Aim — originally the Alternative Investment Market — is a curious entity that understandably excites conflicting responses. Since its launch in 1995, London’s ‘junior’ market has raised some £24 billion in new capital for smaller companies. But more than 70 per cent of companies listed on this relatively laissez-faire exchange have failed to make money for investors. A huge number have disappeared: the best taken over or promoted to the main market; many more simply insolvent; some spectacularly fraudulent. The official Aim index, which tracks the performance of its 1,100 constituent members, remains 27 per cent lower today than it was when Aim opened two decades ago — and it excludes companies that have gone south in the intervening years. Yet, paradoxically, Aim has also been a resounding success.
Is there a genuinely independent go-to guide for anyone who cares about the future of the UK economy but isn’t sure how to cast their vote in the Brexit referendum? Two-thirds of voters are said by unreliable pollsters to have made up their minds already, which leaves at least a third undecided. As the strident rhetoric and tendentious factoids of the two campaigns intensify, the need for dispassionate analysis could not be greater.
In a world where we’re heading for driverless cars, drones that deliver groceries to your back garden and smartphones that switch your lights and radiators on and off automatically while you are miles away from home, is it strange to think about handing over your money to a robot to look after? No, it’s not such a daft idea as it may first appear — and if the trend to robotise your finances gains traction, it will mean exciting opportunities for investors and potential trouble for the army of financial advisers and wealth managers who make a well-paid living looking after your money today.
When you put your money into an actively managed investment fund, it’s as well to remember that you are putting your faith in a human being you have probably never met. Have you ever stopped to think who you have chosen to be the steward of your savings? They come in all shapes and sizes, from brash and super-confident ‘masters of the universe’ (mostly in hedge-fund territory) to more diligent, understated portfolio technicians who probably drive Skodas and come blinking into the limelight only under duress. Few investment managers, it’s safe to say, are quite as backward in coming forward as Nick Train of Lindsell Train. His track record is exceptional, but largely under the radar. One of his UK funds has beaten the market 13 years out of 15; the other nine years out of ten. The investment trust he runs with Michael Lindsell has done so well that its shares trade at a huge premium to asset value.
There is a good reason why we lack a definitive account of what characterises the end of bull markets, in the sense of a prescriptive set of conditions that must be met for such an outcome to be logically anticipated by investors. Such a set of rules would of course be self-fulfilling (and therefore worthless) if widely known and acted upon. Only with hindsight, when earnings and economic data are revised to accord with reality, do we typically discover for certain what should have told us the end was approaching. What we do know from historical precedent is that bull markets (a) tend to end with a whimper, not a bang and (b) are rarely triggered by specific causes that have been prominently highlighted for months in advance. Given their current dominance of the headlines, it seems unlikely therefore that either a new Greek crisis or a September interest rate rise from the Federal Reserve will be the trigger that abruptly brings the current bull market to an end.
Interviewing James Anderson is a lot more refreshing than grilling your average fund manager, as befits a man who runs one of the country’s most venerable investment trusts in a most unvenerable way. The Scottish Mortgage Trust, established in 1909 by Baillie Gifford, has been taken in a new and more adventurous direction under its latest managerial team, which pairs Mr Anderson, a historian, and Tom Slater, a computer scientist, as co-managers. (This is a fuller version of an interview which first appeared in the Spectator in its May 22nd 2015 issue).