The recovery in the Japanese market in September reflected a belated improvement in the Covid situation and, in particular, the decision by Prime Minister Suga not to contest the recent contest for leadership of the LDP, effectively a resignation. An unpopular Olympics and an even more unpopular Prime Minister completed the gloomy picture. The principal reason was the country’s clumsy handling of the Covid pandemic, with vaccinations falling well behind comparable countries in the West. Between April and August, the Nikkei 225 significantly underperformed other developed markets like the US, shown here. It’s been a testing summer in Japan, as the chart above suggests. Japan bounces back after a difficult summer Before you invest in a fund, please ensure you have read Doing Business with Fidelity and the Key Information Document (KID). The fund that is most obviously focused on the FTSE 250 index is the Threadneedle UK Mid 250 Fund. Select 50 fund pick: there are nine UK funds on the Select 50 representing a wide spread of investment styles. And it’s worth pointing out that the FTSE 250 index’s valuation multiple is much lower than the 21.6 for the S&P 500. But look at the forecast earnings growth and that looks more than justified - Goldman Sachs estimates that FTSE 250 earnings will grow five times faster than those in the FTSE 100 (53% vs 9%). In terms of valuations, the FTSE 250 looks more expensive than the FTSE 100 with a price that’s 17.7 times expected earnings versus 12.4 for the blue-chip index. So, what should we take from this looking forward? To draw sensible conclusions, we need to look through the windscreen not in the rear-view mirror.
You could have made good money investing in our home market but only if you ignored those big, boring businesses in the FTSE 100. The FTSE 250, on the other hand, has risen more than 3.5-fold over the same period, outpacing the trebling in value of the S&P 500. No wonder the FTSE 100 has gone nowhere in two decades. The weighting of TMT has dwindled to next to nothing as companies have been taken over or gone out of business while the other stodgy sectors have grown more important. This was true in 2000 too, when an additional 30% of the index was in technology, media and telecoms (TMT) stocks. More than half of the value of the FTSE 100 is represented by commodities, financials and consumer staples. Just 24% of the FTSE 100’s sales are domestic, compared with 51% of the FTSE 250’s. It shows the performance of the biggest companies, but these are concentrated in a handful of sectors and they earn most of their profits in the rest of the world, not here in the UK. The FTSE 100 is the UK stock market benchmark we all watch but arguably it should be put out to grass. Smaller, more domestically focused, companies have matched the US market and then some. Yes, investing in the UK’s biggest companies has been hugely disappointing but it only tells part of the story. The divide has widened further in the recovery from the pandemic lows last year.īut when you add in a third line, representing the performance of the FTSE 250 mid-cap index, a rather different picture emerges. The conventional wisdom says that investing in the UK has been a bit of a disaster in recent years and if you look at the divergence between the FTSE 100 and the S&P 500 in the chart you can see why people might have come to that conclusion.Īlthough UK and US shares tracked each other closely in the first dozen years after the peak of the dot.com bubble in 2000, they have parted company in the 10 years since the financial crisis. The performance of the UK stock market over the past 20 years is an excellent example of this danger. If we are not careful, we can pick up entirely the wrong message. It’s very important as investors to understand what we are looking at. When investing in overseas markets, changes in currency exchange rates may affect the value of your investment.
Past performance is not a reliable indicator of future returns. Source: Refinitiv, 30.9.21, rebased to 100 as at 3.1.00 (peak of dotcom bubble), total returns in local currency % Investing in the UK has not been so bad after all
0 kommentar(er)
