Investment Insider: As confidence rises, financial service shares are worth a look
Sunday 08 April 2012
Who would have guessed that the UK finance industry would ever recover from the severe beating it has taken over the past few years? But it has.
According to the latest survey from the CBI and accountant PWC, confidence in the sector has dramatically recovered in the last quarter. So, how can we, as investors, capitalise on this?
By and large, stockbrokers are said to be geared plays on the stock market, meaning that if the market does well then stockbrokers' shares should do even better. Shares in Brewin Dolphin Holdings, which manages clients' portfolios and offers internet trading, have returned more than 100 per cent since the FTSE 100 index hit a low of 3,512 points on 3 March 2009. By comparison the index has returned 83 per cent.
Brewin Dolphin is not alone. Close Brothers Group, which provides banking, securities and asset management services, has returned 94 per cent. And, Charles Stanley, which offers stockbroking and management services, has returned 100 per cent.
The rise in stockbrokers' shares is not entirely unexpected. Consider Brewin Dolphin, which saw a 40 per cent cut in profits from £42m to £26m between 2007 and 2009. Profits have gradually recovered and the dividend yield of 4.2 per cent looks quite decent too, as indeed do the yields for other brokers.
Money managers are also likely to benefit as investors regain their risk appetite. And so these are also seen as geared plays on a stock market recovery.
Aberdeen Asset Management has delivered a return of 133 per cent since March 2009. Other fund managers have equally impressive, if not better, returns. Ashmore, an emerging market specialist, has returned 273 per cent or 54 per cent a year, while Henderson Group and Investec have returned 131 per cent and 151 per cent respectively.
Geared plays can be a great way to outperform the wider market. But they are a double-edged sword. Just as profits can rise quickly when market confidence is high, they can evaporate even faster should shares fall.
David Kuo is director of the financial advice website www.fool.co.uk
Compare with the Independent: See how much you could save by switching credit cards. Compare now
Solar on Schools project offers green investors 'tangible, ethical assets'
easyJet founder Sir Stelios Haji-Ioannou aims to make buying a home easier
Life expectancy calculator will allow people to plan ahead but needs to be handled carefully
Simon Read: Facebook and PayPal may be about to cash in as people get more fed up with high-street banks
How to start your own internet business
- 1 'Natural' energy drink banned for containing erectile dysfunction drug
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Dylan Tombides: West Ham confirm 20-year-old striker has died after battle with cancer
- 4 Loch Ness Monster found on Apple Maps?
- 5 Angus Steakhouse: How does tourist staple continue to thrive in today's gourmet market?
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
Refugee facing deportation from Sweden saved by fellow passengers refusing to let plane leave
iJobs Money & Business
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£221.25 per week: QA Apprenticeships: This company is a well established Inter...
£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...
£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...
Day In a Page
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds