VOL 21 / ISSUE 43 / 31 OCTOBER 2019 / £4.49 BOUNCING BACK THE SECTORS WHICH RECOVER QUICKEST FROM A SELL-OFF... AND STAND TALLEST IN A DOWNTURN GLAXOSMITHKLINE WHY ALTERNATIVE FUNDS EXPOSED TRANSFORMED BY ASSETS ARE IN TO HIGH-RISK NEW STRATEGY DEMAND DIVIDENDS EDITOR’S VIEW Why stewardship really matters with investing A new code draws the spotlight on how big investors engage with companies he introduction of a new UK Stewardship in the eyes of the wider public has to be a good Code by the Financial Reporting Council thing, particularly if it opens people’s eyes to the T will look to raise the bar on how big opportunities provided by putting their cash to investors hold the companies in which they invest work in the markets. to account. A lot of the headlines around the news focused DON’T LOSE SIGHT OF UK STRENGTHS on the climate change angle but there is more to In fairness, if it wanted to distract from its own the code than environmental concerns, including shortcomings, the investment world could easily how institutions make their decisions and what point to failures of stewardship among the political they are doing about issues such as governance class in the UK. and diversity. As we write the country remains mired in a Brexit Fundamentally this is about recognising that stalemate with the potential joys of a Christmas investors are part-owners of a business. Even big election. Companies and markets are still denied asset managers are sometimes guilty of buying the clarity on the UK’s future relationship with the shares and seeing their work as done. EU that they crave. Amid the uncertainty it would be easy to lose RIGHTS AND RESPONSIBILITIES sight of some of the attributes the UK enjoys. But Taking true ownership involves both rights and there are plenty of them. responsibilities. It is easier for big institutional Alongside the release of Credit Suisse’s Global investors to engage with the firms they invest in Wealth Report the investment bank’s UK chief than it is for individual shareholders, however that Christian Berchem observed: ‘Equity markets doesn’t mean you shouldn’t try too. have risen and we continue to see UK-based Go to AGMs if you can and if you are invested in entrepreneurs thriving, businesses spotting smaller companies you may even find management new opportunities, and international mobile will respond if you get in touch directly on an issue wealth continuing to be attracted by a which exercises you. t r a n s p a r e n t l e g a l s y s t e m , o u t s t a n d i n g s c h o o l s The code is voluntary and lots of investors in UK and universities and an unrivalled cultural firms are from overseas and may feel under less proposition.’ pressure to abide by it, but hopefully the industry sees this as an opportunity to be grasped. Most responses have been very positive so far, which is a By Tom Sieber Deputy Editor promising start. Anything that makes the investing more relevant 2 | SHARES | 31 October 2018 SCOTTISH AMERICAN INVESTMENT COMPANY SAINTS HAS GROWN ITS DIVIDEND EVERY YEAR FOR THE LAST 39 YEARS. THE POWER TO GENERATE AN INCOME FOR THE LONG HAUL. SAINTS (The Scottish American Investment Company) is designed to go on and on delivering an income that outstrips infl ation. It focuses on three areas – growth, income and dependability. Our analysis centres on the sustainability and long-term growth of a fi rm’s cash fl ow. This naturally leads SAINTS to invest in high quality global companies with strong balance sheets. The desired outcome is a dependable and growing income stream alongside the prospect of capital growth. It’s a solution that could be well suited to investors enjoying a long and happy retirement. 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The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies and are not authorised and regulated by the Financial Conduct Authority. VIEWING SHARES AS A PDF? Contents CLICK ON PAGE NUMBERS TO JUMP EDITOR’S TO THE START OF 02 Why stewardship really matters with investing THE RELEVANT VIEW SECTION BIG Brexit Latest / Metals outlook / Luxury stocks still in demand / 06 NEWS Banks round up - where next for the sector? GREAT New: WHSmith / Caretech 11 IDEAS Updates: GB Group / Temple Bar IT TALKING 15 POINT Negative yields have forced investors to explore ‘alternative assets’ MAIN 19 FEATURE Bouncing back 25 ASK TOM ‘How are increases in pensions worked out?’ 27 FUNDS Discover where fund firms are looking for growth INVESTMENT 30 TRUSTS Know your fund: The Scottish Investment Trust UNDER THE 32 BONNET Find out about how GlaxoSmithkline is changing 36 AEQUITAS Why US earnings fears look overdone FRANKLIN 38 TEMPLETON The demographics driving India 40 EDUCATION What to expect from investing in different assets over the long-term MONEY 42 MATTERS Are you exposed to the Dividend Dangerzone? 45 INDEX Shares, funds and investment trusts in this issue securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor DISCLAIMER agrees that the reporter can write about the interest, it should be disclosed to Index of companies and funds in this issue readers at the end of the story. Holdings by third parties including families, trusts, IMPORTANT self-select pension funds, self select ISAs and PEPs and nominee accounts are included in such interests. Shares publishes information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. 2. Reporters will inform the editor on any occasion that they transact shares, Comments published in Shares must not be relied upon by readers when they derivatives or spread betting positions. This will overcome situations when the make their investment decisions. Investors who require advice should consult a interests they are considering might conflict with reports by other writers in the properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited magazine. This notification should be confirmed by e-mail. do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions. 3. Reporters are required to hold a full personal interest register. The whereabouts of this register should be revealed to the editor. Members of staff of Shares may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it 4. A reporter should not have made a transaction of shares, derivatives or spread will be disclosed. Shares adheres to a strict code of conduct for reporters, as betting positions for seven working days before the publication of an article that set out below. mentions such interest. Reporters who have an interest in a company they have written about should not transact the shares within seven working days after the 1. In keeping with the existing practice, reporters who intend to write about any on-sale date of the magazine. 4 | SHARES | 31 October 2019 Equipped for every kind of saver Investing in Witan through an ISA, SIPP or general savings account could be a wise move. We’re not limited by the performance of one manager. Instead, we draw on the wisdom of up to 12 experts with an aim to provide long-term capital growth and increase your income ahead of inflation. Experience collective wisdom witan.com Witan Investment Trust plc is an equity investment. Past performance is not a guide to future performance. Your capital is at risk. Investors brace for a Brexit election Will a vote provide the clarity on the UK’s relationship with the EU investors are craving? omething has finally happened with Brexit. WHAT WILL HAPPEN NEXT? MPs have finally agreed to have a general The specifics of the result are unpredictable but S election on 12 December in attempt to find may go in one of two directions. a way forward. The first is that Johnson secures a majority The market appears to be taking the news in its and is able to steer his Brexit deal through stride for now, however there is little question that parliament. In the short-term at least this would uncertainty has been ratcheted up. provide more clarity to business and would The timing of the election and a volatile likely see a boost for sterling and other UK electorate, which seems less attached to the main assets including real estate and banking and parties, mean that many expect this to be the most housebuilding shares. unpredictable vote in generations.