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Daily Mail
12 hours ago
- Business
- Daily Mail
What are the best US investing opportunities right now?
The erratic policies of President Donald Trump particularly on trade have caused many investors to rethink their heavy exposure to US markets. Negative recent returns from the US and brighter prospects in Europe and Asia have prompted what is dubbed the 'great rotation' out of dollar assets. The US has made a total return of -5.2 per cent in the year to date, partly due to dollar weakness, versus the rest of the world which made 6.8 per cent. But there is inevitably pushback from some investing experts, who point not just to the staggering returns the US has generated in recent decades, but its dominance in key industries with huge money-making potential - most notably, AI. 'It is not a zero-sum game – just because other markets perform better doesn't necessarily mean the US will suffer,' says Rob Burgeman, wealth manager at RBC Brewin Dolphin. 'Disinvesting from the US means cutting exposure to some of the biggest and most successful tech companies in the world, and few other markets have any equivalents or competitors of similar scale. 'These aren't just US companies – they are global – and they will likely be the pioneers of AI implementation too, along with the rest of the US economy.' Meanwhile, with all due respect to the traditional adage that past returns are no guide to the future, the chart below from RBC Brewin Dolphin is a stark illustration of recent US outperformance. US has dominated world markets for decades The MSCI USA index has beat the MSCI World ex USA in 30 of the last 50 years, according to analysis by RBC Brewin Dolphin. It has delivered a total return of 25,833.6 per cent – equivalent to 11.8 per cent per year. That is more than double the rest of the world's 10,311.9 per cent, or 9.7 per cent annually. Meanwhile, the rest of the world has outperformed the US just twice in the past 15 years, in 2017 and 2022. US success is thanks in large part to the tech sector and the so-called Magnificent Seven companies - Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. Rob Burgeman says: 'There is a lot of negative sentiment around the US at the moment, as questions are being asked about the future effects of economic policy. 'That has led a lot of people to talk about the "great rotation" that will soon follow, with moves away from the US into Europe and other markets, where returns may be better in the years ahead. But, when you take a longer- term view, it suggests that things are rarely that straightforward.' Burgeman says US exceptionalism is about more than its companies, citing as well the shape of the country's economy, the strength and diversity of its tech sector, and its self-sufficiency. He adds the caveat that disagreements with the US may prompt the rest of the world to look beyond it for solutions to challenges, noting that China has attempted to woo other nations following Trump's announcement of tariffs. Burgeman also says the headwinds that faced other parts of the world are beginning to ease. 'Europe was most impacted by the war in Ukraine, rising energy costs, and Germany's fiscal brake, but these are beginning to dissipate now and may even come round and fill the continent's sails. He gives his take on the prospects for the UK, the rest of Europe, China and Asia more widely below. Dollar weakness is hitting returns from US investments A continuation of the 'American exceptionalism' theme was a consensus view at the start of this year, focused on potential upside from corporate tax cuts and deregulation and less on the risk of tariffs, says Evelyn Partners managing director Jason Hollands 'What President Trump announced on 'Liberation Day' was most definitely at the worst end of expectations,' he goes on. 'While there has been some softening of position since and the US market has rebounded, there is clearly a lot of uncertainty around the end state and what this will mean for both the US economy and corporates.' Hollands says the effect of US tariffs has yet to show up in its inflation data, maybe due to firms stocking up inventories of goods in advance, so the effect may come through over the coming months. 'We are cautiously positioned towards the US and while the AI theme has come back into focus, valuations in this part of the market are very stretched. 'Bubbles can develop and run on for some time and while the sell-off in big tech in February, triggered by the emergence of DeepSeek, proved short-lived, it should serve as a bit of a warning shot.' Hollands warns another risk with having exposure to the US is the impact of dollar weakness. 'While the S&P 500 is up 2.6 per cent since the start of the year in dollar terms, a UK investor will have seen a -5.5 per cent return because of currency losses, as most funds do not hedge the impact of currency movements.' Jason's US fund tips: ETF Invesco FTSE RAFI 1000 ETF (Ongoing charge: 0.39 per cent)- tracks largest US stocks, selected based on book value, cash flow, sales and dividends. Actively managed funds Dodge & Cox Worldwide US Stock (Ongoing charge: 0.63 per cent) GQG Partners US Equity (Ongoing charge: 0.45 per cent) US small and midcap funds Premier Miton US Opportunities (Ongoing charge: 0.69 per cent) Federated Hermes US SMID Equity (Ongoing charge: 0.76 per cent) Undervalued markets like the UK are attracting renewed interest The US has been the only game in town when it comes to equities for a long time now, says FundCalibre managing director Darius McDermott. 'Its dominance has been underpinned by world-leading innovation, accelerating corporate earnings, and the sheer scale of its capital markets. As a result, it has justifiably remained the core allocation in most global portfolios.' But McDermott says shifting monetary policy, heightened valuations, and geopolitical uncertainty have led his firm to consider rotating part of its exposure elsewhere. 'While the US is still an absolutely core focus of our portfolios, as multi-asset investors we are continually reassessing where value and growth potential lie. 'Markets such as the UK, which have long been undervalued, are starting to attract renewed interest. Alongside this, alternative equity niches, including specialist thematic funds and trusts, offer selective opportunities for those willing to look beyond the traditional playbook.' Darius's fund tips: US Comgest Growth America (Ongoing charge: 0.82 per cent) GQG Partners US Equity (Ongoing charge: 0.45 per cent) UK AXA Framlington UK Mid Cap (Ongoing charge: 0.83 per cent) IFSL Marlborough Special Situations (Ongoing charge: 0.78 per cent) IFSL Evenlode Income (Ongoing charge: 0.63 per cent) What about the case for the rest of the world? Rob Burgeman of RBC Brewin Dolphin gives his take on where else you might look to invest right now. UK: It could be the time to shine again The UK has had its challenges in recent years – Brexit, in particular, cast a long shadow over a number of sectors, he says. On top of that, the companies that make up the UK market are generally seen as being value-led, rather than growth, largely in mature sectors such as banking, energy, resources, insurance, and large cap pharmaceuticals. The upshot has been that the FTSE index was largely seen as out of favour in a global context. However, with investors now more willing to search beyond the US, and the UK looking like a more attractive market – with some high-quality companies and a comparatively stable policy environment – it could be the UK's time to shine again. Europe: US-Europe valuation gap could begin to narrow The change in rhetoric from the US when it comes to Europe's defence has prompted a lot of the continent's governments to reassess their spending priorities. Perhaps most notably is Germany's €500billion commitment to infrastructure and defence, which was rubber stamped earlier this year. This, and other funds like it, should act as a major stimulus for Europe's economies. The question, however, is: how does it work out in practice? Not every country will benefit in the same way, and the same can be said for industries within the nations that do. Nevertheless, there is a general consensus that the valuation gap between the US and Europe could begin to narrow in the years ahead. China: At the forefront of AI, with unveiling of DeepSeek All of a sudden, China looks like an interesting place to invest. The country is still reeling from a property crisis that impacted stock markets, as well as the long-term effects of a stricter approach to managing the Covid-19 pandemic. But it is also at the forefront of AI implementation, as the unveiling of DeepSeek demonstrated, and the tariffs imposed by the US may be nowhere near as punitive as once feared – albeit, the situation is fluid. The country is also one of the few that can offer similarly scaled alternatives to the US tech giants.' Emerging markets: A weaker dollar is good news for Asia and emerging markets What is good for China is often good for the wider Asia Pacific region as well – an area that it is difficult to disentangle from the broader category of 'emerging markets'. Typically, most emerging market funds will largely be made up of companies from these countries, with exposure to other areas added in. Broadly speaking, a weaker dollar is good news for Asia and emerging markets because much of their debt is denominated in US dollars. That frees up capital that can be invested elsewhere in rapidly growing markets, while any tariffs placed on China will likely see manufacturing moved to Vietnam, India, and other countries, which can only be to their benefit.
Daily Mirror
4 days ago
- Business
- Daily Mirror
Thousands urged to 'withdraw' pension cash after new HMRC rule change
The rule change has prompted many savers to reconsider their withdrawal strategies. Under current rules, once people hit the age of 55, they're entitled to take out 25 per cent of their pot tax-free Amidst rising living costs and political uncertainty, UK households are in a rush to dip into their pension pots early, with hundreds of thousands withdrawing a whopping £2.2bn last year. Official HMRC figures have highlighted a significant surge, showing that 120,000 people between the ages of 55 and 56 made taxable withdrawals from their pensions in 2023 - 24, marking an 18 per cent increase over the past five years. Under current rules, once people hit the age of 55, they're entitled to take out 25 per cent of their pension pot tax-free, subject to a ceiling of £268,275. Beyond this threshold, any further withdrawals incur taxation as income. READ MORE: Simple airport duty free trick to bag cheaper beauty and alcohol before arriving Investment expert Jason Hollands from Bestinvest commented on the trend, suggesting: "Demographic patterns will be a factor. But other possible influences are a rise in business exits and second property disposals ahead of the election enabling more people to take early retirement." From the perspective of wealth management, Daniel Hough of RBC Brewin Dolphin pointed out: "Retirement is lasting longer for people – by accessing their pensions at 55, there will be more pressure on providing a sustainable income throughout retirement, however long it may last." Highlighting potential risks associated with this behaviour, Andrew Tricker from Lubbock Fine Wealth Management, who procured the data, saod: "The large number of savers withdrawing from their pensions before actually retiring is very concerning. Many of them are withdrawing too much – and too early." Financial specialists also cautioned that savers might feel impelled to overspend from their pension funds to sidestep inheritance tax charges stemming from new regulations introduced by the Labour Party government. Kate Smith from the pensions outfit Aegon commented: "The expectation is that those individuals with large estates will access their pensions earlier to avoid inheritance tax, and later life tax planning will become increasingly important." Mr Hough expressed that the proposals sparked "concern and some confusion" for those approaching retirement age, reports Birmingham Live. Chancellor Rachel Reeves had previously broadcast the discontinuation of inheritance tax reliefs on pension savings come 2027. At present, Britons are at liberty to bequeath their pension wealth devoid of tax, yet this policy alteration has incited many to revisit their strategies for drawing down their pensions.
Gulf Insider
6 days ago
- Business
- Gulf Insider
Gold Passes Euro As Second-Largest Global Reserve Asset: ECB
In the latest indication of gold's rising prominence in international finance, the yellow metal has surpassed the euro as the world's second-largest reserve asset, a European Central Bank analysis of year-end 2024 holdings has found. As the year ended, the US dollar represented 46% of central bank reserves, followed by gold at 20%, the euro at only 16%, while all other currencies collectively accounted for 18%. It's important to note this may understate the actual gold share, given the secrecy shrouding central bank gold-buying activity. Doubling their previous pace, central banks bought more than a thousand tons per year in 2022, 2023 and 2024, putting their holdings at their highest level since the late 1970s, as measured by weight, and close to the all-time high established in 1965. The current pace of central-bank and sovereign-wealth-fund purchases roughly equals a quarter of mined production. The ECB report attributes the trend in part to one of the biggest geo-political developments of recent years. 'Gold demand for monetary reserves surged sharply in the wake of Russia's full-scale invasion of Ukraine in 2022 and has remained high,' the researchers wrote. Witnessing the freezing of Russia's foreign-reserve assets and the broader weaponization of the US dollar, central banks have rationally sought to reduce their dollar reliance — particularly those in US-adversarial positions or more likely to land in that category. 'In five of the 10 largest annual increases in the share of gold in foreign reserves since 1999, the countries involved faced sanctions in the same year or the previous year,' the report said. Of course, while the ECB won't emphasize it, the reckless printing of Western fiat currencies to enable profligate government spending is another major factor. Gold's 30% price surge in 2024 contributed to its second-place ranking as the year ended. However, its ascent has only continued since the timeframe of the ECB analysis, rising another 27% and approaching $3,500 per ounce. With buyers increasingly turning to gold as a hedge against political risks — versus inflation risk — there's plenty of reason to anticipate more upside, particularly in the wake of Israel's brazen attack on Iran in violation of international law, including the targeting of senior military officials and nuclear scientists in their residences. 'Given the strong run in gold prices, the momentum in gold buying could slow,' RBC Brewin Dolphin head of market analysis Janet Mui tells CNBC . 'But on a long-term basis, the uncertain geopolitical backdrop and desire for diversification will support the accumulation of gold as reserves.' While central banks are important players, the ECB notes that 70% of demand for gold comes from non-sovereign investors and those using it for jewelry.
Telegraph
10-06-2025
- Business
- Telegraph
Savers raid £2.2bn from pension pots amid fears of tax grab
Hundreds of thousands of savers raided £2.2bn from their pensions early last year thanks to rising living costs and political uncertainty. The number of savers making flexible pension withdrawals as soon as they can has grown by 18pc in five years, according to new data revealed in a Freedom of Information request. In 2023-24, 120,000 individuals aged 55 to 56 unlocked £2.2bn from their pensions. By comparison, 100,000 withdrew just under £2bn in 2019-20. The figures – released by HM Revenue and Customs – cover the taxable withdrawals made by individuals and not tax-free lump sums. Once workers reach 55, they can take 25pc of their pension tax-free, up to a maximum of £268,275. After that, withdrawals are taxed as earnings. Experts said there could be a number of reasons behind the rise, including fears of a capital gains tax rise driving some to take early retirement. Jason Hollands, of the investment platform Bestinvest, said: 'Demographic patterns will be a factor. But other possible influences are a rise in business exits and second property disposals ahead of the election enabling more people to take early retirement.' Capital gains tax revenues hit a record £16.9bn in 2022-23 amid fears a Labour election victory would lead to higher tax rates. With life expectancies increasing, experts said the large number of savers accessing their pots at age 55 was 'concerning'. Daniel Hough, of wealth manager RBC Brewin Dolphin, said: 'Retirement is lasting longer for people – by accessing their pensions at 55, there will be more pressure on providing a sustainable income throughout retirement, however long it may last.' Andrew Tricker, of Lubbock Fine Wealth Management, who obtained the data, said: 'The large number of savers withdrawing from their pensions before actually retiring is very concerning. Many of them are withdrawing too much – and too early.' It comes amid growing concerns that savers could be tempted to spend excessively out of their pensions in order to avoid an inheritance tax bill. Currently, savers can pass on their pension pots tax-free. However, Rachel Reeves axed the exemption in the October Budget, with changes due to come into effect in 2027. Kate Smith, of pensions firm Aegon, said: 'The expectation is that those individuals with large estates will access their pensions earlier to avoid inheritance tax, and later life tax planning will become increasingly important.' Mr Hough said the proposals had caused 'concern and some confusion' among those nearing retirement. In a survey of 1,000 individuals aged 45 or over with pots worth at least £300,000, RBC Brewin Dolphin found that 56pc were intending to 'spend more' of their pension following the October Budget. The Treasury was contacted for comment.
Business Recorder
07-06-2025
- Business
- Business Recorder
London stocks advance after US jobs data quells slowdown worries
LONDON: British equities rose in broad-based gains on Friday after a US jobs report allayed concerns of an economic slowdown in the world's biggest economy, with both UK blue-chips and midcaps clocking weekly advances. Global risk assets ticked higher after data showed US job growth slowed in May amid uncertainty around US President Donald Trump's tariffs, but solid wage growth should keep the economic expansion on track. 'The US jobs report data for May suggests the economy is holding up and far from recessionary,' said Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin. The blue-chip FTSE 100 gained 0.3%, while the more domestically-oriented FTSE 250 ended 0.4% higher. Both indexes clocked firm weekly gains. On the day, heavyweight banks were among the top gainers, with Standard Chartered up 2.9%, HSBC up 1% and Barclays climbing 1.9%. Precious metal miners, the best performing FTSE 350 sector this week, lagged on Friday, clocking a 1.8% decline. Aerospace and defence shares - which jumped earlier this week after Prime Minister Keir Starmer pledged the largest sustained increase in British defence spending since the end of the Cold War - gave some of those gains back, to fall 0.8%. The week has been a volatile one for global markets as investors grappled with ever-changing global trade dynamics. Trump doubled tariffs on steel and aluminium imports, though the UK received an exemption. Trump and Chinese leader Xi Jinping also confronted weeks of brewing trade tensions in a rare leader-to-leader call on Thursday that left key issues to further talks. Back in the UK, Finance Minister Rachel Reeves is scheduled to hold her first multi-year spending review on June 11 and is expected to divvy up more than 2 trillion pounds ($2.7 trillion) of public money between her ministerial colleagues.
