Special Report on Investment Trusts (7): Confidence begins at home: Rupert Bruce asked three senior analysts to recommend areas and trusts for 1993 and found a consensus of opinion
Wednesday 20 January 1993
The Independent spoke to senior managers at three of the largest investment trust groups, who between them manage a fifth of the total pounds 27.3bn UK investment trust market. When asked which investment areas and trusts they favoured, a clear consensus emerged in favour of UK smaller companies.
The managers said they expected smaller companies' stocks to perform well in reaction to lower interest rates and improving economic conditions. They pointed out that these smaller companies were the most sensitive to domestic economic conditions because they participated in relatively little overseas trade.
Also in favour were the emerging stock markets of South-east Asia and Latin America. Managers expect these markets to offer high rewards, but warn that they are high risk.
Lord Mark Fitzalan Howard, chairman, Fleming Investment Trust Management: 'I like the UK but that is on the basis of the hoped-for recovery really being now likely to materialise, although there is still an element of hope there.
'I think the other area which we would like to suggest is the Far Eastern markets, excluding Japan, where we believe there is going to be considerable growth in 1993.
'We would include Hong Kong in the firm belief that the posturing at the moment (the diplomatic row between Chris Patten, the Governor, and China over the degree of democracy in the colony) appears perhaps more extreme during this preliminary stage of debate than perhaps is, in reality, the case and that a solution will be found.
'Undoubtedly it is going to be volatile, but I think that for those people who can look at it for the long term it is probably no bad thing to start buying.
'In all we would expect returns in excess of 15 per cent from the region including Hong Kong, Malaysia, Singapore, Philippines, Thailand, and Indonesia.
'On actual investment trusts within our portfolio, I think we would include Fleming Far Eastern Investment Trust.
'Another is Fleming Fledgling Investment Trust, the smaller companies trust. That is about 40 per cent in the UK. We believe that if we are going to see a turnaround in the UK economy then this neglected area ought to make itself felt.
'The trust also has a little under 30 per cent in the US, about 30 per cent in Europe and 8 per cent in Asia.'
Michael Moule, a senior investment manager, Touche Remnant: 'I still think the UK is going to be a good market, even though it has had a strong run. You are in an interest rate-driven market, and I am still bullish that interest rates are going to come down. That is one of the keys to it. Just like the US, you are going to have people saying, 'I cannot believe how expensive this market is'.
'It is going to be driven by money not earning enough in the bank and the building society rather than some wonderful economy and you are going to have to push out your hopes of the economy picking up until 1994.
'But personally, it is Europe and particularly France, Holland and Spain that excites me most.
'My view is that eventually the Europeans will wake up to realise that in the short term the main problem is lack of growth and rising unemployment rather than inflation.
'If I am being judged over the year I would be very happy to be in TR European Growth. It also happens to be on a 25 per cent discount to its net asset value (at time of writing), which is very high. This is because Europe is so unpopular and because it invests in smaller companies whose share prices rise later than larger ones.
'I think the UK has already had the big company effect so you really ought to go for medium and smaller companies where you have had this very big bear market. You have spent five years since October 1987, when they reached a peak, in a bear market. So I quite like TR Smaller Companies.
'I also like TR Far East Income because I still see South-east Asia doing rather well.
Jeremy Tigue, a director of Foreign & Colonial Management: 'In the American market we think smaller companies will do better than larger companies. Any improvement in the US economy will be particularly good news for US smaller companies. There are a lot of them out there, they have done very badly in the 1980s, although they have done a bit better in the last couple of years.
'We are also quite hopeful about prospects for UK smaller companies. The only caveat is that everyone seems to be thinking the same way and we saw in the States a bit of a false dawn a couple of years ago.
'One can't help feeling that there is a danger that might happen to smaller companies this year here. But the prospects for smaller companies here with lower interest rates should be good.
'Europe we think looks pretty dull at the moment with the economic situation in Europe and particularly Germany looking increasingly dire. The stock markets might take heart from a reduction in interest rates in Europe, but I doubt that will happen until later in the year.
'We are also still very keen on Latin America, although that has been very up and down this year after having had a terrific 1991. There could be terrific opportunities here.
'I would recommend our F&C Smaller Companies investment trust. That has about 45 per cent in the UK and 35 per cent in the US, so if we are right about the US and UK smaller companies both recovering that should do very well.
'If the conventional wisdom about UK smaller companies is wrong and they have a bad year at least you have the protection of the US smaller companies.
'For the brave we would say Latin American Investment Trust. It is looking quite attractive now but it is not a widows and orphans stock.'
- 1 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 A politically correct lefty goes to see Top Gear live – you'll probably believe what happened next
- 3 Young Preston fan has play-off hero Jermaine Beckford's shirt stolen from him at Wembley - which then appears for sale on Gumtree
- 4 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 5 Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
A nation of inequality: How the UK is failing to feed its most vulnerable people
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof