The Investing Show podcast

An inflation panic has sent interest rate expectations soaring in the UK, even as the US Federal Reserve is tipped to stall. 

Base rate is now forecast by some to climb as high as 6 per cent as the Bank of England battles stubborn inflation, rather than peak near its current level of 4.5 per cent.

Rate expectations combined with rising gilt yields have sent shockwaves through the mortgage market, as lenders rapidly pull and reprice deals. The average two-year fixed rate mortgage has now hit 5.9 per cent.

But while the mortgage market apple cart has been well and truly upset by much higher rate expectations, what does this mean for investors?

On this episode of the Investing Show, Richard Hunter and Simon Lambert discuss what interest rates on both sides of the Atlantic may mean for investors and look at the shares that could do badly and those that could do well. 

Venture capital trusts offer the opportunity to invest in some of Britain's most exciting small growth companies and a juicy 30 per cent income tax break.

By pooling investors money in investment trusts run by specialist managers, VCTs offer a way to spread your risk while backing the small firms that could become the next big thing, with previous examples including Zoopla, Depop and Five Guys.

But they say you should never let the tax tail wag the dog, so before putting money into a VCT you need to make sure it is right for you.

On this episode of the Investing Show, Simon Lambert and Richard Hunter are joined by Bestinvest's Jason Hollands, who explains what you need to know about VCT investing - and talks through some of the offers out there.

Commercial property has had a rocky ride over recent years, but is it now a great value investing opportunity with the power to beat inflation?

On this episode of the Investing Show, Simon Lambert is joined by the manager of TR Property Investment Trust, Marcus Phayre-Mudge, who explains why he thinks a careful approach to backing retail, warehouse and office real estate could deliver rewards for years to come.

The market for offices was written off by many during the pandemic but has rebounded strongly for landlords who can offer quality.

Marcus says that there are two elements that he believes will drive the office market for years to come: demand for high quality space ‘to tempt staff back in’ and demand for more energy efficient buildings, to allow companies to save money and deliver on environmental pledges.

He says: ‘We expect a green building supercycle’.

The fund manager, whose trust holds shares in listed property companies across Europe, says that what ties the philosophy behind TR Property’s diverse investments together is looking for quality management in those businesses – something that he says is key to success.

Marcus explains the issues investors need to consider before buying into commercial property, including why an investment trust is a better way forward than an open-ended investment fund, many of which have been forced to lock in investors during turbulent periods.

He also talks through where he sees the best opportunities and how he sees retail and office space changing, including the demand for better quality premises for shops and businesses keen to attract shoppers and workers to bricks and mortar.

Like many property trusts and funds, TR Property had a tough 2022, with a 35 per cent share price fall, but the trust has climbed 8.5 per cent since the start of the year. Shares currently trade at an 8 per cent discount to net asset value.

TR Property has averaged a 9.48 per cent total return over the past decade and has a dividend yield of 4.37 per cent, according to Morningstar data. It has an ongoing charges figure of 0.58 per cent, but also a performance fee can apply.

Impax Environmental Markets has spent two decades scouring the world for companies that can help deal with the challenges the planet faces.

Long before the recent trend for green investing and ESG funds emerged, its managers were earning their spurs by tracking down disruptive companies with a difference.

And this has proved to be a highly profitable strategy for the investment trust's long-term investors, with a total return of 75 per cent over five years and 311 per cent over ten years, according to Association of Investment Company figures. 

Yet, Impax has not been immune from the storm for growth stocks and is down 5.9 per cent over the past year, with shares falling to a 5.19 per cent discount to net asset value. 

But what are environmental markets and what does Impax look for in a company? On this episode of the Investing Show, Impax Environmental Markets' senior portfolio manager Jon Forster joins Simon Lambert and Richard Hunter to explain more.

He also reveals some of the fascinating things that the companies Impax invests in do, from the UK company helping industrial users make better use of steam, to firms helping reduce the impact of agriculture while improving its yields.

The FTSE 100 has started the year on the front foot and investors are watching closely to see if it can hit a new record high.

The UK’s blue-chip index led the way among main global stock markets last year, keeping its head above water and delivering a respectable total return including dividends of 4.7 per cent.

After a strong finish to 2022 and good start to 2023, it is now up 14 per cent on its October lows at 7,860, within a whisker of its all-time closing high at 7,877.

So why has the FTSE 100 been performing so well and can it continue its run throughout this year? On this episode of the Investing Show, Simon Lambert and Richard Hunter take a look back at the scorecard for the Footsie and other major markets last year and look forward to what may happen this year.

Inflation has dominated consumers and investors' minds over the past year, as the dramatic rise in the cost of living has eaten into incomes and share prices.

Official data shows that inflation is still running hot and central banks are continuing to hike interest rates to combat it, but there is also an expectation that inflation will start to fall away dramatically next year.

Will inflation subside, can it stay low, and will this help households and investors? 

Tom Becket, of Canaccord Genuity Wealth Management, joins Simon Lambert and Richard Hunter on this episode of the Investing Show to explain why he feels inflation may prove stickier in the UK than in the US and markets will remain volatile, but bold investors looking for value could profit.

Doom and gloom are dominating the headlines but investors are being too pessimistic, says Temple Bar manager Ian Lance.

He says: ‘Today, we think is a really interesting environment. We go as far as saying it is as interesting as 2008 and 2000, which were the last two times we think we used to see bargains of this nature.’

‘At the moment we think the UK is a very cheap market.’

The value investor looks for shunned stocks that are trading at least 50 per cent below their intrinsic value and, taking a five-year view, looks at what they should be worth when they recover.

Lance, co-manager of Temple Bar investment trust alongside Nick Purves, says that while the UK stock market has fallen by less than its international peers this year, it still contains plenty of bargains for value investors.

He discusses his views on where value lies in the UK and elsewhere in the world on this episode of the Investing Show, with This is Money’s Simon Lambert and Interactive Investor’s Richard Hunter.

Ian explains why he sees Marks & Spencer as significantly undervalued and why even despite BP’s huge share price rise since its pandemic low, the energy giant also remains good value and underappreciated by investors.

Temple Bar sits within the Association of Investment Companies UK Equity Income sector and is the best performing trust in that sector over the past year, with a total return of 8.48 per cent. It yields 4.1 per cent and has an ongoing charges figure of 0.57 per cent.

Redwheel Capital, Lance’s firm, took over management of Temple Bar two years ago. Over five years the trust has returned 11 per cent, compared to a sector average of 20.5 per cent.

Britain has a new Prime Minister who has vowed to be pro-business and help consumers, but will that filter through to the stock market? 

Simon Lambert and Richard Hunter discuss the UK's change at the top on this episode of the Investing Show. 

Liz Truss is taking on both Britain's top job and an economic challenge that would make most baulk.

Inflation has breached double-digits, at 10.1 per cent, and is forecast to rage higher still. Meanwhile, the pound has slumped against the dollar, UK borrowing costs are rising, business and consumer confidence is sinking and the Bank of England is warning about recession.

Yet, on the flipside, looked at overall Britain's business and household finances are in decent shape and the consumer economy fared much better through Covid than many expected.

Meanwhile, the UK stock market has held up better than most this year - with the FTSE 100's big international firms supporting that index - and until the cost of living crisis combined with the downfall of Boris Johnson as PM, the UK was being talked about as an investing opportunity. 

So can our new Prime Minister get confidence back up and investors buying in, or does whoever is at Number 10 Downing Street make little difference to the UK stock market and would investors be better off looking for guidance from across the Atlantic and the state of the US economy and markets?

Investors are past the halfway mark for 2022 and it has been a troubling year so far, with the global markets dominating US in bear market territory.

But even as the S&P 500 in the US has fallen 20 per cent since the start of the year, the UK stock market has for much of that period managed to keep its head above water and even after recent falls the FTSE 100 is down 4 per cent since the start of 2022.

The chief issue rattling investors is high inflation and rapidly rising interest rates, with central banks dramatically changing their tune and signalling that rather than supporting markets they are happy to raise rates into a recession.

But with both the Bank of England and the Fed hiking, why is the UK doing better than the US and will the second half of the year be better than the first? Richard Hunter and Simon Lambert discuss these issues and more on this episode of the Investing Show.

On this show, they take a look at why the shift to rising interest rates is troubling investors and making them shun growth stocks – and the sectors where inflation is boosting share prices.

Although the headline FTSE 100 index in the UK has not suffered as much as many other global markets, including the US, many investors will be feeling pain in their portfolios, as the below that the mid cap FTSE 250 is down 21 per cent year to date and individual popular stocks have taken even more substantial hits.

Among the biggest fallers over the past six months in the FTSE 100 are some major household names with Royal Mail down 48 per cent, Ocado down 46 per cent and ITV down 45 per cent.

If inflation starts to ease and central banks take their foot off the gas later in the year, could that see a rally for the stocks that have been beaten down by inflation crisis?

This is a question many investors are debating as they try to decide whether it is time to buy into shares on sale in the bear market or keep their powder dry fearing more bad news ahead.

One concern for investors is that much of the aggregate decline in stock market valuations has come from a downgrading on the price side of the price-to-earnings ratio, reflecting investors willing to pay less for stocks.

With fears that a recession is on the way, the earnings side could be riding for a fall too – leading to further market declines. With that in mind, Richard takes a look ahead at the US earnings season and what it could bring.

The high-flying Blue Whale Growth fund has reaped the rewards of the US stock market's bounce back from the coronavirus crash - delivering a 34 per cent gain for investors over the past six months.

The global fund - run by Stephen Yiu and backed by Peter Hargreaves - is invested heavily in the US, which accounts for 72 per cent of its holdings and its top ten features a raft of technology-related companies, including Adobe, Facebook and Microsoft.

Considering the remarkable run that US shares and the tech sector have been since the coronavirus crash lows at the end of March, has the market become detached from reality - as some suggest - or have the world's well-known digital names proved themselves far more resilient than people thought?

Stephen joins Simon Lambert on this episode of the Investing Show to share his views on what has happened with the market - and also why he sees some big names such as Facebook as value investments but would not buy Tesla or Netflix. 

The Blue Whale fund holds just 25 companies from around the world, which it considers to have the best prospects, resilient business models and - perhaps surprisingly for a US and tech heavy growth fund - and to be good value.

In fact, Stephen describes himself as a value investor, but says that this involves looking to pick up companies at a good price, rather than the kind of bargain basement value investing strategy once described by legendary investor Ben Graham as picking up pennies in front of a steamroller.

Stephen discusses how this philosophy fitted with using a high proportion of cash in the fund as the coronavirus crisis hit to add to holdings of Amazon and PayPal at a knock down price, but also then selling down some of those holdings after their share prices rocketed in the sharp recovery.

He also reveals why despite Tesla riding out the storm, he doesn't see the company as one he would invest in and why although Netflix's subscription model is highly attractive it suffers from the same business model problems as Premier League football clubs.