UK investors seized the bull market last year, as statistics from the Investment Association last week revealed investors ploughed a record net £63bn into funds, ending 2017 at an all-time high of £1.2 trillion. Of particular interest, though, is mounting evidence that investors are seeking to put their money into ethically sound businesses (Ethical Investing).
Investors bought £138m in ethical funds in March 2018 compared to just £32m at the same point last year. A further market indicator of appetite is the increasing number of passive funds prioritising green and socially responsible companies – more exchange traded funds (ETFs) with environmental or social goals (ESG) entered the market in May 2018 than in any previous month. While ethical funds still only represent 1.3% of the market, that number is up from 1% at the end of 2015 and the old trade off of between doing good and delivering good returns is evaporating as performance picks up (Ethical Investing).
UK economic slowdown
UK gross domestic product was estimated to have increased by 0.1% in the first quarter of 2018 which is the slowest pace of growth in five years. The bad weather experienced early this year is believed to have been the main cause for the downturn in construction and high street spending as, overall, household spending grew by 0.2% – the lowest it’s been for three years. Additionally, business investment decreased by 0.2% which will no doubt highlight concerns over the strength of the UK economy and its ability to maintain stability after it leaves the EU. While first-quarter growth was clearly dragged down by the elements in February and first half of March, the extent of the slowdown suggests an underlying loss of momentum in the economy.
House prices fall
UK house prices haven’t perked up yet this year, with the latest report from Nationwide saying they fell 0.2% month-on-month. Annual house price growth has now slowed to 2.4% from the 2.6% recorded in April. The dip in May makes it the third fall for house prices in the past four months. The average price of a property – when not seasonally adjusted – was £213,618 in May 2018, compared to £213,000 the month before. With annual house price growth confined to a fairly narrow range of circa 2-3% over the past 12 months there seems to have been little change in the balance between demand and supply in the market over that period. Most commentators share the view that there are few signs of any imminent change.
Future price stability for Bitcoin?
Bitcoin price has fluctuated since its December high of just under $20,000 – but some cryptocurrency experts now believe bitcoin could have a “more stable” price in the future (though this could take decades). The sense is that volatility is not going to go away any time soon, especially since there are still plenty of bitcoin ‘whales’ or people who are involved in bitcoin early on who have amounted a large stockpile. That’s going to be a threat in the near-term and possibly for the long-term. However, once the adoption rate of bitcoin is normal and has reached full market penetration, which we are nowhere near at the moment, and once there is more liquidity in the market, it’s likely there will be a much more stable price fluctuation. There are a lot of ‘ifs’ though.
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