14th May 2008

Trustnet Bulletin: Global sector; dealing with inflation

Trustnet Bulletin: Global Growth sector; dealing with inflation

IMA Global Growth

The clue is in the title of this report: economic growth worldwide has been firm in the past three years, but with ongoing macro-economic challenges there are fears returns from this sector could take a knock through 2008. Evidence from the six months to April suggest this is happening.

Globalisation itself presents an interesting challenge to investors. Analysis of the r-squared figures suggests increasing correlation between different markets, while the widely adopted mandate limiting managers to not taking unnecessary risks means it is increasingly hard to outperform the sector. Click here for further information on IMA Global Growth.

AXA Framlington UK Growth Fund.

• Top decile performance since manager Jamie Hooper took over*
• Minimum 50% quality FTSE 100 stocks for large cap exposure
• A new approach from a new manager

Find out more about a core fund for today's markets. Click here to visit our website or call 0845 766 0184.

*Source: 31/12/06 - 30/04/08 Lipper, offer to offer, net income reinvested.

The inflation conundrum

That inflation is causing problems on the high street is one thing, but what about its effects on the mandates of absolute or target return fund managers?

One solution seems to be a shift towards non-UK based assets which should rise in value in line with inflation, or by considering asset classes that are riding the crest of the inflation wave, such as soft commodities. Asian property is also seen as interesting: with local currencies still pegged to the US dollar investors can take advantage of the fact borrowing costs also reflect lower US interest rates, helping push along local property markets. Click here for further information on inflation matters.

Regulations and ETFs

Continued growth in the popularity of exchange traded funds (ETFs) as a way to play returns from assets such as hard and soft commodities is posing an interesting challenge to financial intermediaries who may be recommending more such products these days than in times past.

Those involved in the manufacture or distribution of ETFs acknowledge that it is vital for the investor to gain an understanding of how ETFs or ETCs (exchange traded commodities) actually work in order to meet the Financial Services Authority's Treating Customers Fairly regime. Click here for further information on ETF regs.