Video: CNBC Worldwide Exchange Interview On Oil, Greece (amongst other things)

To watch my TV interviews on CNBC's Worldwide Exchange programme from Thursday 19 February, on the subject of Oil and Greece, please click on the links below:

CNBC WWE: Oil Has Hits Its Bottom

CNBC WWE: Capital Controls are a Last Resort

Idle Investor Research: Multi-Asset ETF Trends (Graphs in Presentation)

Idle Investor Research: ETF Spotlight

(Presentation in PDF file format)

Click on the link below to download this presentation:

Idle Investor Research: Examining ETFs, 6 Feb 2015

Contents:

1.Top Multi-Asset Trends 
2.Currency Trends: King $ 
3.Risk Watch: A More Volatile World 
4.Equity Sectors: Best and Worst 
5.ETF Top of the Pops 
6.Featured Theme: The Hunt for Yield is on!

Oil Your Portfolio with Energy Exposure

Since the beginning of September, the benchmark FTSE 100 index has dropped over 5%. A buying opportunity, you might well think to yourself. But can we do better than that, by looking at some of the sectors within the UK stock market that have suffered more over the last month?

Bringing up the rear in performance over the last month with a 19% fall is the Food Retail sector – but this is for very good reasons, with the pressure on supermarkets from the German discount chains Aldi and Lidl, resulting in worsening profit performance from Tesco, Sainsbury and Morrisons. In my judgement, while there may be a value investing opportunity in these names, timing any investment is proving tricky, to say the least. 

I would rather focus on another large sector that has been some beaten up – the Oil & Gas sector, which has dropped over 7%. This has been principally driven by the precipitous drop in crude oil prices on both sides of the Atlantic, with Brent crude oil now costing a tad under $93 per barrel, $22 lower than the lofty height of $115 per barrel touched back in late June (Chart 1).

1: The Fall in Brent Crude and the Impact on the Oil & Gas Sector

Source: Author, Bloomberg

Why Could Oil & Gas Prices Rise?

With Winter approaching and the possibility of a cold, hard winter in the United States triggering greater demand for oil products such as heating oil, not forgetting the potential of disruption in supply of oil and gas from our Russian neighbours, we could at some point see a sizable rebound in global crude oil and natural gas prices. 

After all, OPEC nations are also keen to see crude oil prices stay above $90/barrel for their own, budgetary reasons, as oil and gas represent the vast majority of their government revenues. 

I suspect, furthermore, that global markets under-estimate the strength of the growth in long-term energy demand from the mega-sized emerging economies of China and India, which between them boast a population of over 2.3 billion who are currently using a mere fraction of the oil & gas per head that we consume per year in the Western world. 

Oil & Gas Exposure via Stocks, Sector ETFs

If you like this value investing theme, how best to get exposure? You could of course simply buy a few familiar large-cap oil stocks such as Royal Dutch Shell, BP or Total. 

Or you could buy an Oil & Gas Exchange-Traded Fund (ETF), such as the db x-trackers STOXX Europe 600 Oil & Gas ETF offered by Deutsche Bank’s x-tracker ETF division (code: XSER on the London Stock Exchange).  

Two Less Obvious Oil & Gas Investment Options

But I think that there are a couple of more intriguing investment alternatives that are a little less obvious, but which offer greater long-term potential. 

Firstly, there is the Ecofin Power & Water Opportunities Fund (code: ECWO on the LSE), an investment trust listed in London which is currently trading at a substantial 23% discount to its own Net Asset Value. To put this another way, you can buy exposure to £1 of stocks for only 77p! The Fund’s largest holdings are in oil companies, notably the US shale oil play Lonestar Resources and US oil infrastructure stock Williams Companies. In addition, the Fund also pays out a generous 4% dividend yield, a stream of dividends that has remained impressively consistent since 2005 when the Fund started. Since the beginning of this year, this trust has gained 32% to around 162p now, while the UK oil & gas sector has stagnated (Chart 2).

2: The EcoFin Power & Water Opportunities Fund Has Done Well

Source: Author, Bloomberg

A second way to take an interesting exposure to the oil & gas sector is through US-listed Master Limited Partnerships (MLPs), a particular tax-advantaged structure largely for infrastructure assets such as oil and gas pipelines which obliges the MLPs to pay out 90% of their profits in dividends. This high-yielding asset class has performed extremely well, with the London-listed Source Morningstar US Energy Infrastructure MLP ETF (code: MLPP on the LSE) up 16% in sterling terms to 7200p since April of this year. This ETF also also pays out a generous 6% dividend yield, to help investor returns (Chart 3).

 

3: Master Limited Partnerships Have Performed Very Well

Source: Author, Bloomberg

These are two intriguing alternatives to the more obvious oil & gas investment options which are well worth considering, particularly if you are an income-oriented investor. 

Edmund

Video: How to build an efficient portfolio using ETFs

Video: How to build an efficient portfolio using ETFs

I recorded a 20-minute webcast on Thursday together with John Lapping of Mindful Money and Ben Thompson of Lyxor/Societe Generale on the subject of building an efficient portfolio using ETFs.

To watch a video replay of this webcast, please cliek on the web link below:

How-to-build-an-efficient-portfolio-using-etfs-3

ETF Investing – Why not all indices are created the same

Why not all indices are created the same

Exchange-traded funds (ETFs) based on indices are meant to be simple, transparent, cheap investment vehicles, which do not require the expertise (and thus avoid the cost) of an “active” fund manager. They instead simply buy exposure to the stocks (or bonds or commodities) in the particular index being tracked – so-called “passive” investing. And they do fulfil this role, pretty successfully in my view.

But when you delve into the indices upon which these ETFs are based, you find that there is a huge number of variations on this particular passive investing theme; it’s like opening a can of worms.

Weighting index members by market cap

For instance, the vast majority of benchmark stock indices that you will have heard of – like the S&P 500, FTSE 100 or Euro STOXX 50 – weight the stocks in their index by market capitalisation. That is to say, the more a particular company (e.g. Vodafone) is worth, the greater its weighting in the index, and thus the more of that company you will buy exposure to when you buy a FTSE 100 index ETF.

To read the rest of this article, please click on the web link below to Harriman Intelligence:

ETFs: Why not all indices are created the same

Weekly Newsletter, March 10 2014

Is The Ukraine Question Going To Hit Markets Again?

And things seemed to be going so well for global stock markets! Mid- and Small-cap indices hitting new highs, then followed by the large-cap benchmark indices such as the S&P 500 in the US and the Euro STOXX 50 in the Eurozone. Then comes President Putin with his move into the Crimea (where the Russians maintain a strategically-important Black Sea naval port), and hey presto, we suffer a nasty, if short-lived, dose of market volatility.

But notice also that the trend in mid-term volatility (shown below) has been rising from the lows hit in early January, well before the Ukrainian-triggered flare-up in volatility over February.

1. US Mid-Term VIX Volatility Gently Rising

Source: Bigcharts.com

Whether or not this market volatility will worsen will depend on whether the US and Europe press ahead with any form of economic sanctions against Russia.

I believe that Europe in particular will not be hasty to pursue this course of action, given the value of Russian gas to the Old Continent.

A Few Energy Policy Considerations

This political instability in Ukraine underlines the fragility of European energy policy, given that one-third of Europe’s natural gas supplies come from Russia via the Ukraine (particularly important for Germany and the Netherlands). Thus, any economic sanctions against Russia are very likely to have a heavy hit for the European economy too, which is precisely why sanctions look unlikely in the near-term.

Of course, this means that European nations will not want to rely too heavily on Russia for natural gas output in the future, as this recent episode has underlined just how toothless they are in the face of volatile Russian foreign policy.

As they are committed in general to reducing their reliance on nuclear power (Germany in particular, but also France), what can they do about the precarious natural gas supply situation?

Industries That Should Benefit From This Situation

Renewables will benefit of course (solar, wind, hydro, biomass), which is one reason why clean energy funds have been performing so well (see chart below).

2. PowerShares Clean Energy ETF is Roaring Away

Source: Bigcharts.com

Algeria also benefits from French largesse as the French pay over the odds for Algerian natural gas supply for diversification reasons (and historic reasons too).

But I believe that the ultimate winner will be shale gas exploration and production in Europe, led of course by the UK. But other nations will inevitably follow…

I remain a big long-term fan of oil service companies can that enable/facilitate shale oil/gas exploration, extraction and processing/transportation. I would rather take exposure to these companies (who provide the “shovels”) rather than the exploration companies themselves, given the uncertain hit-and-miss nature of exploration activity.

The Oil Service companies have shown some excellent share price performance over the last month, with the IEZ iShares US Oil Equipment & Services ETF up 15% in a month!

3. iShares US Oil Equipment & Services ETF +15% in Feb.

Source: Bigcharts.com

UK-listed oil service companies that continue to do well on the back of this theme include: 

Kentz Corporation (KENZ.L), Petrofac (PFC.L), Wood Group (WG.L), 

KBC Technology (KBC.L) and AMEC (AMEC.L).

An Interesting Perspective on the Current Bull Market

This week, the bull market that started in 2009 celebrated its fifth anniversary. Now, there was a big correction back in 2011 at the peak of the Euro financial crisis, when the S&P 500 index lost almost 20% form peak to trough. Since then, we have surged back to hit new highs.

The chart below from www.chartoftheday.com puts the current stock market rally in to historic context. It highlights that the current rally in the US S&P 500 index is, thus far, nothing particularly remarkable or stretched when compared against previous historical bull market rallies.

4. Similar in Duration to the Average Rally, But Not As Strong!

Source:  www.chartoftheday.com

This all suggests to me that, should we navigate these choppy Eastern European without a full-scale “new cold war”, there is still further upside potential over the medium-term for developed stock markets, while economic growth momentum continues to slowly build up steam on both sides of the Atlantic Ocean.

My Model ETF/IT Model Portfolio: +2.8% after 3 Weeks...

So Far, So Good…

If we look at the performance of my 6-member portfolio of UK-listed Exchange-Traded Funds (3 in total) and Investment Trusts (another 3) which I launched on Mindful Money on Friday February 10,

Introducing Our new ETF, Investment Trust Model Portfolio

I think we can say that it has been satisfactory so far, safely weathering the recent Ukrainian mini-storm (Figure 1).

1. ETF/IT MODEL PORTFOLIO +2.8% SINCE LAUNCH ON FEB. 10

 Source: Author, Bloomberg

All six funds have made ground over the three weeks since launch despite the recent bout of Russian-Ukrainian inspired volatility, which for now at least seems to be calming down as Russia and the West both back away from anything that looks like military action or sanctions.

The benchmark index (comprised of one-third UK FTSE-All Share index and two-thirds MSCI World index in sterling, to match the geographic composition of the portfolio) has risen some 2.3% over the same period – so the portfolio has eked out a small measure of outperformance so far. But in any case, this is largely irrelevant as the portfolio is designed to perform over the medium-term (think years not weeks).

To read the rest of this article, including my thoughts on Russian exposure via an equities investment trust and an emerging market bond ETF,
please click on the Mindful Money web link below:

Edmund's ETF/IT Model Portfolio Up 2.8% in 3 weeks

All the best,
Edmund

Explore oil services for attractive value and momentum

Oil services coming back into vogue

As a contrarian value investor by nature, I like to look at sectors that have under-performed and which look to offer long-term value. If we look at the performance of the various S&P 500 sectors since the beginning of this year, the Oil & Gas sector stands out as one of the worst performers, with the iShares US Energy ETF falling from $50.50 at end-December 2013 to $46.40 by the beginning of February.

Since then, however, the Oil & Gas sector has staged somewhat of a recovery – still, over the last three months, the iShares Oil Equipment & Services ETF has lagged the S&P 500 by 4% (Figure 1).

However, in the long-term, I still see the Oil Equipment & Services sub sector remains an excellent way to take a “picks and shovels” approach to investing in the US shale oil & gas theme. The crude oil price has, if anything, moved higher over this period, judging by the Brent Crude Oil ETF (BNO; Figure 2).

To read the rest of this article and see my 3 favoured European stock picks to ride this Oil Services recovery, please click on the Mindful Money article link below:

Explore Oil Services for Attractive Value and Momentum

All the best for the week ahead,
Edmund

Weekly Newsletter: February 17, 2014 - Focus on SmallCaps

Weekly Spotlight on: Small-Cap Stocks

While global stock markets have continued their steady recovery following January’s emerging market-led swoon, a difference in performance is emerging between small-cap stocks Stateside and those both located in the UK and also in Europe. 

Now normally, you could expect the performance of small-cap stocks in general to be driven broadly by two factors: 

 Firstly, the direction of the broader stock market, as small-cap stocks tend to have a beta higher than 1 as a group; that is to say, when the benchmark stock market indices are moving higher, small-caps tend to move higher even faster. Conversely, when stock markets are correcting, small-caps tend to suffer more as small-cap liquidity can dry up, causing wider swings in stock prices on lower volumes.

 Secondly, small-caps tend to be driven more by the momentum in the domestic economy than large-caps given their greater domestic exposure. So when the domestic economy is improving rapidly, as it is currently in the UK, you would expect small-caps to be more responsive to this trend and outperform their large-cap compatriots.

Now small-caps are indeed outperforming the large-cap stock indices in the UK and Continental Europe as you would expect given rising stock markets and positive signs from the UK and Eurozone economies. 

UK SmallCap ETF BEats the Footsie Hands Down

Source: Yahoo Finance

However, this is no longer the case in the US, after an impressive 2013 when US stocks did well (the S&P 500 benchmark index gained over 30%) and small-cap stocks did best of all (+37% over calendar 2013!). 

Why might this be? Well, there are some signs that the US domestic economy is not perhaps growing as robustly as was previously thought. Employment growth (as measured by the non-farm payrolls data) has been much weaker over the past two months. 

Now while some of this weakness may be attributable to the extremely cold weather hitting much of the US over this period, there are also lingering suspicions that better US economic growth is not translating into better job growth, suggesting that the peak in domestic US growth may already be behind us. Hence the relative weakness in US small-caps, reflecting these economic doubts. 

A second factor to bear in mind is valuation: US small-caps now sit on average at a hefty valuation premium to large-caps, when traditionally small-caps have traded more often at a discount to the largest US companies. This suggests that for US small-caps to grow into their higher valuations, they are going to have to convince investors by posting superior earnings growth from here on out. 

In the meantime, I think I shall be calling time on my US small-caps ETF strategy, and instead looking at different investment styles for my ETF exposure to American companies. As the eagle-eyed may have spotted in lat week’s weekly newsletter, my favourite ETF/investment trust portfolio includes a Nasdaq 100 ETF (EQQQ.L), rather than any US small-cap ETF, as I am still very partial to US technology exposure. 

But what about UK, Euro Small-Caps?

In contrast, I am still keen on exposure to UK and Euro small-cap ETFs and investment trusts, as the situation here is somewhat different. 

Euro SmallCap ETF Heading Back To Highs

Source: Yahoo Finance

Firstly, the valuation differential between small-cap and large-cap indices is not at all extreme on this side of the Atlantic; if anything, small-caps still trade at a modest valuation discount to large-caps.

Secondly, the economic evidence is different in that the UK and Eurozone are still seeing improving domestic trends. The UK case is relatively clear-cut, with employment growth still accelerating rather than slowing down (albeit disproportionately driven by the “London effect”). 

In the Eurozone, economic growth rates are still modest but are improving, with Friday’s Q4 2013 GDP growth data beating analysts’ expectations. The employment data in the Eurozone is very variable, but we can start to discern slow improvements even in peripheral countries such as Spain and Ireland. 

So for these two reasons, I shall be maintaining my UK and Euro small-cap fund selections in the Model ETF/IT portfolio.

The Idle Investor’s Model ETF & IT Portfolio

The table below details the 6 UK-listed ETFs and investment trusts (3 of each) that I favour at the moment. There are a number of other ETFs and closed-end funds that I am keen on in the US, but have not included here for reasons of simplicity.

Company	Code	Share Price Feb. 7, 2014	Share Price Feb. 14, 2014
iShares MSCI UK Small-Cap ETF	CUKS.L	15,027p	15,276p
Source GLG/Man Europe Plus ETF	MPFE.L	10,999p	11,126p
iShares Japan GBP-Hedged ETF	IJPH.L	4151p	4136p
Inveco Perpetual Enhanced Income IT	IPE.L	73.0p	72.0p
Fidelity Asian Values IT	FAS.L	198p	202.5p
Herald IT	HRI.L	715p	726.5p

Well four out of the six funds saw gains over the week, with the UK Small Caps leading the way in the form of the Small Cap ETF and also the Herald investment trust. 

In contrast, the Japan ETF struggled this week as the Japanese yen strengthened, with continued doubts over the success of Prime Minister Abe’s “Abenomics” economic revival plan. I remain convinced that China should see better days ahead, and that this should have positive knock-on effects for the Japanese economy and stock market, which on certain profit-based valuation measures looks cheaper than it has for many, many years. 

This Week’s Articles, In Case You Missed Them…

I wrote a couple of articles on Gold and on Europe in my Mindful Money Expert Opinion column this week:

1. Focus on Gold Miners as gold glitters once again: Gold bugs have had a good start to 2o14, unlike those invested in stock markets. While the FTSE 100 index has lost 1% over the year to date, in contrast gold futures have gained over 7% in US dollar terms. Billionaire hedge fund manager John Paulson’s Gold Fund gained some 18% over the month of January, according to Institutional Investor Alpha. What are the best ways to play the gold rally? Click on the article to find out…

2. Buy Europe! The ECB will have to give the Euro economy a boost: Yes, I know that you may be hesitant to buy Continental European stock market exposure, given the travails of the Euro zone since 2008. And you would be right to object that the Euro zone sovereign crisis has by no means been definitively solved, with debt loads of countries such as Portugal, Spain and Italy still pretty enormous.

I am a firm believer that the European Central Bank (the ECB for short) will need to stimulate the Euro zone further in the months ahead, which should be unabashed good news for the European stock market.

There is also a video interview you can watch:

3. Bloomberg TV interview: Focusing on Euro corporate results. 

I invite you to cast your eyes over my Bloomberg TV appearance early (too early, at 6:10am!) this morning, commenting on corporate results from: Rio Tinto, BNP-Paribas, Commerzbank and Nestlé.

Have a great week ahead, and please don’t hesitate to recommend this newsletter to anyone who you know may be interested: to subscribe, please just email me at 

    idleinvestor@idleinvestor.com

The best of luck for the week ahead,

Edmund

Focus on gold miners as gold glitters once again

Gold bugs have had a good start to 2014, unlike those invested in stock markets. While the FTSE 100 index has lost 1% over the year to date, in contrast gold futures have gained over 7% in US dollar terms. Billionaire hedge fund manager John Paulson’s Gold Fund gained some 18% over the month of January, according to Institutional Investor Alpha.

This rally should of course be put in the context of the substantial slide that the gold price has suffered since October 2012, when it sat close to $1800/ounce. Today, even after rising since December of last year, the gold price is still only $1292/oz (Figure 1). Were the gold price to continue to rise back to its October 2012 level, there could still be another 38% to gain!

1. THE GOLD PRICE BREAKS OUT OF ITS 2013 DOWNTREND

Source: Bloomberg

Now that is easy to say; but what could the drivers be for a continued gold rally? And is there a better way to play this trend than simply through the yellow metal itself?

Uncertainty and Strong Chindian Demand Are Key Drivers

There are two key drivers that can be easily identified for gold; one is uncertainty in financial markets, and the second is the growth in demand for physical gold from Chinese and Indian consumers.

Focus on gold miners as gold glitters once again

A final thought:Bear in mind that, since 1900, the gold price (London fixing) has actually beaten the US Dow Jones Industrial Average stock market index! 

Edmund

Buy Europe! The ECB will have to give the Euro economy a boost

Why you should buy Europe now, before the ECB acts

Yes, I know that you may be hesitant to buy Continental European stock market exposure, given the travails of the Euro zone since 2008. And you would be right to object that the Euro zone sovereign crisis has by no means been definitively solved, with debt loads of countries such as Portugal, Spain and Italy still pretty enormous.

This is all true and I wouldn’t dream of denying any of these facts. But hey, if you are to look at sovereign debt mountains, then you wouldn’t invest a single penny in the US, Japan or the dear old UK! The final exit from the sovereign debt mountains amassed both before and during the last financial crisis will take a very long time for the respective governments to unwind, as noted by the economists Rogoff and Reinhardt in their seminal tome “This Time is Different” (although there have been some subsequent issues raised concerning their calculations).

What I would argue is that there are a number of green shoots poking through for the Euro zone economy, which should be a harbinger of better days ahead. Added to this, I am a firm believer that the European Central Bank (the ECB for short) will need to stimulate the Euro zone further in the months ahead, which should be unabashed good news for the European stock market. And you have a chance today to buy into relatively cheap European stocks before the ECB unleashes one of their economy-boosting “big bazookas”.

Euro Confidence Is On the Up

Whether you look at leading economic indicators or  economic sentiment indices like the Sentix economic confidence index highlighted below (Figure 1),  the improving macro trend is clear...

Please click on the MindfulMoney website link below to read the entire article, see the charts and also the ETF and investment trust suggestions at the end:

Buy-europe-the-ecb-will-have-to-give-the-euro-economy-a-boost

All the best,
Edmund

The Idle Investor Weekly Newsletter: 8 February 2014

Market Outlook: Are We Already Back to the Races?

As per the usual script, this recent stock market correction was unexpected and sudden on the downside, illustrating once again that while stock markets may go up steadily, they tend to drop out of bed quickly and without much warning, catching the majority of investors by surprise.

And just as everyone starts to panic and sell any exposure they have to Emerging Markets (which have suffered mutual fund huge outflows in the US over the month of January), stock markets in the US and Europe have started to recover, and volatility has started to go back down. The US VIX volatility index (commonly known as the “Fear index”) has already eased back to just over 15, after rising from 12 to a peak of over 21 (Figure 1).

1. The US VIX Volatility Index Is Receding Quickly

Even some of the worst-affected emerging markets such as Russia have even some measure of stability return to their currencies, after suffering a sharp bout of depreciation against the US dollar. 

Is this a buying opportunity, or is it too early?

This is a fair question. I would suggest that the issues that triggered the turmoil in emerging markets are far from being solved.

However the structural issues facing countries such as Turkey and Brazil are far from being as serious as those faced by Asian economies or Russia back in the crises of 1997 and 1998. 

Personally, I would not be buying into emerging markets just yet despite the compelling value they seem to offer, as they can always get cheaper still in the short-term, as has been pointed out by Templeton’s famed emerging markets guru Mark Mobius. On the other hand, developed stock markets such as the UK and Continental Europe do look attractive to me post their recent declines, as do certain US stock market sectors such as Oil Services. 

If you are determined to buy some cheap emerging market exposure as a committed long-term investor, then can I recommend you look at relatively well-developed Asian economies such as South Korea and Taiwan. Both of these countries are home to a number of world-leading industrial and technology companies, including Samsung, LG and Hyundai, to mention but a few. They also do not have economies that are vulnerable to pressures on external debt funding. You can see from the chart below that the South Korean KOSPI index has started to bounce after a slump from the start of December (Figure 2). 

2. The South Korean KOSPI Index Stars to Rebound

So where are the best opportunities right now? I thought I would form my own model portfolio of exchange-traded funds (ETFs) and investment trusts, that I feel are best-placed to gain ground over the next few months. 

NEW! The Idle Investor’s Model ETF & IT Portfolio

The table below details the 6 UK-listed ETFs and investment trusts (3 of each) that I favour at the moment. There are a number of other ETFs and closed-end funds that I am keen on in the US, but have not included here for reasons of simplicity.

Company                           Code Price (Fri)

iShares MSCI UK Small-Cap ETF    CUKS.L    15,027p

Source GLG/Man Europe Plus ETF   MPFE.L      10,999p

iShares Japan GBP-Hedged ETF     IJPH.L        4151p

Invesco Perp. Enhanced Income IT IPE.L          73p

Fidelity Asian Values IT          FAS.L         198p

Herald IT                         HRI.L         715p

A few notes on each fund:

CUKS.L (UK Small-Cap Stocks) – I am very enthusiastic about UK mid- and small-cap exposure, which held up much better than the FTSE 100 in the recent correction, and which should benefit more than their larger compatriots from the strength in the UK economy (as the largest companies tend to be more global in focus). This iShares MSCI UK Small-Cap ETF is a good way to buy exposure to this UK investment style relatively cheaply, without going to all the effort of buying a basket of individual small-cap stocks.

MPFE.L (European Stocks) – This Source ETF is an interesting twist on a European stock fund, as it combines the best stock picks from investment banks in a single fund. Historically, this ETF has outperformed the broad European stock market by around 2% per year, so the model clearly seems to work in adding performance.

IJPH.L (Japanese stock market, hedged) – This iShares Japan ETF is a way to invest in Japan without taking Japanese yen currency risk. After all, one of the reasons that Japanese companies like Toyota are growing their profits is the competitive advantage conferred on these exporters by a weaker currency. However, that is not such good news for an investor based in a currency other than the yen, as then their yen-based assets tend to depreciate. This fund neatly sidesteps the problem by hedging the yen each month back into sterling. 

IPE.L (European Corporate Bonds) – the Invesco Perpetual Enhanced Income Trust is an investment trust that invests in UK & European corporate bonds, and through application of 25% gearing, offers a dividend yield not far off 7% at present. Rare to see such a high yield these days…

FAS.L (Asian Stocks) – The Fidelity Asian Values Trust is an Asia-focused investment trust that is heavily weighted towards South Korea, Hong Kong and China, and which trades at a 12% discount to net asset value following the recent emerging markets rout.

HRI.L (UK Small-Cap Technology & Media) – The Herald Investment Trust is a specialist investor in UK small-cap technology, media and telecoms stocks. Historic performance has been strong, it is invested in both sectors and the size style (smaller companies) that I prefer, and also trades at a 12% discount to net asset value. 

So there you have it, 6 of my current UK-listed fund favourites, all in one portfolio. These can be used by an idle investor to invest in a relatively well-diversified set of assets, without the need to delve into choosing individual stocks, and all achieved at low management charges. 

I will track the performance of this portfolio over the weeks that follow, so we shall see if it is an inspired set of choices or not!

This Week’s Articles, In Case You Missed Them…

I wrote an article on the UK Construction sector in my MindfulMoney Expert Opinion column this week:

1. UK Building Is All Systems Go! If ever anyone needed confirmation that the UK building industry is enjoying the best of times, you only need cast your eyes over the recent UK Construction Confidence survey from the firm Markit, that was released this morning, which hit a new high at nearly 65. Which stocks should benefit from this strength in building? Click on the article to find out…

There have also been a couple of videos you can watch:

2. CNBC TV Guest Host: Why I still prefer Insurance to Banks.... I was asked what I thought about European Banks in the wake of the announcement of Credit Suisse's results - I maintained that I still prefer Insurance companies to Banks. To find out why, please click on the CNBC TV web link below to watch the video…

3. Bloomberg TV Interview: On Emerging Markets, the allure of Technology The topics of this 5-minute interview were the value that can be found today in Emerging markets and European stock markets, following the current correction, and my continuing fondness for the Technology sector.

And if you would like to see and listen to my slideshow presentation with audio commentary on why further monetary stimulus efforts from the European Central Bank are key to the investment case for the European stock markets, click on the video link below:

4. Why the ECB is the Key to Buying European Stock Markets

Have a great week ahead, and please don’t hesitate to recommend this newsletter to anyone who you know may be interested: to subscribe, please just email me at

idleinvestor@idleinvestor.com

The best of luck for the week ahead,

Edmund