than average on metrics such as price/earnings or price/book). But investors still feel compelled to paint themselves as shrewd bargain hunters, rather people who like to buy firms that are…

Investors sometimes use national stockmarkets as a shorthand for their views about a country, but that doesn’t mean that a given market tells you much about the domestic economy. Take the FTSE 100. It’s the key UK equity index but it’s full of firms that don’t do a huge amount of business in Britain. It’s just a collection of companies that happen to be listed in London. The same is true for many European markets and for regional indices such as MSCI Europe. That matters because markets get hooked on narratives, and the dominant one today is that the US means growth, while Europe is boring (if cheap). These narratives are hard to dislodge, but over time they can decline in usefulness. This might be the case in Europe, according…

Indonesia flirts with disaster William Pesek Nikkei Asian Review In its panic, the government of Indonesia, southeast Asia’s biggest economy and one of the worst hit by Covid-19, is embracing policies “that may undo decades of progress”, says William Pesek. It was the lack of separation between the Ministry of Finance and Bank Indonesia (BI) that got the economy into trouble in the 1997 Asian debt crisis. The rupiah’s 80% “plunge” made foreign debt held overseas, which investors were unaware of, “impossible to repay”. The resulting chaos fuelled violent protests that ended Suharto’s 32-year reign and led to “epochal change”: the freeing of BI from “government meddling”. Now there is backsliding. In July, President Joko Widodo made BI an “offer it couldn’t refuse: buy government debt directly from us”. Lawmakers…

iea.org.uk Global economic freedom peaked in 2018, according to a score calculated by the Fraser Institute, a Canadian think tank. The UK’s score has been in steady decline since its high in 2000, say Alexander Hammond and Fred McMahon. The highs were a cause for celebration as “freer economies tend to be richer, grow faster, be more equal and have longer life expectancies”. But recent developments look likely to derail the progress we have made. The policy response to the Covid-19 pandemic, which has put more and more of the global economy into the hands of government, in particular, looks likely to further erode freedom. Governments everywhere are spending freely, “reducing the space available for free exchange, and eroding individual liberty and individual responsibility”. Sovereign debt has soared – it…

“In a world dominated by passive funds, no share price is too high” We’ve always been fans of passive investing here at MoneyWeek. We’re not extremists about it – the debate can take on an evangelical overtone at times, but we still think that good active fund managers (mainly in the investment trust sector) can add alot of value for investors. However, it’s also true that many active managers charge too much money, and that most also struggle to beat the market consistently over the long run. So index funds and exchange-traded funds (ETFs), which are a) cheap and b) can at least be relied upon not to hugely underperform the market, have proved a welcome innovation and a necessary competitor to a complacent fund management industry with an unfortunate…

Creative-software group Adobe came out with record-breaking results this week, beating analysts’ expectations yet again. Exceptional businesses are rare but Adobe is one of them. Over the past five years, profits have leapt 60% annually and cashflow is up over 300%, while gross margins have averaged an eye-catching 86%. And that was before the pandemic. Covid-19 has clearly triggered the need for even more digitisation, and at a faster pace as technology plays an increasing role in our lives. Adobe, which makes this happen, will be enjoying tailwinds for years to come. An obscure giant Despite being extremely profitable and a top-performing stock –the shares have grown 26.5% a year since floating in 1986 – Adobe isn’t that well-known. For many, it’s simply the maker of the Acrobat software that…

The Financial Conduct Authority’s (FCA) victory over insurers in the row about whether they should pay out on business interruption policies to firms hit by Covid-19 is a rare ray of sunshine for hard-pressed small and medium-sized enterprises (SMEs). While insurers say last week’s High Court ruling does not apply across the board, they concede that they will now have to cover hundreds of millions of pounds worth of claims from SMEs. “Three leading insurers put the cost at more than £200m” The FCA brought the test case against eight insurers after the insurance industry argued that business interruption policies – designed to compensate businesses prevented from trading by some sort of exceptional event – had not been intended to cover pandemics such as Covid-19. The regulator asked judges to…

Japan is the world’s third-largest economy and home to global industry leaders in areas such as automation and medical tech. However, many companies remain under-researched, so those prepared to explore lesser-known areas of the market can find promising stories. I believe that a rigorous, bottom-up approach to active management can consistently identify companies where the market is underestimating or mispricing future growth, or there is a clear disconnect between near-term sentiment and mid-to-long-term fundamentals. “Many Japanese companies remain under-researched, creating opportunities” I tend to invest in small and medium-sized growth companies where I can find better business models and returns on equity, and management is more incentivised in terms of shareholder returns. Smaller companies, being relatively young and dynamic, are often able to create their own niche market and so…

• News reader Fiona Bruce (pictured) “is absolutely right to blast the gender pay gap at the Beeb as ‘unacceptable’”, says Karren Brady in The Sun on Sunday. “It really is. And Idon’t understand why it istaking so long to rectify it.” In the broadcaster’s 2017 report, it was revealed that the highest-paid man made between £2.2m and £2.25m, while the highest-paid woman earned between £450,000 and £500,000. “But still, three and a half years later, four of the top five highest earners are men. Having recognised that the gap exists, it should not be taking them so long to create a more level playing field.” Given that there is so much competition, it’s not asif the BBC can rest on its laurels. “If it doesn’t wake up [and] get…

Street artist Banksy lost a battle with a greetings card company over the trademark of one of his most famous works, says the BBC. Yorkshire-based Full Colour Black challenged Banksy’s right to trademark his painting of aprotester throwing a bunch of flowers. The European Union Intellectual Property Office (EUIPO) threw out Banksy’s trademark, accusing him of being “inconsistent with honest practices” when trying to protect the famous image he spray painted in Bethlehem in 2005. The authority said Bansky had filed the trademark to avoid using copyright law instead, which would have required the “famously elusive” Bristolian to reveal his identity. The EUIPO added it was clear that Banksy “did not have any intention” of using the trademark but instead wanted to “circumvent the law”. Bansky’s decision to remain anonymous…

The eyes of global investors were trained on London this week, but not for good reasons. Speculation about a new lockdown in Britain saw the FTSE 100 slide 3.4% on Monday, its worst one-day loss since June. The drop wiped £52bn off the value of British companies. Concern about a second wave of the pandemic in Spain and France also hit European bourses, with Germany’s Dax falling 4.6% on Monday. The FTSE remained volatile the following day but finished higher as Boris Johnson announced milder measures than many had feared. Markets were already feeling woozy before this week’s new pandemic restrictions, says Rupert Thompson of wealth manager Kingswood. Global equities ended last week down 4.5% from their early September highs. “Central banks have now spent most of their ammunition,” but…

“In the longer term, the main risk to advanced economies [from the coronavirus crisis] is economic scarring… The effects of greater uncertainty will include higher precautionary savings by households and lower business investment, particularly by companies with high debt. Structural changes in sectoral output caused or accelerated by the pandemic will trigger bankruptcies and job losses. This process of ‘creative destruction’ is necessary for long-term recovery, but will inevitably mean lower levels of output for a lengthy period compared with the growth path seen pre-pandemic recessions… Although global output is expected to recover fairly quickly to pre-Covid-19 levels, the previous growth path will not be achieved for many years… Markets have been very optimistic since the global economy reached its trough in the spring. The harder part is now just…

Three to buy Aviva Shares Aviva has reported “robust” half-year results and reinstated its dividend. Yet shares in the insurer trade on just 6.5 times forward earnings, one of the lowest ratings in the FTSE 100. That looks unjustified. New boss Amanda Blanc is refocusing the business on core markets in the UK, Ireland and Canada and has already sold the “prized” Singapore operation for £1.6bn. The cash will help Aviva to reduce leverage and the strategy should ultimately pave the way for higher investor returns. 301p Domino’s Pizza The Sunday Telegraph Recent coverage of this pizza chain has been dominated by spats between management and franchisees about the pace of new store openings. However, lockdown gave both sides a slice of the action as housebound consumers turned to food…

• Andy Bird (pictured), the new Pearson boss, may have “left the Disney coop” in 2018, but thanks to a “Mickey Mouse recruitment process” he’s got a package that’s “anything but chicken feed”, says Alistair Osborne in The Times. It includes $1.25m pay, bonuses of up to five times that and a $9.4m signing-on bonus. What’s more, he gets to run the London-based group from Los Angeles, while also getting a $20,000 a month allowance for a New York flat. Shareholders are “livid” and shares are 87p below the level when the appointment was announced. Bird’s cartoon days “better be behind him”. • Having pondered whether to raise equity now or wait until the “Covid clouds clear”, Rolls-Royce has had the decision “taken out of its hands” by a slumping…

The death of US Supreme Court justice, Ruth Bader Ginsburg (pictured), six weeks before election day has stirred “political jockeying” by both parties, says The Wall Street Journal. Republicans opposed then-president Barack Obama nominating a Supreme Court justice in an election year, but that hasn’t stopped all but two Republican senators indicating that they will support whomever Trump nominates. With the Republicans controlling 53 seats, and Vice-President Mike Pence able to break any tie, it will be hard for the Democrats to stop them. The choice is important because justices tend to split into ideological camps on some of the most “hot-button” issues. Republicans may be behind Trump’s choice, but many are uncertain about whether to hold the final vote before the election, or in the “lame-duck” session between November…

• Alan Joyce (pictured), CEO of Australian flag carrier Qantas, has accepted a pay cut to A$1.7m (£960,000) for last year, down from A$9.9m a year earlier, due to the effect of Covid-19 restrictions on the airline. Joyce could still collect another A$1.3m-worth of Qantas shares after the firm decided to award executives half of their long-term equity bonuses, despite Qantas suffering a A$1.9bn annual loss. • Oil-field services company Schlumberger reported the highest CEO-to-median-employee pay ratio and the lowest median employee compensation in the oil and gas sector in 2019 as the struggling firm faced steep losses, says S&P Global. CEO Olivier Le Peuch was paid 313 times the median annual total compensation of $71,021. He was the seventh-highest paid oil and gas executive in 2019, raking in a…

An intangible asset is anything that a company owns that isn’t physical. Decades ago, the majority of assets were either buildings and machinery – often referred to as plant, property and equipment (PPE) – or financial assets such as cash or securities. These are known as tangible assets. However, over time intangibles have grown to become a greater proportion of assets for many firms. In some sectors, intangible assets may now be a far more significant part of a company’s value than tangible assets, even though much of this may not be fully reflected in its accounts. Valuable (and sellable) intangible assets include intellectual property, such as patents, copyrights and trademarked brands. Since the money that a firm spends on creating and maintaining these assets is usually classed as an…

US activist investor HG Vora Capital Management has bought a5.1% stake worth £115m in William Hill, fuelling speculation that it could campaign for a sale of the British bookmaker, says The Mail on Sunday. The New York hedge fund has previously done the same with American casino group Caesars Entertainment (which is also William Hill’s US partner): in 2018 it took a 5% stake in Caesars and pushed the firm to “explore options” including a sale. Less than a year later, Caesars was sold to Eldorado Resorts for $17bn. News of the investment emerged on the same day it emerged that William Hill’s sports-betting apps will feature on US cable giant ESPN.UK gambling firms are keen to capitalise on the growth of US sports betting, which was legalised in 2018.…

“I’ve definitely never been somebody where money defined me. No one wants to not be able to get food, or decent opportunities for your kids, but I’ve met plenty of billionaires and they are f*cking miserable.” Singer Alicia Keyes (pictured), quoted in The Guardian “Creating all this – the Armani world – from scratch, with only a £400 investment from the sale of my old VW Beetle.” Fashion designer Giorgio Armani on his biggest achievement, quoted in The Observer “I think it’s perfectly legitimate, and it says, this is a sensible, good person who has a bit of financial acumen.” Personal-finance guru Martin Lewis on the etiquette of paying with a restaurant voucher on a first date, quoted in The Sunday Times “The system is broken — and it needs…

fee.org In a spat on Twitter, academic Robert Reich lashed out at Tesla billionaire Elon Musk, says Jon Miltimore. Reich was miffed that Tesla was cutting pay at the same time as the stock soared, sending Musk’s net worth to more than $100bn. “Musk is a modern-day robber baron,” tweeted Reich. Musk replied: “All Tesla workers also get stock, so their compensation increased proportionately. You are a modern day moron.” Has Musk earned his riches? Compare and contrast. Reich has served in government and has been a professor and public intellectual. Intellectual property aside, it’s unclear if he has created anything of value, and yet has a net worth of $4m. Musk, on the other hand, employs nearly 50,000 workers and, in 2019 alone, produced nearly 368,000 energy-efficient vehicles. The…

The impact of passive funds on the structure of the market is rather esoteric. That’s one reason why far more attention has been paid to the risks posed by corporate ownership becoming more and more concentrated in the hands of a small number of passive fund groups. As David McLaughlin and Annie Massa pointed out in Bloomberg earlier this year, about 22% of shares in the average S&P 500 company sit with the “Big Three” passive fund providers, compared to 13.5% in 2008. The providers say this doesn’t matter because they have no specific agenda and they don’t vote as a group. But Harvard Law School professor Einer Elhauge argues that the real problem is that when big shareholders hold lots of companies in the same sector (eg, all the…

• Commercial tenants struggling to pay their rents have won a brief reprieve from potential eviction, after the government announced last week that it will extend a moratorium on action against them until the end of 2020. Rules introduced earlier this year, under which landlords were told they would not be able to seek eviction orders against commercial tenants, had been due to expire on 30 September. But ministers intervened amid widespread concern that thousands of businesses struggling with the financial consequences of the Covid-19 pandemic could find themselves thrown out of their premises. The extension of the ban on evictions was widely welcomed by small-business groups, which have argued that many firms need more time to get back on their feet, particularly amid concern that further lockdown restrictions will…

DIY chain Kingfisher (LSE: KGF) has more than 1,300 stores across Europe. It is introducing major changes to how it operates in light of coronavirus, says Robert Stephens in The Daily Telegraph – including investing in its e-commerce business after online sales rose by more than 200% in May and June. The DIY market has thrived as people stay at home, and “continued urbanisation and ageing housing stock” should keep sales buoyant in the longer run. It has a “solid financial position”, with access to over £3bn in cash resources. The share price is up more than 40% on the year.…

Alan Bond was born in 1938 in London, and spent his early childhood in Wales before moving to Western Australia with his family at the age of 12. He left school two years later and served part of an apprenticeship as a sign-writer before founding Progress Development Organisation (later Bond Corporation) in 1959, originally to pursue real-estate development. During the 1960s, 1970s and 1980s, his empire grew to encompass brewing, mining, television and even a private university. In 1983 his sponsorship of the winning Australian team in the America’s Cup later earned him the Order of Australia. What was the scam? From the start of his career, Bond based his entire empire on large amounts of debt, frequently buying properties before going to the bank for the money for a…

Collateral Damage Britain, America and Europe in the Age of Trump Kim Darroch William Collins, £20 Being ambassador to the United States “is the best job in the world, at least if you are a British diplomat”, says Edward Lucas in The Times. After an almost four-year stint as Britain’s man in that job, Kim Darroch’s “stellar” career suffered a more unusual “fireball crash ending” after The Mail on Sunday reprinted a top-secret ambassadorial cable that called the president “incompetent” and “inept”, prompting Donald Trump to denounce him. Boris Johnson failed to defend him during the Conservative leadership election, leaving Darroch with little option but to resign. In Collateral Damage: Britain, America, and Europe in the Age of Trump, Darroch tells his side of the story. Inevitably, Darroch takes the…

Poor Castor and Pollux. The two elephants from the Paris zoo were slaughtered in 1870. Locked down for four months by an invading army, desperate Parisians started to eat the fauna. Fancy restaurants developed consommé of donkey head and kangaroo stew. The common people had to make do with dog cutlets and rat sausage. Here in Argentina, we’ve been locked down for six months, surrounded by Covid-19. Fortunately, we have hundreds of cattle, sheep, and goats; there has been no need yet to slaughter household pets. “If the feds had done nothing at all, the results might be about the same” The strategy here was the same as in the US and UK – keep the virus at bay by closing up shop, putting on masks, staying home, putting the…

Bryson DeChambeau (pictured) won his first US Open last week, receiving $2.25m in prize money, says Jessica Marksbury in Golf. The 27-year-old’s win comes after he decided to bulk up, putting on 20lbs in an effort to win his first major, adds the BBC. Staff at insurer Admiral received a £10m present as a thank you from chief executive David Stevens to mark his retirement, says the BBC. Full-time workers at the Cardiff-based firm will receive £1,000, while part-timers will get £500 asa farewell gift. He said he was “proud and fortunate” to work with his staff, adding that their hard work had seen Admiral “grow from a start-up to over 11,000 staff worldwide”.…

Pet-focused pharmaceutical specialist Elanco Animal Health was spun out of Eli Lilly two years ago and its shares have spent most of that time treading water, says Barron’s. Yet in early August the company closed a near-$7bn acquisition of Bayer Animal Health, transforming its prospects. The deal made it the second-biggest player in animal health, behind Zoetis, and has pushed the share price up by 15%. The deal opens up opportunities in emerging markets, where pet ownership is growing fast. Hefty debt is a risk and explains why the valuation of 27 times 2021 earnings is still a big discount to Zoetis’ rating of 38. But widening margins and gradual deleveraging should help it to slowly close the gap.…

Claims that some of the world’s largest banks “moved large sums of allegedly illicit funds over nearly two decades”, despite “red flags” about the origins of the money, caused shares in the sector to fall on Monday, say David Pegg and Julia Kollewe in The Guardian. Barclays, HSBC and Standard Chartered were among those hit by the leak of thousands of documents showing $2trn (£1.55trn) of “potentially corrupt transactions” between 1997 and 2017 that passed through the US financial system. For HSBC investors in particular, these headlines may feel unpleasantly familiar. Eight years ago, the bank was fined nearly $2bn, and forced to agree a deferred prosecution agreement by the US Department of Justice, for “providing banking services to drug cartels and other criminals”, says Katherine Griffiths in The Times.…

An unprecedented wave of protests has swept Thailand over recent months, led by young people calling for the dissolution of parliament, an end to the harassment of political dissidents and a new constitution, says John Reed in the Financial Times. Last weekend, up to 30,000 people gathered in front of the Grand Palace in Bangkok. On Sunday, a symbolic plaque, stating that the nation belonged “to the people” not the monarch, was laid in concrete. It was removed within 24 hours. Demonstrations began on university campuses at the beginning of 2020 in response to the forced dissolution of Future Forward, a prominent opposition party popular among Thai youth, says Rachel Ratcliffe in The Guardian. After a temporary halt caused by lockdown, student-led protests against the government began in July, calling…

With £90.6m wagered on the US election (up from £84.5m a week ago) on Betfair, the punters’ view of November’s presidential contest remains essentially the same. Joe Biden is still the favourite to win at 1.87 (53.4%), while the odds on Donald Trump have narrowed very slightly to 2.18 (45.9%). It’s a similar story for Sporting Index’s Electoral College vote market, though there has been a tiny shift towards Biden, who is now at 291-285 (up 2), while Trump is at 247-253 (down 2). One state that offers a great opportunity is Oregon. This is a solid Democratic state that has voted Democrat in every presidential election from 1988 onwards (although George W. Bush did come close to winning in 2000 due to a large vote for Green Party  candidate…

Civil servants are raking it in, says Martin Beckford in the Daily Mail. The number of mandarins on at least £100,000 rose by 15% in the last 12 months, with a record 1,560 paid at least three times the national average salary of around £30,500, according to Cabinet Office figures. In just the last three years, the number on £200,000 and more has doubled to 20. Ian Booth, who heads the submarine delivery agency at the Ministry of Defence (MoD), was the best-paid. He landed a £180,000 bonus on top of his £275,000 salary. Simon Bollom, who heads MoD equipment and support, earns up to £284,999. Crawford Falconer, the chief trade negotiation adviser, was handed a rise last year to take his salary close to £269,999. And Ruth Todd was…

Will Danoff, portfolio manager, Fidelity “I always prefer to invest in companies that are doing well right now,“ says Will Danoff, who manages the $139bn Fidelity Contrafund in the US, the largest active equity fund run by a single person. That’s why his portfolio is heavy in stocks that benefit from a world in which people work and study from home, he tells Bloomberg, rather than contrarian bets such as airlines and hotels that are only likely to recover when the pandemic is over. Danoff’s biggest holdings are tech giants such as Amazon, Facebook and Microsoft. Many of these shares have already risen much further than anybody would have expected when Covid-19 first struck. “But if you say ‘would I rather own [a stock like Amazon] for the next ten…

■ Baillie Gifford has relaunched the £236m Witan Pacific Investment Trust as the China Growth Trust, says CityWire. The trust’s board began a review of its arrangements in February and announced in July that the contract for what was previously a multi-manager Asia Pacific fund would be transferred from Witan to Baillie Gifford, and would become a China-only mandate. The rebadged fund will be run by Sophie Earnshaw and Roderick Snell alongside their Baillie Gifford China open-ended fund, which has returned 51.6% over three years compared to the sector average of 29.1%. Elsewhere, Securities Trust of Scotland (STS) shares jumped almost 5% after its board appointed Troy Asset Management to take over from Martin Currie and said it wants to grow the £191m global equity income trust. Analysts welcomed the…

nypost.com America’s young people are increasingly socialist, says P.J. O’Rourke. Polls say that anywhere between 50% and 70% of the youth would prefer to live in a socialist country. Of course they would: “Kids are born communists.” As soon as children discover that the world isn’t nice, they want to make it nicer. But kids are broke – so they want to make the world nicer with your money. And they don’t have much control over things – so they want to make the world nicer through your effort. Kids would no doubt like to help, but are very busy being young. This is the way children have thought ever since they were invented – which was in about the 19th century. At that time, mechanisation liberated them from onerous…

Is any of this a reason to stop using passive funds? Not at all. Firstly, the thesis could be wrong. These ideas make a lot of intuitive sense but there are other arguments (often involving central banks) that may explain value’s poor performance and rising correlations between stocks. Secondly, even if the thesis is correct, passive funds are still a useful innovation and a good way to invest in specific countries or sectors – you can be an “active” investor and still use passive funds. The problem doesn’t so much lie with index funds as such, as with the impact their dominance has on a market. So what does it mean for your investments? In general, if we’re facing a market that’s as likely to melt up as it is…

As retirement approaches, you may feel like there is little left to do to increase your pension. You’ve saved for years and now it is time to turn your pension fund into income. But there are a few tips that might be able to increase how much you get. • If you’ve already retired and have a final-salary company pension, be aware that you might be due compensation for the way that your scheme calculated benefits for members who were contracted out of the state earnings related pension scheme (Serps) between 1990 and 1997. “The average payment is likely to be £1,000, but some people could get £25,000” In the next year, more than a million pensioners will start to get back payments under a government scheme to “redress decades…

Businesses forced to shut temporarily during local lockdowns will be eligible for “lifeline grants” of up to £1,500 for each closed-down property every three weeks. The new initiative from the Treasury follows calls for more targeted support for businesses hit by restrictions in areas facing high rates of Covid-19 infection. Until now, such businesses have only had access to the support schemes available on a nationwide basis. To be eligible for the new scheme, businesses such as retailers, pubs, restaurants and leisure sector firms must have been directed to close down as part of a local lockdown ordered by the government. Businesses in premises with a rateable value of more than £51,000 will receive a cash grant of £1,500 for each three-week period they are closed, while businesses in premises…

Outsourcing group Capita (LSE: CPI) still collects the BBC licence fee and manages Transport for London’s congestion charge. However, it has “fallen a long way since its days as a stock market darling during the Tony Blair administration, when it was the government’s outsourcer of choice”, notes Sabah Meddings in The Sunday Times. In March, Capita warned its turnaround is costing more than expected – it reported a £63m pre-tax loss for last year, versus a £273m profit the year before, while debt “ballooned”. The shares are down nearly 80% on the year.…

Made by El Bulli ex-sommelier David Seijas (for a detailed piece on David please see the article on my website), my headline wine and also a red called 2018 Roca del Crit, Windy Roads to Montjoi (£19.99) are both absolutely extraordinary. Manar is authoritative, extremely complex and tightly wound, based on treixadura with albariño, godello and loureiro bringing immeasurable class to proceedings. It opens slowly in the glass to reveal ozone-tinged, near-tropical fruit underpinned with severe minerality. It is one of the most grown-up and exacting Spanish white wines I have tasted in years and it is a classic David creation in that it is designed to drink with epic cooking. Manar’s red brother Roca is a made from ancient carignan vines situated in the Rabós sub-region of Empordà, coupled…

“The Kardashians will walk away from their hit show with more than $2bn between them” Andy Warhol famously predicted that, “in the future, everyone will be world-famous for 15 minutes”. He did not foresee the rise of the Kardashian family, whose 15 minutes seems to have extended to nearly 15 years. Still, thankfully nothing lasts forever. Kim Kardashian West has announced “with a heavy heart” that Keeping Up With the Kardashians, the “pseudo-documentary” that follows the celebrity family’s every move, “will end next year after 20 series”, as Polly Vernon reports for The Times. This brings to a close a show that, whatever you may think of it, has been an undoubted “cultural phenomenon”. Trumping Trump The show’s popularity has proved incredibly lucrative, not just for its stars, but for…

$451,122 The average income of the top 5% of American households last year, according to the US Census Bureau. Their inflation-adjusted income has risen by 27.9% since 2009, compared with a 10.8% rise for those in the bottom 20%, making an average of $15,290. £50bn The value of the banknotes that have gone missing from circulation, equivalent to around £1,000 per adult in Britain. A report from the National Audit Office speculates that more people are keeping the notes at home, due to low rates of interest and inflation. £58m The shortfall in revenue from the sale of TV licences last year compared with what the BBC had expected. The broadcaster blamed licence fee evasion and the preference of younger viewers for online streaming services, such as Netflix. £400m The…