If you invested £10,000 in a basket of cheap companies in 1926 and consistently bought the cheapest shares over the period your investment would be worth over £1 billion today. “The direction of interest rates occupies a lot of people’s headspace: when rates were at zero post 2008 everyone thought they’re staying at zero forever now they’re higher everyone’s debating whether the next move is up or down.Īs a value investor I’d rather just focus on finding cheap companies with good balance sheets that have the ability to recover. Compared to the last 15 years, you may now need to be more flexible and active in the way you invest.” Meanwhile, here in the UK, the number of publicly-listed companies has shrunk, leading investors to increasingly looking beyond our shores and to private markets for investment opportunities.Įvery asset has had to reprice to compete with a yield on cash in the bank. It’s become a more complex place, increasingly shaped by huge forces such as decarbonisation, a retreat from globalisation, technological advancements and challenging demographics. “Although interest rates have gone back to where they started, the world is very different to how it was pre-Lehman Brothers’ collapse. It’s time to return to careful analysis of winners and losers among companies – not just in the US – and seeking interest rate opportunities as monetary policy diverges once again many ways, as an investor you now need to think about what you did in the last decade – and then do the opposite.”ĭoug Abbott, Head of UK Intermediary, Schroders: Gone are the one-way streets of “FOMO” equity markets dominated by the US and vanishingly small bond yields. “Investors should expect higher inflation and tighter economic policy for longer.

Johanna Kyrklund, Group CIO and Co-Head of Investment, Schroders: They are sought after by investors and companies alike. The best private equity investors also have deep sector expertise and take a much more hands-on approach to driving value. It can now finance companies to a much later stage of their development than before.Ĭompanies are not only attracted to private equity for the money. With this growth, the size of the cheques the industry can write has soared. Private equity has grown from a $500-600 billion industry in the early 20002 to be worth more than $7.5 trillion in 2022. One important reason why companies have turned their back on a stock market listing is that another source of financing has become more widely available: private equity. By the end of 2022 this had collapsed to 1,100 – a 60% reduction. In 1996 there were over 2,700 companies on the main market of the London Stock Exchange. Read more: How should investors respond to the stock market's dwindling status?.The declining popularity of stock markets as a way for companies to raise capital is a global trend, but it is particularly notable in the UK and one that has continued in the past 15 years. The charts below show how the tide has turned away from UK equities since the Global Financial Crisis.Ĭompanies have been turning away from the stock market as they look to private capital Meanwhile, despite strong overall market performance, the AUM of the UK All Companies sector has gone from £95 billion to just £97 billion over 15 years. In 2008 the AUM of the IA Global equities sector was £11.7 billion, compared to £266 billion today. The domestic bias has been turned on its head, with substantial outflows from the IA UK All Companies sector, while the IA Global sector has grown exponentially. There’s been a dramatic shift between 2008 and today in where UK investors invest. And, with interest rates now back at pre-crisis levels, we ask: what next? UK investors have gone global The following charts reveal some of the powerful trends that shaped the global and UK investment landscape in the 15 years since. Only in July this year did the Bank Rate return to 5%.

UK interest rates fell 90% over the next six months from 5% to 0.5%. Within months both HBoS and RBS had changed hands as the UK banking sector was recapitalised with taxpayer support. Lehman Brothers filed for Chapter 11 bankruptcy protection in the US on 15 September 2008 in an event that helped spark the Global Financial Crisis.įrom a UK perspective, Lehman’s UK businesses went into administration on the same day and UK bank shares plunged.

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