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FeaturesYourguidetowealthcreationsince1979

COVER FEATURE 35 PROPERTYSPECIALREPORT

22STIMULUS PACKAGES

30GLOBAL ASSET POSITIONING

26OUTRAGEOUS FORTUNES

28MAN OF THE WORLD

In your Money Observer next month

SPECIAL SUPPLEMENT Investing in low-cost funds MoneyObserverhelps you identify the fundmanagers that truly earn their fees, but the fact is very few can claim to beat the performance of an index benchmark such as the UK’s FTSE 100.

The rise in popularity of exchange traded funds (ETFs) and their commodity-focused cousins has spawned new investment thinking in terms of portfolio planning and forced high-charging actively managed funds that underperform to buck up their ideas.

Our guide to low-cost passive and actively managed funds includes special sections on: understanding howETFs work, the range of assets they cover and how to use them in your portfolio; capturing the ups and downs of exchange traded commodities; and the rise of a newbreed of low-cost tracker funds.

ALSO INSIDE Annual investment trust tips Our 2009 investment trust tips achieved gains of 60 per cent and an

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average rise of more than 25 per cent – and our 2010 tips are doing even better inmany instances.

Our annual tips are designed for both cautious and bullish investors: can you afford tomiss out?

The true cost of investing In 2010MoneyObserverran a campaign that exposed what you really pay for other people tomanage your money. Weassess whether anything has changed for the better.

4 August 2011 | www.moneyobserver.com Sections

August 2011 NEWS LETTERS INVESTMENTS KNOWHOW PLAY ANALYSIS

PROPERTY REPORT

36 PREPARE FOR GENERATION RENT Prosper in the residential property gold rush, plus house price trends

40COSTASREIGNINSPAINSpain’scoastalhomeslurebuyers

42 MALTESE TEASERS Effortless assimilation makes Malta a haven for British retirees

45PROPERTY STILL PACKS A PUNCH TR Property manager Marcus Phayre-Mudge insists property pays

48THE BARE FACTS REVEALED The French ‘bare’ ownership scheme suits cash-rich absentee owners

50AGENTSOFFORTUNEOurexpertsrevealtheir pick of property companies and funds

22 DON’T BE DUPED BY BRITTLE EXTRAS Most inducements companies use to lure shareholders lack substance

26 IN A LEAGUE OF THEIR OWN The stayers are the stars in our latest sector-based fund manager survey

28 WHY NOT TAKE THE ORIENT EXPRESS? Global trends such as growth in China offer investors a fast track to wealth

30 EQUITIES LOSE WAY ON ROAD TO RICHES Asset allocators face dilemma as the equity danger signs start flashing

WHAT’S NEW KNOW-HOW REVIEWS SAVINGS

EXCHANGE TRADED FUNDS

ETF risks lie in the balance

T

Ihavebeen astonishedby thenegative pressonETFs GinaMiller

Ruth Emery www.moneyobserver.com August 2011 7

INVESTING STRATEGIES SHARE TIPS PORTFOLIOS

625 %

EQUITY INCOME

550

475

400

325

250

175

FTSE Actuaries 350 Higher Yield index

FTSE Actuaries 350 Lower Yield index

100

01/1986

01/1990

01/1994

01/1998

01/2002

01/2006

01/2010

Higher yield roars back

IInvestors who rely on equity income have suffered of late, but dividend yield and dividend growth still account for the lion’s share of long-term gains, as Heather Connon shows

Expect a rise in payouts of 13 per cent this year www.moneyobserver.com August 2011 53

GOLFING GETAWAYS

No fairer way to improve your handicap Northern Ireland’s links courses and those on Devon and Cornwall’s Atlantic coast, are well-kept, beautiful and challenging, making for a joyous break, says Jamie Reid

T

Above: the splendour that is Royal County Down; below: a regular on the course, Rory McIlroy, the US Open’s youngestever winner

The greens are in a state of permanent perfection

64 August 2011 www.moneyobserver.com

FUND ANALYSIS

150

%

120

90

60

30

FUNDS TRUSTS ETFs SHARES

0

China/Greater China sector average

Asia Pacific ex Japan sector average

-30

07/06

07/07

07/08

07/09

07/10

Avoid inflation heat

07/11

Funds focused on China have underperformed pan-Asian funds this year as authorities move to cool runaway growth, but fortunes may be changing, reports Cherry Reynard

CFidelity China Special Situations

Henderson China Opportunities

Thames River Emerging Asia Martin Currie China www.moneyobserver.com August 2011 67

EasyMoney 7 ETF risk in the spotlight 8 Clamour grows for strategic bonds 9 New website unlocks African equity 10 A month in the markets 12 Rates fall for latest mortgage deals | Tax rates table 13 Bruce Stout’s bearish outlook 14 Belief in bonds is still justified 16 Don’t overlook the savings small print

YourMoney 18 Your letters and Ruth Investigates InsideMoney 21 Why a trip down the yellow brick road should be highly rewarding GrowMoney 53 EQUITY INCOME Dividend yield and growth still account for the lion’s share of long-term equity gains 55 SHARE SLEUTH For value investors, a falling share price is often confirmation that the market has got it wrong on future earnings growth 56 SHARE SPOTLIGHT Market lore that profit warnings often come in threes proves true, but not all market sentiment is on the money 57 PORTFOLIO CHOICES Defensive holdings served the hypothetical growth portfolio well over the last quarter 59 MARKET TRADER The relationship between share price, earnings per share and future growth is invaluable in establishing a share’s value

Smart Money 60 PENSION PORTFOLIOS Prepare to rebalance your pension asset allocation to suit your income strategy 62 SUPERMARKET FINANCE The big supermarket chains muscle in on the financial services sector

PlayMoney 64 GOLFING GETAWAYS There’s no fairer way to improve your golf handicap on the Atlantic links

AnalyseMoney 67 INVESTMENT FUNDS China-focused funds underperformed pan-Asian funds this year, but fortunes may be changing 70 Sectoral and alphabetical statistics for open-ended funds 82 INVESTMENT TRUSTS AND COMPANIES Premiums on high-yielding trusts are unsustainable and investors should consider alternative income routes 84 How investment companies are performing over five time frames 89 EXCHANGE TRADED FUNDS The performance of fixed-income ETFs needs to be examined carefully 91 SHARE WATCH Interior Services Group’s Olympian efforts and full order book make it a buy 94 Main market and Aim-listed shares plus a share snapshot

ContactMoney 97 Get in touch with organisations

FunnyMoney 98 Ascot’s painted ladies seek top marks www.moneyobserver.com | August 2011 5

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