Commodities do well in the later stages of the economic cycle, specifically in the expansion phase. This is because excess capacity in the economy has been used up during the recovery phase. Once capacity utilisation is at maximum levels (typically around 80-90%), price pressures start to emerge. These price pressures are often felt heavily in … Continue reading When are commodities typically a good investment?
Author: tothepound
Financial advisors should treat vulnerable customers with special care
All firms should treat all customers fairly, regardless of gender, race, sexuality, and any other characteristics. Vulnerable clients should be paid special attention to make sure their needs are understood.The FCA provides a set of rules with respect to vulnerable clients along with guidance on how those rules should be applied. All firms are expected … Continue reading Financial advisors should treat vulnerable customers with special care
When might the beneficiaries of a will wish to alter the terms of the will?
The beneficiaries of a will may wish to alter the terms of the will, using a ‘deed of variation’ if, for example:The will wasn't updated to include a new beneficiary that would clearly otherwise have been intended to be a beneficiary, for example a newly born grandchild that wasn't included. To exclude someone who decides … Continue reading When might the beneficiaries of a will wish to alter the terms of the will?
What is the senior management and certification regime (SMCR)?
The senior management and certification regime (SMCR) replaced the approved persons regime in 2019. Senior managers at a firm who performed functions that are designated as senior management functions by the FCA must be approved by the FCA. Other staff who are not deemed senior managers will be covered by the certification regime, i.e., the … Continue reading What is the senior management and certification regime (SMCR)?
What is prospect theory and how does it matter for investors in the real world?
Prospect theory is a behavioural finance theory that attempts to explain human decision-making behaviour as it really is, rather than assuming rationality. It starts with loss aversion which is an asymmetric form of risk aversion. It says that the positive utility (happiness) of £1 gained is less than the negative (absolute) utility of £1 lost. … Continue reading What is prospect theory and how does it matter for investors in the real world?
Can ESG feature in the tactical asset allocation decision?
The behaviour of financial markets is determined not by a scientific rulebook but by the collective guesswork of millions of biased human brains. Information reaches asset prices via haphazard attempts by these brains to second-guess what all the other brains think about the information.With that in mind, consider these reasons for buying a stock:· It … Continue reading Can ESG feature in the tactical asset allocation decision?
What are the lawful bases on which a company can process your data?
Companies need a justifiable reason to process your data, and under the European General Data Protection Regulation (GDPR), there are five acceptable justifications.1. Consent. Consent isn’t strictly necessary, because there are other lawful bases for processing data, as we’ll see. But consent is the most direct approach and so regularly used by companies. Consent must … Continue reading What are the lawful bases on which a company can process your data?
How do passive portfolios track their benchmarks so closely?
There are several different strategies that managers use for doing this, each with their pros and cons.Full replication: This involves buying all the securities in the index, in proportion to their weights in the index. It can be inefficient and costly, and it doesn’t always result in close tracking (referred to as low ‘tracking error’). … Continue reading How do passive portfolios track their benchmarks so closely?
What type of ‘centralised investment propositions’ is your financial advisor using?
Centralised investment propositions are like model portfolios that can be expressed as a suite of products from which the client can choose, or the advisor can choose for them. These can be:Multi-manager/multi-asset: one manager – or collection of managers - does the diversification for you across asset classes, regions, sectors, etc. Usually these are classified … Continue reading What type of ‘centralised investment propositions’ is your financial advisor using?
Price vs NAV vs value of an investment trust – what’s the difference?
Investment trusts can invest in thinly traded or unlisted securities which don't have an observable market price. For these assets in the fund, managers will have to use a hierarchical pricing model, assessing fair value first by observing comparable transactions in the market and then by using a fair value model. Because of these subjectivities … Continue reading Price vs NAV vs value of an investment trust – what’s the difference?
To the pound 