Diversification is an important strategy for investors and is when you spread your money across different asset classes and also investment types.
The goal of diversification is to spread risk and improve the consistency of your investment portfolio.
The financial crisis and subsequent monetary easing, has affected the way certain assets have performed and also the make-up of a well balanced portfolio. Below, we look at how investors are diversifying in today’s market.
The Alternative Investment Market (AIM) can be a fertile hunting ground for investors, but it can also be a minefield. Small, unproven companies are inherently riskier than larger, established companies. As such, investors seek much higher upside on AIM companies.
Whilst AIM shares are not for the fainthearted, they can provide diversification and enhance portfolio performance.
AIM has built a reputation as an attractive marketplace for companies and investors, and a highly tax-efficient one. Qualifying shares listed on AIM are exempt from inheritance tax once they have been held for two years and have been allowed in ISAs since 2013.
2017 has been called the year of the ICO with the emergence of Initial Coin Offerings and over $6.1 billion raised for more than 870 different companies. This was almost 70 times the amount raised in 2016. The $6.96 billion already raised in 2018 for over a thousand companies, suggests that 2017 was not a flash in the pan and could have been the start of the era of the ICO (source ICOData).
The internet has created a global marketplace over the past forty years. A consequence has been a high level of fraud resulting in an increasing trust gap. Intermediaries help to add a level of verification but there still remains a leap of faith that the intermediary is trustworthy and competent. With the number of smart devices predicted to outnumber humans seven fold by 2020, new technology is required to fill the growing trust gap. Up step blockchain, tipped to radically change record keeping for shares and derivatives, property, governmental agencies and filing accounts. The resultant ledger is an immutable record trusted by all counter parties that speeds up and reduces the cost of transactions. Blockchains could replace all intermediaries and what’s more, every company in the world could be at risk of competitors that embrace and incorporate this game changing technology. Below we look at how blockchain works, its strengths and weaknesses and what future applications could be.
Blockchain technologies will initially target industries where poor service is delivered at a high cost.
One thing for sure there is far more to blockchain than Bitcoin.
Artificial intelligence (AI) is predicted to boost UK productivity by a much needed 30 per cent whilst generating cost savings of up to 25 per cent. The government is targeting for AI to add £232 billion to the economy by 2030.
London is currently leading the world in AI through companies such as DeepMind and the UK’s AI sector is growing faster than the US or Canada. However, the government will need to invest heavily as the US and China are battling for supremacy in the AI field.
Last September Tesla’s market value briefly passed that of General Motors, America’s largest car maker, despite Tesla having made fewer vehicles in its lifetime than GM makes in a month.
Shares in the group have dropped by more than 21 per cent since. Nonetheless, investors have stuck by Tesla, hoping the company will lead the electric car revolution. As an honorary member of NATU, Tesla has clearly been identified as a technology powerhouse.
Tesla stock delivered a handsome positive return of 45.7% in 2017. These gains were much higher than the broader market and other mainstream automakers. By comparison, the S&P 500 Index yielded 19.4% returns, and outperformed traditional auto makers General Motors (+17.7%), Ford (+3%), and Toyota (+8.5%) in 2017.
Tesla’s high valuation has been repeatedly questioned by experts. Tesla has been listed on NASDAQ since 2010 so whilst debate ensues, the fact is the market values the company and as an investor you have the opportunity to buy into the trend or sell if you feel strongly that the company does not warrant such a lofty valuation.
First came steam and water power; then electricity and assembly lines; then computerisation… So what comes next?
Technologies are emerging and affecting our lives in ways that indicate we are at the beginning of a Fourth Industrial Revolution, a new era that builds and extends the impact of digitisation in new and unanticipated ways.
The Fourth Industrial Revolution is the combination of digital technologies including analytics, artificial intelligence and the internet of things and will affect most aspects of life today, with the potential to disrupt every industry in every country.
As the combination of these digital technologies becomes widely adopted, we stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation could be unprecedented.
Can a sector as diverse as venture funding be judged on an average performance basis? If you are considering investing in this area what can you learn from successful VC investors?
Most experienced investors know that when they are assessing investment opportunities, the right management team is vital. This is even more true for smaller entrepreneurial companies, where the founding team is the driving force in the company’s growth strategy.
The problem is that if the founders have a track record of building successful companies then they will more than likely already have backers. This is compounded by UK investors often being put off if the founders have been involved with unsuccessful companies.
The November 2017 Budget announced several changes to the Enterprise Investment Scheme (EIS). EIS is designed to help smaller trading companies to raise finance by offering a range of tax reliefs to investors.
The changes are part of the government’s Patient Capital Review of support for small businesses.
Below we look at the main changes and how they could affect private investors.