Headline : Go big or go home

Read more from the original article on here at www.diyinvestor.net.

---

No. of Paragraph 31

The rich get richer has been the market’s watchword over the past few years. The momentum has been behind the largest companies in markets around the world, whether that be AI-related names in the US, large cap luxury brands or healthcare giants in Europe, or the banks in Japan. There are specific drivers in each case, but perhaps there is also a general preference for size, liquidity and momentum, linked to technical factors in how we invest, both in terms of the strategies and the infrastructure we use. In the investment trust space, something analogous has been happening, with boards seeking to get scale quickly. Here two of our analysts debate whether this consolidation is a good thing for the end investor, or if it is to be regretted.

Is there really such a thing as ‘capitalism’? It always struck me as a term that was defined by its enemies. In other words, it was communists who defined capitalism as something they were against, whereas nobody really agitated for ‘capitalism’ as it emerged from the Middle Ages. People fought for economic freedoms: the freedom to choose what work to do, and to spend or invest the money they earned how they wished. I’m not going to go all libertarian here – as far as I am concerned there is a vital role for the state in a good society, not least in providing the laws and regulations that make a free market economy possible and ensuring that might makes right doesn’t make it collapse into its opposite. But I always thought ‘economic freedom’ was much better branding for something that should be celebrated.

Call it what you like, one of the most powerful features of a capitalist society, or an economically free society, is that it directs money, energy and time to what has value to people, and this has a compounding effect in refining, developing and producing more of it. At the risk of losing a lot of readers here, as other people’s holidays currently have an image problem, I would point to the overseas vacation as a classic example. This is now something that is open to the majority of the population, and not just a luxury. According to the Association of British Travel Agents, 52% of people took a foreign holiday in 2023, down slightly on the 64% pre-pandemic peak in 2019. Huge investment by industry across multiple sectors over many decades has given us what we want.

In our sector, the same forces are at work, directing time, energy and resources to the funds that give people what they want. I think this is one of the key driving factors behind the consolidation in the investment trust space. Take JPMorgan Global Growth & Income (JGGI), for example. Over the past two years or so, it has absorbed three trusts with very different approaches to investing globally that had struggled to get to scale. The combination of a quality growth portfolio with an optional income is clearly highly appealing to a broad variety of investors, while the successful execution of the strategy, evident in strong performance numbers, has built confidence in the managers. Or take the absorption of UK Commercial Property’s assets by Tritax Big Box (BBOX). Just as consumers want cheap Amazon deals, investors want to own the logistics network that makes them possible, and the market is giving them what they want.

Read more from the original article on here at www.diyinvestor.net.

Related Headlines : Go big or go home (in Google.com):

Hello, below you have a "Web" tab to read more content and an "Image" tab to get related pictures

Example : Trends, Country, News, Jobs, Scholarships, Investment, Business, Politics, Adverts, Fashion, Events, Technology and more.