A Window on the Future; FINANCIAL MAIL
Byline: JEFF PRESTRIDGE
MOST investors in unit trusts and investment trusts have had a volatile ride in 1997.
Stock markets across the world have responded nervously as the Far Eastern economic miracle has crumbled.
While most investors who take the long view and spread their risks have come out smiling, some, such as those with big holdings in Far Eastern funds, are nursing sore heads.
So as we draw closer to 2000 and the Millennium Dome starts to take shape in Greenwich, east London, should investors look on the New Year as a time to rethink their global strategy towards equities?
Should they maintain their core investments in the UK, or should they take advantage of turmoil in the Far East to increase exposure on the principle that what goes down must go back up - eventually. Or should they avoid equity-related funds altogether?
To help investors answer these questions, we asked a panel of 10 leading independent financial advisers for their assessments on prospects for four key investment areas - the UK, the US, Europe and the Far East.
Unit trusts and investment trusts are recommended because they offer convenient and low-cost routes into equities. By investing in a range of companies, they also provide exposure to diversified portfolios of shares.
While our advisers believe investors can continue to do well through long-term exposure to equities, especially via UK and European funds, they should expect a rocky ride.
Moshe Hadari, panel member and senior partner with Chancery Bar Financial Services, says: 'Investment markets are becoming more volatile as a result of more effective global communications and the domination of computer trading.
The winners will be those who stick out this volatility for the long term.'
THIS is a view shared by David Aaron, senior partner of the David Aaron Partnership. 'Markets will remain volatile,' he says, 'but the global economic environment should be stable for some time.
'Moderate growth, low interest rates and low inflation are the conditions on which equity markets thrive. If these remain in place, investors should do well.' Our panel also recommend that investors should look outside the conventional geographic trusts for millennium investment winners.
Technology funds such as Finsbury Technology, Prolific Technology and Herald Investment should benefit from the millennium and the problems and opportunities it will bring.
Yet it is Amanda Davidson, partner with Holden Meehan, who has come up with the most interesting millennium investment tip. 'Invest in a green fund,' says Davidson. 'Many of the themes for 2000 and beyond will have an environmental slant, so funds such as Jupiter Ecology unit trust should prove winners. As the world battles with sustainability, green funds will come into their own.' Our panel of advisers comprises David Aaron Partnership, Milton Keynes, 01908 281544; Alan Steel Asset Management, Lin-lithgow, near Edinburgh, 01506 842365; Bates & Partners, Leeds, 0113 295 5955; Chancery Bar Financial Services, London, 0181 482 2222; County Partnership, Cheltenham, Gloucestershire, 01242 253136; Hargreaves Lansdown, Bristol, 0117 988 9880; Holden Meehan, London, 0171 692 1700; Master Adviser, London, 0171 240 1901; Plan Invest, Macclesfield, Cheshire, 01625 429217; Premier Unit Trust Brokers, Bristol, 0117 927 9806.
Portfolios begin at home
ALL 10 members of our investment panel are positive about the outlook for UK shares.
They believe UK-invested unit trusts and investment trusts should form the core of any portfolio.
Alan Durrant, head of UK equities at Hargreaves Lans-down, says: 'All of the technical signals are good.
Directors are avidly buying shares in their own companies, and they know more about the prospects for them than analysts ever will.
'Regardless of the level of stock markets, many investors will continue to pay monthly into their savings plans. …