One of the unexpected effects of the pandemic is that we’ve become more interested in our money – whether we are saving or investing it, or ensuring that we pass it on effectively to our children.
It is also possible to invest in the nation’s combined thirst for all things financial. Banks, asset managers and financial technology companies are all benefiting as people utilise some of their lockdown savings.
Tim Levene is boss of Augmentum Fintech, a £220million investment trust that invests in financial technology oriented businesses – ‘fintech’ companies. ‘The last 12 months have been transformative,’ he says. ‘We have seen lockdown accelerate the adoption of fintech by consumers.’
Raise the bar: Bullion and ‘fintech’ firms have seen investments soar
People, he says, are now far more willing to buy and sell precious metals through online traders such as BullionVault and make wills digitally through online ‘death services’ using firms such as Farewill.
Companies such as mobile bank Starling have also thrived as many people have become more comfortable using their phone to make payments.
Longstanding wealth management companies have enjoyed a flood of new clients as people have sought to get on top of their financial affairs, often empowered by extra savings accumulated during lockdown. Nick Brind is manager of £245million investment trust Polar Capital Financials. He is positive about the outlook for listed wealth management companies such as Rathbones and Brewin Dolphin which he says ‘offer attractive opportunities for patient investors’. He adds: ‘As their clients’ assets grow, so do their revenues. A bonus is that the dividends they promise are attractive – equivalent to 4.3 per cent per annum in the case of Rathbones and 4.7 per cent for Brewin Dolphin.’
Although funds such as Polar Capital Financials and Jupiter Financial Opportunities hunt down attractive investments across the global financial services industry, many mainstream UK investment funds have significant exposure to financial stocks.
‘Most UK equity funds include a decent slug of financial companies in their portfolios as the sector represents nearly 20 per cent of the UK market,’ says Jason Hollands, a director of wealth manager Tilney. For example, investment fund Slater Income has 37 per cent of its holdings in financials while the Aviva Investors UK Listed Equity High Alpha fund has 32 per cent. ‘None of our preferred UK funds go quite that far,’ adds Hollands, ‘but Jupiter Income and Fidelity Special Situations – two funds we like – are both overweight in financials, with positions of 25 per cent and 22 per cent respectively.’
But for those who want to take their financials neat, Dzmitry Lipski, head of fund research at wealth manager Interactive Investor, suggests investment fund Jupiter Global Financial Innovation.
Darius McDermott, managing director of Chelsea Financial Services, likes sister fund Jupiter Financial Opportunities, which invests in financial services across the globe. ‘It has top ten stakes in US banks JP Morgan Chase and Goldman Sachs and also invests in stock exchanges,’ he adds.
James Carthew, head of investment company research at analyst QuotedData, likes Augmentum Fintech. He says: ‘It is invested in a range of exciting financial companies including Interactive Investor, which has one of the UK’s fastest growing investment platforms, and crowdfunding platform Seedrs.’
The only issue, he says, is that its shares are expensive, trading at a significant premium to the value of its assets. Carthew also likes investment trusts Finsbury Growth & Income – run by well known fund manager Nick Train – and Polar Capital Global Financials.
Investment platforms could also benefit from the surge in interest in shares from young investors. Interactive Investor has seen what it calls a ‘significant rise in beginner and younger investors’ over the last year, with 25 per cent of new customers in the fourth quarter of last year being under the age of 35.