Investment trust insider on good news for the investment companies sector – James Carthew: Trusts that should rally on costs reform and rate cuts
There was no pool of capital waiting to pounce on last week’s good news so there is still time to grab a bargain before over-sold investment companies start to bounce.
On cost disclosures, last Thursday’s news was about as good as it could be. Nothing is set in stone yet, the FCA still needs to formulate the final rules for its Consumer Composite Investments regime, but it does look as though all parties have agreed that the previous system (including the widely derided Key Information Documents, or KIDs) was misleading for investors and was damaging the sector.
In summary, it looks as though they have accepted the argument that the impact of running costs is already reflected in the share price of an investment company. On that basis, wealth managers and the like will only have to communicate the costs of the services that they are providing to their clients, which is a much more logical approach.
Hopefully, this will make these investors look at the sector with more rational eyes – taking advantage of some of the bargains on offer – and stemming the flow of selling.
Markets anticipated a US rate cut but reacted positively to the magnitude of it. Within the investment companies sector, many areas were hit hard when the rate hiking cycle started and these should start to rally now… read more here