What caught my eye this week.
It’s not been easy to find reasons to be optimistic about the shrinking British stock market in recent years.
But I think how private investors, fund managers, the investment trust industry, and investment platforms worked together to defeat US firm Saba’s designs on the trust sector might qualify.
As I wrote last month, there was something of a last alliance vibe about this coalition of the unwilling.
But so comprehensively was Saba defeated – it lost all seven showdowns, and on large turnouts of private investors who overwhelmingly voted no – that the result was quite heartening.
This was shareholder democracy in action, and I’m all for it.
Moreover the platforms showed that they can facilitate such a democracy if called upon.
Your vote counted
In the early days of Monevator, lots of readers urged me to write articles about the evils of nominee share ownership and the demise of paper share certificates.
I saw their point. But I also saw the changes as inevitable and not the most important battle to win compared to, say, lowering fees or spreading knowledge about index fund investing.
Anyway such appeals stopped long ago, whether because the proponents accepted the change or because they moved on to a realm where their voice was even less influential than here on this mortal coil.
But wherever they are, I hope they’re heartened too.
Nominee ownership and representation via electronic voting on platforms does not inevitably mean disenfranchisement, or to be kicked around by those with the billions and the biggest boots.
And that is good news, whether or not you agreed with Saba’s charges and proposals. (Personally I share some of his complaints. But I was not persuaded by the remedy he was offering.)
He gets knocked down, but he gets up again
Saba is now going after a new quartet of trusts, suggesting they be turned into open-ended funds.
Curiously, Moguls-featured Pershing Square isn’t on the list despite its yawning discount.
Anyway, we’ll have to whether Saba’s relentlessness eventually exhausts the opposition.
More UK investors are apparently getting in on the act too. For example, the hugely talented Christopher Mills is said to be raising money for a trust that will work to close discounts at rivals.
As somebody who sees rife opportunity in the trust sector, I’m not surprised.
Though ironically two Mills-affiliated investment trusts themselves sit on 25-30% discounts…
Passive engagement
I’ll leave more comment in that direction for our Moguls member posts though.
Indeed for most Monevator readers who sensibly invest in index funds, this might all seem a bit irrelevant.
But I’d suggest it’s very relevant.
As index funds take up an ever-larger share of the overall investing pie, it’s really important that cheap and effective investing for the masses doesn’t become a lazy synonym for disenfranchised investors and the fracturing of shareholder democracy.
That charge has already being made as index funds have grown to dominate the investing landscape. For example, from the New Statesman:
The upshot of this mix is an ownership regime with a chief interest in maximising assets – whether by minimising costs to take market share, or by promoting general asset price inflation – and takes little interest both in how capital is allocated and how any company within its diversified portfolio is governed.
In other words, such an ownership regime takes no ethical stance on what those companies produce, how they are run, what they sell or what impact they have on the planet.
It’s a valid concern.
Squint though and you can see this battle with Saba as upholding the thin end of the same wedge that ends with Vanguard cutting fees further in the US recently.
The common thread is what’s ultimately in the long-term interests of ordinary shareholders.
Perhaps there’s even a future where even index fund investors get to vote their wishes somehow on the vast range of issues raising by the firms their tracker funds hold – albeit perhaps by aggregating their general wishes at the fund manager level?
Time will tell. But I’m more hopeful about that sort of thing than I was two months ago.
Have a great weekend.
p.s. Two corrections! We featured a wonky graphic in the email of TA’s linker piece on Tuesday. Thanks to reader Richard for the heads-up, and see the corrected post for the right graph. Then the next day TA achieved a – very rare for him – double by misstating the age you can open a cash ISA. You must be 18, of course. Sorry cash-loving youngsters! And cheers to reader Tommo for spotting what I missed.
From Monevator
Did individual linkers hedge post-pandemic inflation? – Monevator
UK tax deadline: how to make use of all your allowances… – Monevator
…including that dreamy £20,000 ISA allowance – Monevator
From the archive-ator: Stonking gains, hedge fund pains – Monevator
News
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UK inflation jumps back to 3% – Morningstar
Fund managers step up calls for Reeves to ‘simplify’ ISAs [Search result] – FT
Treasury rejects farmers clawback compromise on inheritance tax… – Farmer’s Guide
…but government does backtrack on tax hike for private equity firms – CityAM
Reeves’ intervention in car loans case rejected – BBC
Confidence in economy among wealthy Britons falls to record low – This Is Money
VOO has dethroned SPY as world’s largest ETF [US but relevant] – Sherwood
How to fix Europe’s securitisation market – FT
Devon farmer culls 5,000 hens due to bird flu – BBC
House prices in Gwynedd in Wales plunge on second-home policies – BBC
London registers zero house price growth for 2024, says ONS [Search result] – FT
Products and services
Should you choose a savings account that offers a boosted rate? – Which
NS&I cuts rates on Premium Bonds and Income Bonds – T.I.M.
Get up to £1,500 cashback when you transfer your cash and/or investments through this link. Terms apply – Charles Stanley
Plum and Chip boost cash ISA rates above 5% – This Is Money
Major lenders cutting mortgage rates, but don’t hang around – T.I.M.
Co-operative Bank switch offer: £75 + £75 – Be Clever With Your Cash
The best car insurers you won’t find on the comparison sites – Which
Open an account with low-cost platform InvestEngine via our link and get up to £100 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
Buy-to-let mortgage market update [Podcast] – The Property Podcast
Family homes with gardens, in pictures – Guardian
Comment and opinion
Exchange-traded absurdity – Dumb Money Dispatch via LinkedIn
Spending shock – Quietly Saving
Eight investment rules to live and die by – FT
Six ways couples can cut tax and maximise their savings – Which
Targeting apathy – A Teachable Moment
Dealing with uncertainty – Behavioural Investment
Allan Roth: examining Vanguard’s expected returns for the decade ahead – A.P.
Improbable outcomes – Fortunes & Frictions
The Midas touch: 4,000 years of getting it wrong about gold [Search result] – FT
William Bernstein: why I don’t use retirement calculators – Advisor Perspectives
A modest capital tax could help avoid austerity and boost economy – The Conversation
To stop or not to stop mini-special
‘Fuck you’ money is useless without the “fuck you” – The Way of Work
Never enough – Humble Dollar
Naughty corner: Active antics
A couple who spends hours a week in passionate stock talk – This Is Money
Can bubbles repeat? – Arcadian Asset Management
More thoughts on the Magnificent Seven – Brooklyn Investor
The top 15 value-creating stocks of the past decade – Morningstar
Hundreds of unicorns haven’t raised funding since 2021 – Crunchbase
Does trend following still work on stocks? [Research] – SSRN
Kindle book bargains
Fooled by Randomness by Nassim Taleb – £0.99 on Kindle
The Price of Time by Edward Chancellor – £0.99 on Kindle
Edible Economics by Ha-Joon Chang – £0.99 on Kindle
Taxtopia by The Rebel Accountant – £0.99 on Kindle
Environmental factors
Glaciers melting faster than ever… – BBC
…but Trump withdraws support for research that mentions ‘climate’ – Guardian
Expanding seaweed farms poses risks to marine life – The Conversation
EVs are 50% cheaper to run than a petrol car… – This Is Money
…so what are the pros and cons of buying second-hand? – Independent
Rewilding sees animals rebound in Hackney Marshes – BBC
Robot overlord roundup
AI cracks superbug problem in two days that took scientists years – BBC
AI research tools for the financial sector – Herb Greenberg
BrAIn drAIn – The Intrinsic Perspective
Surveying which AI tool will win… – Spyglass
…or is generative AI all a con anyway? – Where’s Your Ed At
Not at the dinner table
How I’m preparing for the next four years – Ryan Holiday
Golfo del Gringo Loco – Daring Fireball
It was never going to be me – Epsilon Theory
It’s time for Europe to stand up – Noahpinion
You can never go back – Garbage Day
The schadenfreude dilemma – Drezner’s World
Off our beat
Career catfishing – Guardian
TFL reveals the costs and challenges of driverless tube trains – Ian Visits
A short history of cryptography, from the Spartans to the FBI – MIT Reader
Live to 100 and die totally happily [Videos] – Men’s Health
Bridget Jones’ London property ladder – Standard
Will quantum computers disrupt critical infrastructure? – BBC
“I love my kids but I regret having them” – Guardian
There goes my hero – A Wealth of Common Sense
And finally…
“What is this sovereign remedy? It is to recreate the European fabric, or as much of it as we can, and to provide it with a structure under which it can dwell in peace, safety and freedom. We must build a kind of United States of Europe. In this way only will hundreds of millions of toilers be able to regain the simple joys and hopes which make life worth living.”
– Winston Churchill, University of Zurich, 1946
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