A couple of readers have asked what I thought of the one-off levy on bonuses announced in the pre-budget report, given that I’ve advocated here and elsewhere a windfall tax.
To be honest it’s become such a mainstream topic that I wasn’t sure Monevator readers would want more opinion / hot air on the subject, especially as I have no special insight beyond common sense.
From the earliest days of the credit crisis I believed the financial services industry should pay a price for their collective greed and idiocy. That has happened, with companies like Northern Rock, Lehman’s, Merrill Lynch, and HBOS all going belly up, amongst many others.
I also wanted the culpable to pay on an individual level, and there’s far less evidence that this has happened.
From Fred the Shred getting his multi-million pound pay-off down to 28-year old traders on a million a year who loaded their banks up with lousy debt and have mostly been re-hired by rivals – even if they were booted out in 2008 – to take part in this year’s credit bonanza, most bankers haven’t done badly from the crisis at all.
I thought yesterday’s pre-budget report was a feeble response to the Government’s ongoing £178 billion-a-year borrowing binge.
These are unprecedented times, true. But that means they call for an unprecedented, apolitical response that we could swallow hard on but stomach, not a pre-budget report that sounded more like Rimmer from Red Dwarf doing the bowling club’s finances.
Readers may recall I’m a bit of an investment trust fan.
Besides that introductory article, I’ve written in-depth articles on three trusts – RIT Capital Partners, The Rights and Issues Trust, and Prodesse – and I included a few trusts in my nine lazy ETF portfolios.
Reminder: Investment trusts are companies that manage pooled investment vehicles and trade on the stock market. They have particular strengths and weaknesses over unit trusts and the passive alternative, ETFs.
While investment trusts aren’t for everyone, they do give us options, and the oldest in the UK have been around longer than air travel or the motorcar.
One such veteran is Alliance Trust, a Dundee-based FTSE 100 company that has been investing since 1888 and that currently manages over £2 billion of assets.
Alliance has seen a lot over the years, from multiple wars to abdications to fervent socialist Governments, so when it’s worried by the AIFM directive coming out of Europe, I think we should take some notice.
Responding to my recent post about buying government bonds for diversification, a reader asked if I’d considered using absolute return funds or hedge funds instead.
I have, but only superficially; I’m far from an expert in either kind of fund, but I don’t particularly like what’s on offer, especially as a replacement for bonds.
In this post I’ll consider absolute return funds. Hedge funds we’ll look at some other day, perhaps when I’ve grown less jealous of the anti-hero hedge fund manager John Veals in Sebastian Faulks’ new novel A Week In December, who seems to have a whale of a time throughout the book.
My regular Saturday comment followed by this week’s blog and financial site links.
Ever wondered why people are bad with money? Turn to today’s Financial Times, which reports that most financial advisers have never recommended a low-cost ETF:
Just under two-thirds of independent financial advisers (IFAs) have never advised on ETFs, while 23 per cent have recommended the products to less than 10 per cent of their clients, according to research carried out by the Financial Times and Skandia, the investment group.
What a disgrace. These people are supposedly professionals, paid by their clients for advice on the best investing products, and almost two-thirds of them have shunned one that delivers cheaply and efficiently.
