Trustnet Magazine Issue 34 November 2017 - Page 4

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IN THIS ISSUE

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DRAWING A BLANK Pádraig Floyd says the industry and end consumer alike are still struggling to make sense of pension freedoms P . 2-5 / WOULD YOU LIKE THAT IN A SMALL , MEDIUM OR LARGE , SIR ? Henderson ’ s Neil Hermon offers three reasons why it can be more lucrative to invest in smaller firms than their larger counterparts P . 6-7 / THE ADVICE AGE COMETH Maggie Williams says stringent rules around the Pensions Advice Allowance appear to be hampering its take-up P . 8-10 / DEPENDABLE DIVIDENDS The co-managers of SAINTS believe they have identified the characteristics of businesses best placed to offer a consistent payout to shareholders P . 12-13 / THE RIGHT TRACK Is it a good idea to invest your pension pot in passives ? Anthony Luzio finds out P . 14-16 / FUND , PENSION , TRUST Trojan Global Equity , BlackRock Smaller Companies IT and Edinburgh Investment Trust find themselves under the spotlight this month P . 18-20 / ON THE RISE The Japanese market is rallying after years in the doldrums – but , asks Adam Lewis , have investors missed out on the easy gains ? P . 22-25 / TAKING BACK CONTROL John Blowers highlights some of the major considerations for investors who want to take full responsibility for their retirement income P . 26-28 / MEANING BUSINESS Evenlode Income ’ s Hugh Yarrow names three stocks that help streamline their customers ’ businesses , helping them cope with a changing world P . 30 / WHAT I BOUGHT LAST Aviva Investors ’ Thomas Wells is using the Baillie Gifford Japan fund to complement an existing holding in GLG Japan Core Alpha P . 31
YOUR PORTFOLIO / PENSION FREEDOMS / Pádraig Floyd says the industry and end consumer alike are still struggling to make sense of pension freedoms, more than two years after they were introduced S INCE THE PENSION FREEDOMS WERE INTRODUCED IN APRIL 2015, there has been an enormous amount of activity in the retirement income market. Data from the Financial Conduct Authority (FCA) shows that almost three-quarters (72 per cent) of those pension pots accessed are held by policyholders under the age of 65 and 90 per cent of these funds contain less than £30,000. The freedom to either take cash or access income drawdown has had a damaging effect upon the annuity market. Last year, the number of annuities sold was down by 75 per cent from the pre- freedoms level. On average, there have been three times as many income-drawdown sales over the past two years. People don’t want to buy annuities because the yields on UK government bonds – which their valuation is based on – are at historically low levels. This makes them appear overly expensive and as a result, more consumers are entering into drawdown contracts. But is this really the best decision? MORE CHOICE OR LESS? Drawdown has replaced annuity purchase as the default solution for releasing pension income, but despite increased demand for this service, there has been anything but an increase of freedom and choice in this arena. “Looking back to 2015, there was a high expectation that pensi g&VVF2vVBV6RF0&WB( 62F5V@bV62&W6V&6B&w&VfW06Fv( vRWV7FVB G'W7FWFF&V7B6ЧG'W7FWFF&V7B6Ф6'&W6bWp&GV7G2BFV2'WBvBvPfR6VV2V"WF7F( Ф&fFW'2fRvFG&vg&FR&WB"G&V@&GV7G2( 2'F7V&ǒF6RvFwV&FVR( 2Vfr&VFfVǐvVW2&vRFRd4&V6VFǒ6VBWFRGW7G'FfFRF0&GV7B&V'F7V&ǒf FW"fW7F'2v6VB'VWBbW'WBFR&VGV6V@FVBf"VFW2ffW'2ƗGFPV6W&vVVBf"&fFW'2FFWfVWr&GV7G2F2&VBF26( B&VǒV6W76'62&ǒ'W'&w2F&V7F"`&WF&VVB( FR&RRFB&V2@v7FW2FVFW2FR&PR6RGfFvR( P62( ƖWv6RFFrFw0FG&vFvFW2Bv&0VR&R6ǒ&W&VBFf"FRwV&FVRR6PvBW6RbFRW7Fr2( ФDR$TuTD.( 0$D vWfW"FR&VwVF"&V066W&VBFBfW7F'2&Pr7V"FFV662FRd42F6GV7B&WfWr`FRVGf6VB6RG&vFv&WBF6VRbFR6b&W Gf6R26W6VB67VW'2FR"FV662gFW"G&vFvv2WfW FVFVB272&W@7G'VVB'WBv&&V@VFW"FRB&VvRf"F6PvFF( BvBF&Rf&6VBF'WrVG6RFW&V6VBFRvRbsRगBv2v26WFrb7FvB&W7G&7FVBFF6PvF6V&RgVG2"76WG00