Investment trusts are great vehicles for making money from the stock market, requiring minimal effort from investors and diversifying your money across multiple assets. For those looking to switch from one investment strategy to another in the New Year, the wide range of trusts can help you to quickly move into new areas as economic and market circumstances change.

Europe

There are many investment themes to look out for in 2018, and one that you have probably heard of on multiple occasions is the revival in European economic growth. 2017 was a euphoric year for most European economies, with the Eurozone’s economic growth rate even outstripping that of the United States. Looking ahead, a number of investment analysts reckon a continued recovery would help domestically exposed stocks in the region.

With this in mind, I believe the Jupiter European Opportunities Trust (LSE: JEO) is a fund to consider for investors looking to get more exposure to European equities. Alexander Darwall, who has managed the fund since November 2000, has proved himself to be an exceptional stock-picker, with the fund regularly delivering returns in excess of its investment trust peers.

Over the past five years, it has delivered a total net asset value (NAV) return of 119%, beating the peer average return of 99% and benchmark FTSE World Europe excluding-UK Index’s performance of 88%.

Fund manager Darwall takes into account economic and business trends to find stocks which offer good prospects for capital growth. Industrials dominate its portfolio, with a 35% sector weighting, and this is followed by consumer services (21.7%) and healthcare (21.7%).

Top holdings include Wirecard (14.7%), Relx (9.9%), Novo Nordisk (9.1%), Carnival (7.4%), and Amadeus IT Group (6.9%).

Mining

Another area worth taking a look at is the mining sector. There’s growing confidence that corporate investment will finally pick up this year, especially following strong global growth and recent US tax changes that create enhanced deductions for capital expenditures. An uptick in corporate investment, along with rising infrastructure spending, should enable commodity prices to make headway in 2018.

The BlackRock World Mining Trust (LSE: BRWM) offers investors a diversified play on the mining sector, with balanced exposure across all major sub-sectors of the mining sector. Although there are a number of diversified large-cap miners listed on London Stock Exchange, this fund also offers exposure to companies such as Canada’s First Quantum Minerals Ltd, Brazilian iron ore miner Vale and a large number of smaller players, giving investors much broader exposure to the market.

Another attraction is that shares in the investment trust trade at a big discount to its NAV. With the shares currently trading at a 14% discount to its NAV, prospective investors have the opportunity to pick up shares in a trust for less than the sum of its parts. They’re able able to buy a pound’s worth of its assets for just 86p, a big discount for a portfolio consisting mainly of some very liquid equity investments.

The post My top 2 ‘growth’ investment trusts for 2018 appeared first on The Motley Fool UK.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

1.  The French go to the polls

If this year’s seismic events have taught us anything, it’s that a huge number of people are growing increasingly dissatisfied with the political elite. As such, investors will be approaching April’s elections in France with a degree of trepidation. A victory for far right candidate Marine Le Pen would send shockwaves through Europe given her desire to hold a referendum on EU membership if elected. Equities — particularly banking stocks — would surely take a battering if France departed from the euro and the entire eurozone experiment could be living on borrowed time. All this before Germany’s federal election in the autumn.

For these reasons, investors should probably be hoping for the Republican party’s Francois Fillon to emerge triumphant.

2. Trump’s push for growth

Trump’s proposed cuts to tax and regulation may help boost growth and consumer demand in the US but his protectionist stance is likely to cause ripples around the world, not to mention bringing an end to the 30-year bond bull market. The latter is good news for those holding equities, particularly those of a cyclical nature; not so good for those whose wealth is tied up in less risky assets. 

The fact that Trump’s policies will also encourage inflation isn’t necessarily a bad thing so long as it remains under control. Should inflation start to gallop ahead however, then central banks will have no option but to raise interest rates, perhaps aggressively. It’s then that equities becomes less desirable and the markets become a scary place to be.  

3. Countdown to Brexit

When you consider how little real progress appears to have been made over our EU exit since June, and given that employment and growth levels remain fairly stable, it’s unsurprising if some investors are growing a little less nervous as to what 2017 will bring. 

However, cracks are starting to appear and I would caution investors over becoming too relaxed. We’ve already witnessed a slowdown in the property market following the referendum. Mortgage rates have surely gone as low as they ever will and a raft of policy changes (including stamp duty hikes) are likely to impact on an already fragile market.

While Brexit is likely to dominate headlines throughout 2017, expect markets to be particularly sensitive in March — the month that Theresa May plans to trigger Article 50.

4. China’s debt mountain

The biggest threat to your wealth over the next year (and beyond), however, is quite possibly China. If you cast your mind back to August 2015 and January this year, you’ll remember just how susceptible the rest of the world now is to sneezing when the second biggest economy catches a cold.

With government, corporate and household debt now estimated to account for 240% of national income, evidence of a further slowdown in the Chinese economy will hit markets across the world, and possibly signal the beginning of the next financial crisis. UK exporters will clearly be severely affected by any reduction in growth, particularly as China now represents our sixth biggest market.

While political events may dominate the headlines in 2017, a hard landing for China could have the greatest impact on your investments.

The post The 4 biggest threats to your wealth in 2017 appeared first on The Motley Fool UK.

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Paul Summers has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

This globalised world, increasingly dominated by countries like China and India, is changing rapidly. This has led to the dismantling of manufacturing industry in the States, and a consequent crash in employment numbers.

Populism is rampaging across this world

In Europe, a series of crises centred around the euro and debt have fuelled discontent in many quarters. Greece has been on the verge of tumbling out of the Eurozone countless times. This has led to the strengthening of extremist and populist groupings such as the National Front in France, and the UK Independence Party in the UK.

And with the announcement of a referendum on whether Britain should stay in the EU, the Conservatives have revealed their huge divisions on this subject. I believe, the consequences for this country dropping out of Europe are frightening, both for Europe, and for Britain. Global stock markets, including the FTSE 100, would crash.

In the American presidential election campaign it’s the populists who have been winning. Donald Trump has beaten the moderates all ends up. In a battle with the likely Democrat candidate Hillary Clinton, Trump’s brand of immigrant- and China-bashing stands a strong chance of beating Clinton’s mainstream policies.

It’s difficult to say whether Trump will be as extreme as a president as he has been during his campaigning, but I feel his aggressive posturing augurs badly for the standing of America in the world.

Yet there’s still hope

And yet there’s still hope. In Europe, I’m hopeful Britain will vote to stay in the EU. People will gradually realise their fears about the European project were overblown. The series of crises that reverberated across Greece, Portugal and Ireland were really about the unsustainable level of government debts, rather than about the euro. Having a zone with the free movement of capital, goods and labour, with one single currency, is actually a good idea, and one that unifies a continent with disparate languages and cultures.

If Britain were to leave Europe, many would ask: what would we have in its place?

Stateside, whether Donald or Hillary win, politicians may begin to realise that a better path would be the reflationary policies that have seen Japan return to growth. Immigration, and an overpopulated world, loom over both America and Europe. Its difficulties and consequences have now entered mainstream debate, and politicians are still grappling with the fallout from one of the defining issues of our age.

I think investors should be cautious, yet optimistic. If we stay in Europe, I expect the FTSE 100 and the pound will bounce. And whatever you think about the US presidential rivals, at least they’re starting to accept the difficulties that their country is facing.

Now they have to decide what to do about it.

The post At a crossroads: why the FTSE 100 could crash or rocket appeared first on The Motley Fool UK.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Much of the debate about whether Britain should or should not leave the EU has been conducted in the future tense. People ask what would happen if this schism took place. They say that if Britain left Europe the pound would crash, or if Britain left the EU the economy would suffer.

Terrible things are taking place

The ‘Remain’ camp says these things in the hope that people will vote to stay in, and then none of these terrible things will actually take place, and these fearful predictions would amount to no more than speculation.

But I have some news for you: these terrible things are already taking place.

Take the employment numbers. Since early 2013 Britain has been a jobs creation engine, as it has pulled away from the Credit Crunch mire, and the economy has been going from strength to strength. From October to December 2015 employment increased by a massive 205,000. The numbers for the 3 months to January 2016 were also impressive, with a rise in employment of 116,000.

The British economy seemed to be unstoppable. Then, on 20 February 2016 the Prime Minister announced that an EU referendum would take place on 23 June. Cue the next set of jobs figures. This time only 20,000 extra jobs were created. What’s more, the unemployment figures increased by 21,000.

What about economic output? Well, the economy has been recovering strongly since the dark days of the Great Recession. From October to December 2015 GDP increased by 0.6% – the economy was ticking over nicely. Then from January to March 2016 this fell to just 0.4%.

Then there are house prices. According to the Halifax house price index, in the 3 months to March 2016, house prices increased by 2.9%. But in the 3 months to April, the rate of increase halved to just 1.5%.

“Nothing positive”

Which brings me to the IMF’s comments today about what would happen if Brexit actually took place. At a press conference in London, Christine Lagarde said

“We have looked at all the scenarios. We have done our homework and we haven’t found anything positive to say about a Brexit vote.”

The picture is stark: Britain’s economy could be tipped back into recession. Investors would be gripped by fear, sending house prices tumbling. And panic in global markets would lead to the FTSE 100 crashing. What’s more, the effects of Britain’s move would reverberate globally, and would be perhaps the most destabilising factor in the world today.

Now, speaking for all those seasoned stock market investors out there reading this article, would we really want to see a repeat of the Eurozone crisis in 2011? I don’t think we would. But this is what we are risking.

Worries about Britain leaving the EU are already resulting in Britain’s business’s freezing hiring, companies passing on investment opportunities, and shoppers spending less. If we actually did leave Europe, the results would be frightening.

The post IMF says that Brexit could send shares tumbling appeared first on The Motley Fool UK.

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Australia now also takes part in the annual songfest, and it’s even being shown on US TV.  In this article I present 3 companies — entries from Spain, the UK and Eastern Europe — that could be your Eurovision winners.

Banco Santander

The share price of Spanish bank Banco Santander (LSE: BNC), like many other financial companies, has been through in the wars recently. This company is one of Europe’s largest banks, and trades across Europe, Latin America, North America and Asia.

The combination of low European interest rates and poor sentiment from investors has meant that the share price has taken a big hit recently. Remarkably, the stock now trades lower than it did during the Credit Crunch or during the Eurozone crisis.

But the fundamentals still look robust. The 2016 P/E ratio is forecast to be 9.34, with a healthy dividend yield of 5.23%. And earnings per share have been fairly consistent, with the bank turning out a multi-billion pound profit year after year.

That’s why I think Banco Santander is one of the best bargains in Europe’s stock markets, and current low prices are a great buying opportunity.

Vodafone Group

Vodafone (LSE: VOD) is a telecoms and broadcasting giant that does much of its business in Europe. It’s a company that’s unlikely to grow rapidly over the next few years, yet it is a stable, consistently cash-generative firm that produces a substantial dividend yield.

Thus I rate this business as a prime candidate for your income portfolio. In 2016 Vodafone shares are predicted to yield 5.14%. After the much vaunted Project Spring, we are still waiting for that transformative deal that everyone has expected from this company.

But in the mean time, tuck this share away in your portfolio and just keep collecting those dividend cheques.

BGEO Group

Eastern Europe is a region that I expect to yield more investment winners in future years. And one of the first companies I have spotted from this part of the world is BGEO Group (LSE: BGEO), formerly called Bank of Georgia.

In developed markets such as the UK, banks have found it difficult to turn large profits, weighed down as they have been by low interest rates, fines and litigation. But the situation is far brighter in emerging markets. Here interest rates are higher, economies are often booming, and more and more consumers are saving their money in banks.

That’s why I have been a big fan of BGEO Group, a company that is the leading financial in fast-growing Georgia. This highly profitable company is priced cheaply, with a forecast 2016 P/E ratio of just 7.05, and a dividend yield of 3.43%.

This is in many ways the ideal investment, as it is fast growing, cheap and has a rising dividend yield. I rate this a strong buy.

The post Are Banco Santander SA, Vodafone Group plc and BGEO Group plc 3 Eurovision Winners? appeared first on The Motley Fool UK.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

If you were to see a television made in the 1950s, and compare it with a television of today, there’s just no comparison. A 12-inch, noisy, black and white wooden box bears no comparison with a 46 inch flat screen, high definition LCD.

A good thing?

Is progress a good thing? Well of course it is. There’s no argument.

The European Union also had its roots in the 1950s. It started out as a declaration by the French foreign minister of the time, Robert Schuman. This was soon followed by the Treaty of Paris, and the launch of the European Coal and Steel Community. This eventually became the European Economic Community.

Since then we’ve had the Maastricht Treaty, which led to the formation of the European Union. This is a Union that brought us the single currency and the free movement of goods, services and labour.

Extensive funding is provided for groups ranging from scientists and businessmen to farmers. There are extensive rules and regulations to preserve our environment, and there are a range of laws on human rights.

Mobility means that we don’t need visas, that it’s far easier to travel in Europe, and that we can settle in the south of France and on the Spanish coast.

A huge number of British companies trade in Europe. They often trade in euros, their employees travel from Manchester to Paris and Warsaw, and their shares may be listed on the London and Frankfurt stock exchanges.

Leaving Europe would be a backward step

People grumble about Europe all the time. They talk about too much immigration, and excessive regulation. Why, they ask, is Brussels interfering all the time? Leaving Europe may have its attractions, but it would be a disaster for British companies and British investors.

The FTSE 100 would fall, and so would the pound. Some companies would up sticks and leave Britain, and others might decide to locate their next factory, office or lab in Valencia rather than Birmingham. Jobs would be lost. But there’s something more important than that. Because this would change how the world views Britain. It would be seen in a very negative light.

That’s why I view leaving the European Union so seriously. You’re not leaving the Greek crisis, and you’re not leaving what people hand-wavingly call ‘Brussels bureaucracy’. In one fell swoop, you’re leaving over sixty years of European progress.

It would be a backward step. Don’t take it.

The post Why Leaving Europe Could Be A Disaster For Investors appeared first on The Motley Fool UK.

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Better together?

Indeed, only yesterday The International Monetary Fund, one of the pillars of the global economic order, charged with overseeing the international monetary and financial system, waded into the debate.

In short, the organisation believes that if the 23 June referendum in the UK were to produce a vote in favour of leaving the EU, it would expect negotiations on post-exit arrangements to be protracted. This, it warned “could weigh heavily on confidence and investment, all the while increasing financial market volatility“.

Additionally, the IMF felt that a UK exit from the EU would “disrupt and reduce mutual trade and financial flows” and restrict benefits from economic co-operation and integration, such as those resulting from economies of scale.

However, the Fund said that domestic demand, boosted by lower energy prices and a buoyant property market, would help to offset the impact on UK growth ahead of the EU referendum.

With all of this uncertainty in the public domain, like it or not, as an investor I couldn’t be more aware of the potential impact that the build-up to the referendum could have on stock markets as the day of reckoning approaches. After all. Mr Market hates uncertainty.

Sell in May?

Selling in May and going away can be used as an investment strategy for stocks or indices based on the theory that the period from November to April inclusive has significantly stronger growth on average than the other months of the year.

In such strategies, holdings are sold at the start of May and the proceeds held in cash before buying again in the autumn, typically around November time.

However, as we saw in 2015 with the General election approaching in the UK, there were many sectors such as utilities and housebuilders that were under pressure. Investors were uncertain of the outcome of the election and the potential impact of differences in policies such as the mansion tax. Of course, when the Conservatives won an overall majority, these sectors bounced back strongly.

Turning to the chart below, it’s quite clear that the best thing to have done in May 2015 was to have sold the FTSE 100 as it breached 7,000 points and to have stayed out of the market completely. The market has slipped steadily, even entering bear market territory in the first quarter.

And although we’ve seen a recovery of sorts with the price of oil now well off its lows, I still think that there’s plenty of potential to worry investors going forward, the impact of which could well be amplified in such a nervous market.

Will you grow richer in 2016?

So it could well be wise to take some money off of the table as we approach 23 June. However, with uncertainty comes opportunity, and as investors we should be ready to pounce on the right opportunities as they arise.

The post Why You Should Sell The FTSE 100 In May And Go Away appeared first on The Motley Fool UK.

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Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Uncertainty abound

As shown in the chart below, we can see that the index hasn’t been the same since breaching the 7000-point mark back in April last year. Indeed, it wasn’t long after that all-time high when volatility struck the markets, eventually leading to a bear market, followed in March by a huge bounce, which seems to be quickly running out of steam as I type, possibly as investors take  profits before Easter.

The problem, at least to my mind, is that there are major events over the course of the coming year which could see markets crash further if the results are not as hoped. Of course, I’m talking about the upcoming referendum on whether Britain should remain in the European Union or not —  to be held on Thursday 23 June — and the US Presidential elections — currently scheduled to take place on Tuesday 8 November.

Investors don’t have to look far to gauge the views of any number of high-profile investors or business leaders, and more importantly for investors, the effect that it will have on the UK stock market.

And, though I am neither, I’m quite happy to throw my hat into the ring with my prediction: I think that the FTSE 100 will move significantly dependant on the result of the referendum and again once the “Leader of the Free World” is decided.

If the results are what the markets want, we could see a huge relief rally heading into December – however – that is a big if!

A very different view

You see, while it true that when you’re not invested you will dodge some of the market’s worst days, it is also true that you also risk missing out on the markets best days, too. It is this that can seriously damage your returns.

While not directly related to the FTSE 100, I have been to several presentations now where speakers site an interesting study from JP Morgan Asset Management released in 2015. This report showed what happened when investors missed out on the market’s 10 best days between 1995 and 2014. 

An investor who stayed fully invested during those 19 years would have achieved an annualised total return of nearly 10%. But an investor who missed the 10 best days in the market would have seen their annualised returns fall to just over 6%.

While that may not seem the end of the world to most, it is well worth looking at it in a slightly different way:

An investor who put $10,000 in the US market would have made $55,000 by being fully invested without any selling or additional buying over those 19 years. However, had if they had missed the 10 best days they would have made only $23,000 – that’s a sizable difference, and illustrates that those of us who try to time the market are at risk of missing out on huge potential gains.

The post Why It Could Be A Good Idea To Stay Out Of The FTSE 100 Until November appeared first on The Motley Fool UK.

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Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

We gain a lot from being in the EU

I’m thinking not of the European Union, but of Unilever. And there are many others too. Think of Volkswagen or EADS. Would you ever think of breaking Unilever up into the individual countries in which it does business?

What strikes me about the Europe debate is how narrow it tends to be, and how negative. But savvy investors and the companies in which they hold shares know that by being part of the EU, we’re connected to the rest of this great continent. They know the EU doesn’t make Europe more complicated – it actually simplifies it. It links the economies, the currencies and the governments. It also links the companies, the scientists and the stock markets.

Why on earth would you break those links?

One argument for leaving Europe is that it’s very expensive. We say it costs us around 0.5% of our GDP. I work in research, helping academics bring science funding to my university. Much of our funding actually comes from the EU. If we were to leave the EU, the universities would find that their research funding would fall away dramatically, and many valuable research networks would be broken up. We may pay a lot into Europe, but we get a lot in return.

Leaving would be so disruptive

Another argument is the euro. And Europe certainly has been struggling in recent years with the crisis in Greece. I still feel Greece would be better off outside the eurozone. But investors buying shares in European companies, firms doing business in the EU, and holidaymakers know how much trouble a single currency saves them. Whether you’re a bank, a consumer goods company or a retailer, the euro makes life much easier.

But the euro-separatists have an ace up their sleeve: what about immigration? Yes, certainly there’s a lot of migration into the UK – arguably too much. But I think Britain’s job creation machine is actually benefitting because of immigration, and despite the huge influx, the employment rate in this country is the highest since records began.

We would be plunging into the unknown if we left Europe, and such a move would be incredibly disruptive. Now if things were going badly, disruption might actually be a good thing. But after eight long years, Britain is finally booming again. I baulk at the thought of what might happen to the FTSE 100 and the pound if we left, as do many business leaders. I see no point in disrupting things now.

The post Why Investors Want A Connected Europe appeared first on The Motley Fool UK.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

In fact, they have been a strong performer in recent months, increasing in value by 8% in the last year, versus a flat FTSE 100. A key reason for this appears to be that investors are beginning to factor in an improved period for the company, with the Eurozone economy likely to enjoy better growth in the next five years than it has in the last five.

A crucial part of this is the single-currency region’s adoption of a looser monetary policy, with the ECB stating that its quantitative easing programme has room to significantly expand. This, alongside a near-zero interest rate, should mean that the performance of the economy picks up and benefits European-focused stocks such as Vodafone.

Furthermore, Vodafone’s strategy of investing in its infrastructure appears to be a sound strategy that positions the company for future growth. In fact, Vodafone is investing around £19bn in its network between 2014 and 2016 and this should mean that it has a highly efficient fixed and mobile network that provides its customers with a unified communication offering. This means that the 20% rise in earnings which is forecast for next year could prove to be longer lived than the market currently anticipates.

Meanwhile, Vodafone continues to be an excellent income play. It yields a very impressive 5.5% and has a superb track record of dividend per share growth, with it having risen at an annualised rate of over 5% during the last five years. And, with Vodafone having a relatively stable business model, additional dividend rises are likely to take place over the medium to long term, not least because, as mentioned, its bottom line is due to rise.

A potential catalyst to boost Vodafone’s total return even further is the scope for additional acquisitions, with the company’s aim being to buy undervalued assets which offer strong cash flow and growth potential. With the European economy now seemingly on a more stable footing than in previous years, it would be of little surprise for Vodafone to engage in further M&A activity in the region. That’s especially the case since it has only a modestly leveraged balance sheet which could accommodate further debt, as well as relatively resilient cash flow.

Of course, Vodafone’s decision to sell its 45% stake in Verizon Wireless in 2014 may have caused investors to worry about its potential overexposure to Europe. However, its strategy to add value while asset prices are low in the single-currency region now seems to be on the cusp of delivering improved financial performance.

With a high yield and growth potential, Vodafone’s total return could be relatively high moving forward, thereby making it a strong buy for long term investors.

The post 1 Big Reason To Buy Vodafone Group plc! appeared first on The Motley Fool UK.

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Peter Stephens owns shares of Vodafone. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.