Our Weekly Newsletter

Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

Proposed new property fund structure may boost the UK’s competitive standing

Investment companies are proposing a new fund structure that would allow pension funds to avoid liquidity issues when investing in property. The Investment Association and the Association of Real Estate Funds hope to target the framework gap as they believe it inhibits the UK’s ability to compete internationally. The structure incorporates closed-ended funds allowing investors to avoid the stamp duty tax associated with traditional open-ended funds. The investment group, which collectively manages £7.8tn, believes the new structure will create more flexibility when investing in property while increasing the UK’s standing within the international fund sector.  (From Financial Times, 4 March 2020)

Robots cause markets to plunge

Market selloffs, which have historically been a result of people instructing their stockbrokers to sell shares, are now equally likely to be caused by algorithms detecting signals in markets. Dickie Hodges of Nomura Asset Management argues that widespread political and market uncertainty facilitates “the perfect scenario” for algorithms to send markets plunging as they automatically trade in response to positive or negative media headlines, where a spike in negative headlines triggers automatic mass-stock selling. (From The Telegraph, 1 March 2020)

Jupiter adds to pressure on Barclays over fossil fuel financing

Jupiter Asset Management, along with 11 other institutional investors and 100 shareholders, has backed a landmark resolution calling on Barclays to stop financing fossil fuel producers that are not aligned with the Paris Agreement climate goals. The resolution is thought to be the first ever climate change resolutions at a European lender and comes as Greenpeace protestors targeted 100 branches throughout the UK. (From City AM, 3 March 2020)

Investors put pressure on companies for more gender diversity in executive roles

Companies are feeling increasing pressure to make meaningful progress in diversifying their boards since it was revealed one in five FTSE 350 companies lack women in executive roles. The Investment Association and the Hampton-Alexander review have both gone to great lengths to ensure women have membership on executive boards. However, several companies are falling behind on progress, which if continued, may cause investors to give “red tops” – the most serious warning for failing to meet expectations on diversity. Investors found that diverse boards generally performed better, further fuelling their motivation to act. (From Financial Times, 29 February 2020)

Targeted insurance offers hotels some relief in coronavirus fight

Organisers of events cancelled due to coronavirus are likely to miss out on insurance payouts because typical policies do not cover epidemic outbreaks. Hotels hit by the same cancellations, however, may be slightly better protected due to a new insurance product that offers compensation when the revenue per room falls below a certain level due to unforeseen circumstances. This type of “parametric insurance” first emerged in the 1990s to cover natural disasters in emerging markets but has since evolved to cover risks once deemed un-insurable such as contagions, terror attacks or financial crises. (From Reuters, 3 March 2020)