AJ Bell Shares magazine 23 January 2025

QUANTUM

COMPUTING

SHOULD YOU BELIEVE THE HYPE AND HOW CAN YOU GET INVOLVED?

The initial market reaction to White House return TRUMP 2.0

05 EDITOR’S VIEW

Will mining M&A speculation prove to be more than just idle chatter?

NEWS

06 Trump promises a ‘golden age of America’ at the expense of trade partners

07 Cloud growth, AI appetite and margins crucial for big tech earnings

09 FTSE 100 hits all-time high on easing inflation and year-low in sterling

10 Trustpilot shares soar 61% over the past six months

10 IG Design shares hit two-year low after major US customer re-enters Chapter 11

11 Can Irn-Bru maker AG Barr bring the fizz?

12 Will Royal Caribbean Cruises continue to benefit from robust demand and pricing trends?

GREAT IDEAS

13 Vistry shares are an attractive risk-reward proposition for the year ahead

15 Buy Buffett-beater CT Private Equity Trust for capital growth and quarterly dividends UPDATES

17 It’s time to take the money and run in Lululemon

18 Why we’re happy to stay plugged in to Currys after 60% rally

FEATURES

19 The festive retail scorecard: who has done best and worst?

22 COVER STORY

Quantum computing

28 US banks reap the spoils of post-election jump in risk assets and funding

31 MONEY MATTERS

My Financial Life – juggling demands on your finances in your 30s with the need to plan ahead

35 FINANCE

Four groups who should consider a Lifetime ISA

37 RUSS MOULD

Why the 2020s may not roar like the 1980s in America

40 ASK RACHEL

Can I bequest my SIPP assets to charity tax free?

43 INDEX

Shares, funds, ETFs and investment trusts in this issue

Three important things in this week’s magazine

Learn about quantum computing

The festive retail scorecard: who has done

Despite a recent stock market setback, quantum computing could be the next technology to create trillions of dollars of wealth for the companies behind it.

Which retailers were the big winners and losers over the key Christmas period?

With the results now in from most of the nation’s major store chains, we present our seasonal scorecard.

Visit our website for more articles

Did you know that we publish daily news stories on our website as bonus content? These articles do not appear in the magazine so make sure you keep abreast of market activities by visiting our website on a regular basis.

Over the past week we’ve written a variety of news stories online that do not appear in this magazine, including:

The US vs China – with Trump back in the White House, where does the relationship between the two powers go from here?

The president has held off from tariffs for now, but with US indices at all-time highs there is a lot at risk if his undisciplined policy approach rattles investors.

Will mining M&A speculation prove to be more than just idle chatter?

Prospective deals between giants often end up going unconsummated

The market is alive with chatter about a mega-merger in the mining space after the revelation of a failed coupling between Rio Tinto (RIO) and Glencore (GLEN).

That’s understandable for several reasons, but recent history shows flirtations between corporate giants often go unconsummated.

Having covered the oil and gas sector for nearly 20 years, I have seen the topic of a combination between BP (BP.) and Shell (SHEL) come up from time to time but it has never moved beyond the realms of dealmaking fantasy.

Making transactions on this scale happen is fraught with complication, not least due to the financing involved.

The mining industry faces a difficult transition as it looks to switch from largely serving a growing and commodity-hungry Chinese economy to providing the metals required to deliver the transition to renewable energies and electric vehicles.

There can be strength in scale, but consolidation does not offer all the answers and the different sensitivities involved in serving these new markets means miners are having to clean up their act.

Would a business like Rio Tinto (RIO), which has been on an ESG journey under current chief executive Jacob Stausholm, really want to undo that by joining forces with Glencore, which has a more pragmatic approach as shown by its decision to retain its coal assets last year on the basis they were

continuing to make money?

Giant transactions have a patchy track record, at best, when it comes to creating value. Perhaps a better model for miners to follow is Shell’s takeover of a still large but second-tier name BG in 2016, which continues to benefit the acquirer through a leading position in LNG (liquefied natural gas).

Presumably BHP (BHP) was looking to follow a similar path to Shell with its failed attempt to capture Anglo American (AAL) in 2024, a move predicated on the latter’s strong footprint in copper, a metal which is seen as central to the energy transition.

A subsequent surge in Anglo American’s share price as it mounted a successful defence makes any potential takeover more expensive today.

The wildcard we talked about during our usual preview of the year ahead at the end of 2024 has now been played as Donald Trump enters the White House –Ian Conway covers the initial market response this week.

On tariffs, it still feels we are in the dark on exactly how the new administration will proceed and this, as much as anything else, will dictate how investors react to the Trump presidency.

Elsewhere in the magazine, Steven Frazer takes a detailed look at the quantum computing space and what could be in store for investors after the recent hype and, with most of the big names having reported, James Crux delivers his scorecard on the sector’s Christmas performance.

Trump promises a ‘golden age of America’ at the expense of trade partners

Tariffs

of 25% could be imposed on Canada and Mexico within days

Eight years ago, at his first inauguration, Donald Trump delivered one of the darkest addresses in presidential history.

This time round, he tried to make the mood more uplifting, describing himself as ‘optimistic’ and promising ‘a thrilling new era of national success’, although it soon became obvious this success could come at a high price for America’s trading partners.

Describing Trump as ‘ushering in an era of disruption for the global economy’, the Financial Times reported that in an unscripted address to journalists in the Oval Office the president suggested he would introduce tariffs of up to 25% on imports from Canada and Mexico as early as 1 February, sending both countries’ currencies lower and the dollar higher.

This followed initial market relief at a lack of immediate tariffs in the series of executive orders Trump unveiled on his first day.

The incoming US president also threatened to apply tariffs of up to 100% on imports of Chinese goods unless Beijing agreed to sell at least 50% of social media app TikTok to a US company, and said European countries would face tariffs on their goods unless their governments bought more US oil. He subsequently talked about a 10% tariff on China and, again, tariffs on European Union imports to offer a hint of the uncertainty which could come with a Trump presidency.

As Paul Donovan, chief economist

at UBS Global Wealth Management, pointed out, any increase in tax on goods from Canada and Mexico ‘would hit the politically sensitive food and fuel sectors’, while a 25% increase ‘would directly raise US consumer prices for imported goods by around 10%’.

For now, it isn’t clear whether these proposed tax hikes would apply to goods such as car components, as the manufacturing process involves a huge volume of cross-border trade, but shares in European carmakers with operations in the US fell sharply on the unscripted comments (US markets were closed on Monday for Martin Luther King Jr Day).

Other notable Day One policy decisions were to withdraw once again from the Paris climate accord and to lift restrictions on oil and gas drilling, along with promises to seize the Panama Canal and to plant the US flag on Mars.

Bloomberg columnist John Authers argues markets matter to Trump, ‘and could function as a guardrail’, meaning policies which upset investors could limit some of his wilder ambitions.

Authers also suggests the administration is using the threat of tariffs as a bargaining tool to bring countries – including China – to the table.

Ushering in an era of disruption for the global economy”

‘Day one might then be a well-camouflaged attempt to leave room for negotiations wide open, both with the legislative branch and with trading partners’. However, at the time of writing there are another 1,460 days of this to come, so investors had better get used to unpredictability, and an increase in stock market volatility as a result. [IC]

Cloud growth, AI appetite and margins crucial for big tech earnings

Key companies such as Microsoft, Apple, Amazon and Tesla are set to report next week

Mega cap tech earnings will kick-off next week and cloud computing growth, AI applications, profit margins and regulations will be key pointers. Big tech has been crucial in driving US markets higher in recent years and so setting a positive tone for the year ahead will be crucial.

The so-called ‘Magnificent Seven’ stocks – Alphabet (GOOG:NASDAQ), Amazon (AMZN:NASDAQ), Apple (AAPL:NASDAQ), Meta Platforms (META:NASDAQ), Microsoft (MSFT:NASDAQ), Nvidia (NVDA:NASDAQ) and Tesla (TSLA:NASDAQ) lived up to the name in 2024 with average share price gains of 60% last year. Because of their outsized market capitalisations,

What the market expects of next week’s big tech earnings

Source: Investing.com

Big tech has been crucial in driving US markets higher in recent years and so setting a positive tone for the year ahead will be crucial ”

Magnificent Seven stocks enjoy a disproportionate influence on the market-cap weighted Nasdaq Composite and S&P 500 indexes, and they likely feature in just about every ordinary investor’s portfolio in one way or another.

JPMorgan has calculated that the Magnificent Seven stocks accounted for an incredible 75% of S&P 500 earnings growth last year, but expects that to fall to 33% in 2025 as the AI rally broadens.

There’s a been some evidence of mild profit taking in the first weeks of 2025, and Donald’s Trump’s inauguration speech seeded volatility when he announced plans for 25% tariffs on Canada and Mexico, a pivot that highlights just how unpredictable the new administration’s approach is likely to be, and how sensitive markets

are to this uncertainty.

Outside of the larger issues, there are key questions to be answered at each company. For example, Apple’s AI-powered iPhone 16 sales have looked a little limp with savage competition in China emerging, while Tesla volumes have been shy of expectations and the big question is when will profit margins start to recover.

Amazon’s continued leadership in the hyperscale cloud sector, which has been growing at around 20%, has helped support its shares, especially with cost-cutting improving ecommerce efficiency.

Streamlining costs has helped bolster Meta’s stock performance too, but it is still aiming to lavish billion of dollars on AI projects, as has Microsoft. The latter is further ahead when it comes to generating new revenue and profit streams from its own AI outlay, where its integration of AI tools like Copilot across its software suite has impressed analysts.

Expect plenty to chew over as the reports come in. Alphabet is due to report the following week (4 February), while Nvidia’s fourth quarter and full year figures are due 26 February. [SF]

FTSE 100 hits all-time high on easing inflation and year-low in sterling

In just the first 20 days of 2025 the FTSE 100 index of blue-chip stocks has equaled its gains for the entirety of 2024, in the process closing at an all-time high of 8,505 points on 17 January.

A better-than-expected inflation report for December together with weaker-than-expected retail sales for the same month appeared to open the door to faster Bank of England rate cuts, pushing the index to its best level since May 2024 and a new record.

Also sending the benchmark higher was a fall in sterling, which hit a new 12-month low of $1.2160 against the all-powerful dollar, as three quarters of companies in the FTSE 100 generate their earnings overseas, and the relative value of those foreign earnings is boosted when the pound weakens.

Leading the gainers in percentage terms was Bill Ackman’s investment vehicle Pershing Square (PSH), which proposed a merger with real estate

developer Howard Hughes (HHH:NYSE) on the one hand and the sale of part of its stake in Universal Music Group (UMG:AMS) on the other if the record label behind Taylor Swift agreed to a secondary listing in the US.

Driving the benchmark higher in points terms first and foremost, however, were energy stocks BP (BP.A) and Shell (SHEL), which together account for more than 10% of the index by market cap and whose shares rallied more than 12% apiece after Brent crude touched a six-month high above $82 per barrel.

Other notable points contributors were heavyweights Barclays (BARC) and Lloyds (LLOY), which gained 10% and 8% respectively following strong results from their US counterparts and on margin hopes as five-year mortgage rates squeezed higher.

Miners also helped lift the index, with Antofagasta (ANTO) among the top 10 gainers, while Glencore (GLEN) and Rio Tinto (RIO) – who it was revealed had held tentative merger talks late last year –chipped in with gains of around 8% each.

At the bottom of the pile, after its near-40% rally last year, is high-street stalwart Marks & Spencer (MKS) whose shares are down 11% this year despite record Christmas sales.

The worst sector year-to-date is housebuilders, with Barratt Redrow (BTRW), Berkeley Group (BKY) and Taylor Wimpey (TW.) all in the red despite losses of around 20% each last year suggesting investors see little prospect of an upturn in the newbuild market. [IC]

Trustpilot shares soar 61% over the past six months

Bookings momentum in North America and an uplift in full year 2024 guidance responsible

In the past week, shares in Trustpilot (TRST) have gained almost 25% to hit a three-year high after the online review and analytics platform said full year EBITDA (earnings before interest, tax, depreciation and amortisation) would be ahead of market expectations.

The Denmark-based firm has seen strong bookings momentum, particularly from its North American region which is up 26%, although other areas have also performed well, including the UK where bookings up 22% and Europe where bookings are 18% ahead.

The company expects to report a 23% year-on-year rise in bookings to $239 million for the full year 2024 and an 18% increase in revenue on a constant-currency basis.

Analysts at Panmure Liberum have expressed caution on the stock due to a softer macro environment and the strengthening of the US dollar, which recently hit a 12-month high against the pound

and which they argue could be a headwind to the firm’s margins.

‘Trustpilot justifiably keeps regional operations naturally hedged by operating predominately in local currencies. Yet as a dollar reporter with higher margin businesses in non-dollar currencies, the sharp move in the pound against the dollar and the euro against the dollar will therefore have an impact on group margin.’ [SG]

IG Design shares hit two-year low after major US customer re-enters Chapter 11

Americas division hit by weak seasonal sales and delayed customer orders

There was no cause for celebration last week when gift card and wrapping paper maker IG Design (IGR:AIM) warned its fullyear results would be ‘significantly below’ market forecasts due to problems with its Americas division.

On the day (17 January), the shares crashed 83p or 58% and they continue to move lower due to thirdquarter trading which was negatively impacted by ‘challenging retail conditions’ in the US culminating in

one of its major customers re-filing for Chapter 11 bankruptcy protection. This forced the company to put aside ‘significant’ provisions in the region of $15 million to offset its exposure to the amounts receivable from customers as well as the inventory the company is holding on their behalf.

Adding to its woes, a number of other customers in the Americas experienced ‘considerable distress’ over the Christmas period due to weak sales, leading them to reduce or delay their orders, which in turn impacted IG Design’s revenue forecasts, production scheduling and its ability to absorb costs.

Design

The firm recently parachuted in a new Americas chief executive with considerable expertise in the consumer sector, in particular paper and textile crafting, who certainly looks to have her work cut out already. [IC]

UK UPDATES OVER T HE NEXT

7 DAYS

FULL-YEAR RESULTS

28 Jan: SThree

29 Jan: Velocity Composites

30 Jan: Shell

FIRST-HALF RESULTS

30 Jan: ITM Power, Rank Group TRADING ANNOUNCEMENTS

24 Jan: Burberry, Paragon Banking

27 Jan: Dr. Martens

28 Jan: Barr (A.G.), Computacenter

29 Jan: Ceres Power Holdings

30 Jan: Airtel Africa, BT, Sage, St James’s Place, Wizz Air

Can Irn-Bru maker AG Barr bring the fizz?

Investors will be hoping for another serving of positive news when resilient beverages business AG Barr (BAG) delivers its trading update for the year ended 25 January 2025 on 28 January. However, cooling UK consumer confidence since the Budget combined with recent cold weather suggests guidance upgrades are unlikely.

The FTSE 250 firm, whose brands include Irn-Bru, Rubicon and Boost, is rebuilding its margins, taking share in the soft drinks market and accelerating the growth of acquired branded porridge-to-plant-based milk business MOMA.

First-half results (24 September) revealed robust revenue growth, up 5.2% to £221.3 million including a 7% increase in soft drinks sales driven by both volume and price. This performance was all the more impressive given poor summer weather and a testing prior year comparative, with Rubicon the star soft drinks performer and iconic Scottish fizzy drink IrnBru generating market share gains.

AG Barr, whose relatively new CEO Euan Sutherland is confident of

‘continued, sustainable growth over the long term’, also delivered a 50 basis point year-on-year operating margin increase to 13% as the company continues to rebuilds its return on sales following a period of rising costs, and analysts reckon there is more margin upside to come.

At the time of the results, Sutherland said he anticipated a strong second half performance from AG Barr’s four core brands –Irn-Bru, Rubicon, Boost and FUNKIN – in particular, underpinned by ‘further marketing and innovation activities’.

Shore Capital forecasts adjusted pre-tax profits of £57 million for the year to January 2025, bubbling up to £65 million in full-year 2026, with cash-rich AG Barr expected to declare a 17.2p dividend for fullyear 2025, rising to 19.6p in full-year 2026. [JC]

Will Royal Caribbean Cruises

continue to benefit from robust demand and pricing trends?

US cruise operator has seen shares gain 43% over the past six months

The world’s second largest cruise operator Royal Caribbean Cruises (RCL:NYSE) is expected to release its fourth quarter and full year 2024 earnings before the market opens on 28 January.

Analysts expect the US cruise operator to report a profit of $1.49 per share up 19.2% from $1.25 per share in the same quarter a year ago.

Royal Caribbean third quarter 2024 performance exceeded expectations driven by strong pricing, onboard revenue growth and effective cost management.

Jason Liberty, president, and CEO said at the time that the company had benefited from first-time cruisers and its three-and-four-night cruise offering.

The company which has 68 ships across five global and partner brands - including Royal Caribbean, Celebrity Cruises and Silversea

Cruises

UPDATES OVER THE NEXT 7 DAYS

QUARTERLY RESULTS

24 Jan: American Express, Verizon, HCA

27 Jan: AT&T, Nucor, WR Berkley

28 Jan: Boeing, Chubb, General Motors, Lockheed Martin, Royal Caribbean Cruises, Stryker

29 Jan: Caterpillar, Corning, General Dynamics, IBM, Meta Platforms, Microsoft, Mondelez, Qualcomm, Tesla

Cruises has seen shares steam ahead over the past year by 90% to $241 as demand for sea-based holidays continues in Europe and the US.

‘With the redeployment of its fleet in mid-2022 occupancy has returned to historical levels and profits and cash flow growth has begun to normalise,’ says Jaime M Katz, senior equity analyst at Morningstar. [SG]

30 Jan: Amazon, Apple, Blackstone, Comcast, Dow, Eastman Chemical, Honeywell, Marsh McLennan, Mastercard, Visa

Vistry shares are an attractive riskreward proposition for the year ahead

Despite a raft of downgrades, the business has solid foundations

Vistry Group (VTY) 588p

Market cap: £1.95 billion

We have held off from recommending any of the housebuilders over the last year as despite plenty of attractive valuations it was clear the whole sector was in a downgrade cycle.

That cycle now seems to be over, for Vistry (VTY) at least. The company was forced to warn on profits three times in quick succession last quarter, including one announcement on Christmas Eve, which was far from ideal.

In its final trading update for 2024, issued last week, however, the company confirmed its lowered profit guidance and said it would set out new financial targets in March, which we believe could be the catalyst for earnings upgrades.

The company has a significant footprint in regeneration work and affordable housing which marks it out from the rest of the peer group.

‘ANNUS HORIBILUS’

The year began on a positive enough note with chief executive Greg Fitzgerald citing ‘good demand in the partner funded market accompanied by an improving trend for our open market sales’ in the firm’s mid-May trading update.

At that stage, the group was on track to deliver more than 18,000 completions, higher than its previous forecast of 17,500 and 10% more than in 2023.

Half-year and full-year profit were also expected to be ahead of 2023 underpinned by a strong forward sales position totalling £4.9bn, up 10% on the same position a year earlier.

Fitzgerald claimed the firm had a high level of visibility on forward sales, was confident in its differentiated strategy and was ‘making good

progress’ towards its medium-term targets.

In September, the company reiterated its target of 18,000 completions, bolstered by a forward sales position of £5.1 billion at the end of the first half, up 19% on the previous year, with 91% of 2024’s deliveries forward sold.

Also, despite starting the year with a net debt position £207 million higher than the prior year, the group was targeting a net cash position in December 2024.

BAD NEWS COMES IN THREES

However, in early October the firm dropped the bombshell that within its South Division the total fulllife cost projections to complete nine developments, including ‘some large-scale schemes’, had been understated by around 10% meaning it would have to take an impairment of £115 million.

The charge would be incurred over 2024, 2025 and 2026, with the bulk (£80 million) falling in 2024 reducing pre-tax profit to £350 million.

By November, the total charge had risen to £165 million, with £105 million falling in 2024, and pretax profit guidance was revised down to around £300 million.

The company also flagged a slowdown in partner

funded demand, partly due to caution ahead of the Autumn Budget and partly due to still-elevated interest rates which meant projects needing a higher level of funding were being delayed.

Demand from registered providers of social housing was described as ‘uneven’, although demand from the private rented sector was said to be strong.

In December, the mood darkened further as the firm cut its pre-tax profit guidance for a third time, to £250 million, primarily due to delays to deals and completions which had been expected to complete before year-end, while admitting it would now end the year with net debt not net cash. Vistry said it had chosen not to proceed with a number of proposed deals ‘where the commercial terms were not sufficiently attractive’.

The chief executive called the downgrade disappointing but stuck to his targets of 5% to 8% annual revenue growth, £800 million of EBIT (earnings before interest and tax) and £1 billion of shareholder returns over the next three years.

‘MATERIAL UPSIDE’

While this month’s trading update didn’t dispel all the ghosts, it was enough to mollify analysts and investors and for the shares to rally 10%, which doesn’t guarantee the bottom is in but is a good sign, nonetheless.

Thankfully, the issues at the South Division weren’t systemic, but given how rapidly the group has expanded in recent years – consolidating Bovis

Consensus forecasts for Vistry

Share-price performance of FTSE 350 housebuilders in 2024

Homes, Linden Homes and the Galliford Try partnership business, then absorbing Countryside – it’s not surprising someone’s eye wasn’t as on the ball as it should have been.

Controls have been enhanced and procedures tightened around monthly site cost reviews and there has been increased investment in commercial assurance, while to shorten lines of communication six divisions have been consolidated into three, each led by a former divisional chair with extensive partnerships experience who reports directly into Greg Fitzgerald.

Looking ahead, the firm’s focus this year is ‘increased capital discipline and cash generation’, starting with a reduction in stock and work in progress after slower open-market sales resulted in a build-up last year, tying up working capital.

Build cost inflation is seen as manageable, as is the increase in employer national insurance, and the group ‘expects to make progress in both

and cash generation’ in 2025, while it will issue updated medium-term targets in March.

As analyst Chris Millington at Deutsche Numis rightly says at this early stage there is no point anyone changing their full-year 2025 estimates, but if Vistry can just execute on its current targets there is ‘very material upside in the share price’ and we are inclined to agree. [IC]

Buy Buffett-beater CT Private Equity Trust for capital growth and quarterly dividends

This differentiated private equity fund has delivered over the long term and a near30% discount presents a compelling buying opportunity

CT Private Equity Trust CTPE) 482p

Market cap: £348.2 million

Discount to NAV: 28.6%

Companies are staying private for longer, yet retail investors struggle to access the rapid earnings growth on offer in the unlisted space, which is where private equity trusts play a vital role.

Private equity has a role as part of a welldiversified portfolio, since it has outperformed other major asset classes over the long term and with lower volatility than public markets to boot. Currently, the outlook for share price returns from the sector is positive given the potential for a narrowing of NAV (net asset value) discounts driven by further interest rate cuts and a potential uptick in realisation activity in the years ahead.

One compelling option is CT Private Equity Trust (CTPE), whose 28.6% NAV discount likely reflects the company’s higher gearing than peers, which can exacerbate downside risks.

Yet the trust’s 10-year share price total return of 259.3% sits towards the top end of the Association of Investment Companies (AIC) Private Equity sector peer group.

Private Equity Trust

LOWER MID-MARKET EXPOSURE

Steered by seasoned private equity investor Mair since launch in 1999, CT Private Equity Trust is one of an elite band of funds and trusts available to UK retail investors to have outperformed Warren Buffett’s Berkshire Hathaway (BRK.B.NYSE) over the last 20 years on a total return basis.

Managed for more than a quarter of a century by Columbia Threadneedle’s Hamish Mair, CT Private Equity boasts a long and strong track record of beating listed equity returns and offers an attractive yield, with dividends paid out quarterly. At 1.1%, ongoing charges are lower than the majority of its sector peers.

Put simply, this is a well-diversified portfolio of private equity funds and stakes in individual private businesses, relatively small firms carefully selected by Mair and his experienced team with a view to generating capital growth over the medium to long term.

The trust offers investors exposure to a diversified portfolio of ‘lower mid-market’ private equitybacked companies at a stroke. The lower mid-market is equivalent to the UK’s small-cap universe, and

there are specialist managers focused exclusively on this area, where value abounds, there is less competition for deals and successful companies can generate significant organic growth.

‘We favour the lower mid-market generally,’ Mair informs Shares. ‘Lower mid-market means the underlying companies would have an enterprise value of less than £500 million, and the sweet spot for us would be companies with an enterprise value of between about £30 million and £150 million. It is a very broad market across Europe, there are literally tens of thousands of companies in that size bracket that could absorb private equity, but only a few hundred do in any given year.’

Mair explains this is an inefficient market which therefore rewards skilled and diligent investors who ‘look hard in their local markets and can buy at better prices, build those business up and then sell them on four or five years later, typically to bigger private equity or to trade’.

He seeks to mitigate risk through diversification, running a portfolio that is reassuringly diversified by geography, sector, company size and vintage year and brings investors exposure to over 500 underlying companies.

Broad-based and resilient, just under half of the portfolio is invested in the long-term growth sectors of IT and healthcare.

CT Private Equity Trust offers exposure to funds from buyout firms including Inflexion, August, Axiom and Stirling Square, while underlying holdings range from premium lifestyle clothing brand Weird Fish and Italian funeral services business San Siro to TWMA, a

Top 10 holdings

Source: Columbia Threadneedle Investments, as at 30 September 2024

provider of waste management solutions for the oil and gas sector, and electronic components provider Sigma.

CT Private Equity cumulative performance

UPWARDS-ONLY DIVIDENDS

Mair looks to identify those managers with a proven ability to generate excellent absolute returns over the medium to long term, and also likes to invest with up-and-coming private equity groups, ‘because we think that these managers are strongly motivated, their interests are aligned very closely with ours as investors. They are very much interested in making profits on their investments and not simply gathering assets and living off the management fee’. Another point of differentiation to the peer group is CT Private Equity Trust’s bumper dividend yield, some 5.8% at last count. ‘We pay out 4% of NAV per annum as a dividend, we’ve done that for over 12 years and its paid out 1% per quarter,’ says Mair. ‘The dividend each quarter is 1% of the average of the last 4 quarter’s NAV, and if that number comes up with a number that’s below the previous dividend, we just maintain the previous dividend. So, it is an upwards only dividend and our shareholders like that certainty.’ [JC]

It’s time to take the money and run in Lululemon

A 40%-plus return in less than six months is plenty for us

Lululemon Athletica (LULU:NASDAQ) $371

Gain to date: 42.7%

We recommended investors slip into Canadian athleisure-wear company Lululemon Athletica (LULU:NASDAQ) in August 2024 after the shares had almost halved in value due to concerns over US consumer spending.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

We might have missed the absolute low, but as it turned out our contrarian call was still fairy welltimed as we caught the sizeable snap-back with the shares hitting $400 this month against our ‘in’ price of $270 per share.

With US retailers showing mixed fortunes over the key festive selling period, we read that inventories rose in 2024 and are expected to keep

Lululemon Athletica

Chart: Shares magazine • Source: LSEG

rising in 2025, while rivals continue to open new stores in close proximity to gain brand awareness.

Also, while we certainly aren’t fashionistas, the firm’s latest marketing campaign – which includes large brand lettering – feels like a mistake.

Most of the latest collection – including the Lunar New Year range in striking red, ideal for the Chinese market – is fairly classy, as it should be at such an elevated price, but we can’t see customers paying $120 for a pair of ‘high-rise’ leggings with the firm’s name splashed all over them.

WHAT SHOULD INVESTORS DO NOW?

As analysts at Jefferies point out, looking at Gap and Under Armour’s past failures, the large and loud logo is exactly the opposite of what consumers covet and another reason the competition is likely to take market share.

We didn’t pick the absolute low in the shares, nor have we picked the high for the time being, so we may be forgoing an even bigger return, but it feels as though we have had a good run and as the old saw goes you can’t lose money taking profits. [IC]

Why we’re happy to stay plugged in to Currys after 60% rally

Electronics retailer has carved out an attractive niche for itself

Currys (CURY) 94.1p

After the takeover saga around Currys came to a close in 2024 we flagged that the electronics retailer was too cheap and had recovery potential.

WHAT’S HAPPENED SINCE WE SAID TO BUY?

Our hypothesis has proved sound, the shares making substantial progress supported by consistently strong trading, with the latest example occurring over Christmas, allowing Currys to deliver another full-year profit upgrade. A strong festive period reflected in like-for-like sales growth in both the UK and Nordics.

Due to a technology replacement cycle driving consumer demand for new AI-enabled computers, Currys announced plans to reinstate the dividend based on strengthening cash generation and an improved balance sheet.

The FTSE 250 retailer last declared a dividend alongside its first-half results in December 2022

but then paused the payout due to struggles in the Nordics, inflationary pressures and a decision to exit the Greek market.

For the 10 weeks ended 4 January 2025, Currys’ UK & Ireland like-for-like sales increased by 2%, with mobile, gaming and premium computing offsetting weaker TV sales, while in the Nordics likefor-like sales increased by 1% with the Elkjop chain gaining market share in a challenging environment.

Following strong sales over the festive period, Currys now projects adjusted pre-tax profit of £145 million to £155 million for the fiscal year ending April 2025.

This forecast tops the consensus estimate of £140 million, even after accounting for increased costs from the UK Budget, and investors can anticipate a final dividend of around 1.3p per share to be announced with the full-year results in July.

WHAT SHOULD INVESTORS DO NOW?

The shares still do not look particularly expensive at 9.1 times April 2026 consensus forecast earnings per share.

While the UK backdrop is uncertain, Currys has carved out a niche for itself as one of the few remaining places to buy electricals on the high street.

With many shoppers looking for a bit of handholding as they get used to new consumer technologies, we think this gives the company a clear competitive advantage so keep buying. [TS]

The festive retail scorecard: who has done best and worst?

Tesco, Next and Currys are among the clear Christmas winners so far,but JD Sports and Dunelm failed to deliver any cheer

With most of the big names in the retail sector having reported we can get a decent picture of how the sector fared in the run-up to and during the festive period.

A weak trading backdrop for non-food retail in October and November, before Santa delivered a return to growth in December, a month that also witnessed a notable shift to online sales according to the latest data (17 January) from The Office for National Statistics (ONS).

The ONS’ latest official figures revealed a 0.3% drop in retail sales in December including a significant fall in food sales during the month, which seemed at odds with the record Christmas sales reported by some of Britain’s biggest supermarkets.

As the table later in this article shows, the stock market reaction to most of the festive updates so far has been pretty negative. Those to have bucked the doom and gloom include Next (NXT) and Currys (CURY), led by Simon Wolfson and Alex Baldock respectively, whose shares rose after both beat expectations for Christmas sales, while Topps Tiles (TPT) rallied after reporting (8 January) a return to sales growth for the first quarter ended 28 December 2024, buoyed by improved trading during the Christmas run-in.

Timing played a part with a raft of retail names reporting on the 9 January when concern about surging UK bond yields and a softer pound led to weak sentiment towards domestic-facing names.

The outlook for 2025 is decidedly downbeat, with retailers issuing cautious outlook statements across the board and bemoaning the incoming cost headwinds from the increase in employer national insurance contributions and a rising national living

wage following Rachel Reeves’ October Budget. They’ll look to offset these through operational efficiencies and other savings as well as by passing on higher costs to shoppers by hiking prices.

An intriguing trend highlighted by Next was that consumers continued to ‘slightly shift their purchasing preferences, buying fewer entry-level products and more items at the middle and top end of our price architecture’. The FTSE 100 retailer clarified that consumers ‘are not necessarily spending more overall, but buying fewer, marginally more expensive items. We believe that this trend will continue into next year’.

NEXT DELIVERS THE GOODS

First out of the blocks on 7 January was Next, which raised full-year profit guidance yet again following better-than-expected festive trading with online sales growth accelerating in the fourth quarter.

Shares in Next, which has the knack of selling the right product at the right price point in the right format for its target customer base, met with a positive reaction on the day, but the stock has drifted down since as investors digested guidance for the year to January 2026, which came in below market expectations.

Next warned it expects UK growth to slow as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.

Overall, this was a good Christmas for the retail bellwether, which saw full-price sales grow by 6% in the nine weeks to 28 December 2024, ahead of the 3.8% consensus estimate, albeit flattered by the timing of the end-of-season sale.

Growth was driven by online sales which were up

Retail Updates Table

Table: Shares magazine • Source: Shares website, ShareScope

6.1%, more than compensating for a 2.1% decline in Next’s UK retail sales, while overseas online sales remained very strong with a 31.4% increase.

Begbies Traynor’s (BEG:AIM) Julie Palmer said Next ‘could have been forgiven for weaker figures following a pretty extensive period of volatile consumer confidence made worse by the Budget, but it has once again bucked the trend by announcing sales ahead of expectations’. Nevertheless, she described the drop in sales at Next’s retail stores as ‘concerning’, and yet another ominous sign for the health of the UK high street.

A BAD DAY FOR GOOD NEWS

Despite reporting resilient Christmas performance across the board, Tesco (TSCO) and Marks & Spencer (MKS) were unfortunate to report on 9 January, a day in which, as discussed, UK plc was out of favour.

Over the 13 weeks to 23 November 2024, Tesco’s UK like-for-like sales were up 3.8%, rising to 4.1% for the six-week Christmas period to 4 January, as the firm took market share and enjoyed switching gains ‘from all corners of the market’ to quote chief executive Ken Murphy.

Echoing Next’s observation that consumers were trading up over Christmas, sales of Tesco’s Finest range rose over 15%, and the company sold more than 1.4 million bottles of prosecco, with the week leading up to Christmas the busiest in its history in terms of overall sales.

Investors may have been disappointed by the lack

of upgrades to earnings guidance, which may have reflected Tesco’s commitment to keeping prices low and having plenty of extra Christmas staff on hand in order to get people through the tills.

Retail bellwether M&S delivered ‘another good Christmas’ with sales records broken across the business as it gained market share in both food and clothing. However, shares in the high street stalwart fell on the day as management’s gloomy outlook statement stoked profit-taking.

Chris Beckett, head of equity research at Quilter Cheviot, noted that while Marks & Spencer has achieved profit growth, there are headwinds ahead. ‘Rising national insurance costs and broader cost-ofliving challenges are expected to eat into measures designed to boost margins,’ warned Beckett.

‘Overall, it was a good Christmas period for M&S, but management remains cautious in its outlook, and the stock has de-rated accordingly. While the company is clearly on a positive trajectory, external pressures may weigh on its ability to sustain upgrades in the near term.’

A soft third quarter update (9 January) from B&M (BME) was poorly taken by the market, despite little change in the discounter’s full-year 2025 EBITDA guidance range and some early evidence of an improving trend, with investors clearly troubled by the ongoing decline in B&M UK like-for-like sales.

Second-placed UK supermarket group Sainsbury’s (SBRY) posted an upbeat thirdquarter trading statement on 10 January calling out its ‘biggest-ever Christmas’ – over half of the

retailer’s big Christmas baskets included a Taste the Difference product, helping premium sales rise 16%. Like Tesco however, Sainsbury’s stock fell on the day after the retailer left its full-year operating profit guidance unchanged at £1.01 billion to £1.06 billion, representing growth of around 7%.

UPGRADES & DOWNGRADES

Among the clear Christmas winners so far has been Currys, whose shares sparked higher (15 January) after the electricals retailer delivered yet another full-year profit guidance upgrade following a strong festive period.

In fact, the TVs-to-laptops purveyor delivered like-for-like sales growth in both the UK and Nordics over the 10 weeks ended 4 January 2025. Benefiting from a technology replacement cycle that is driving consumer demand for new AI-enabled computers, Currys also delighted investors with news it plans to reinstate the dividend off the back of strengthening cash generation. Currys now expects to achieve adjusted pre-tax profits of £145 million to £155 million for the year to April 2025, comfortably ahead of the £140 million consensus estimate.

‘In an environment where consumers continue to watch every penny,’ said Russ Mould, investment director at AJ Bell, ‘it’s impressive that Currys has managed to report a good festive trading period. It’s clear that electronic devices were popular choices to put under the Christmas tree in 2024. Currys has also cemented its reputation as the go-to place to get help when technology goes wrong.’

Another winner was Card Factory (CARD), which generated 4.7% revenue growth across November and December, driven by higher average basket value, which reflected the cut-price greeting card seller’s expanded ranges as well as sales of gift and celebration essentials.

On the negative side of the ledger, the recent downward momentum in JD Sports Fashion (JD.) continued after the self-styled ‘King of Trainers’ stumbled in (14 January) with another year-toJanuary 2025 profit guidance downgrade. This followed slower sales over the Christmas period for the FTSE 100 tracksuits-to-football shirts seller, which has seen weak trading in the UK and US and warned it is ‘taking a cautious view of the new financial year’ accordingly.

Also in the doghouse with investors was UK homewares leader Dunelm (DNLM), which

UK retail sales

delivered a rather mediocre festive trading update (16 January). Investors were hoping for more for Dunelm, which should have done well with people looking for good value homeware products to give as Christmas presents, yet the sofas, cushions and curtains seller’s sales growth slowed in the second quarter to 28 December in ‘challenging’ market conditions, and investors were also rattled by management’s rather vague language around the outlook. Against a backdrop of rising costs, Dunelm still expects pre-tax profit for the year to June 2025 to be ‘within the range’ of the £207 million to £217 consensus is calling for, which leaves wiggle room for earnings to come in at the lower end of guidance.

Sofa seller DFS Furniture (DFS) enjoyed betterthan-forecast orders in the half to 29 December 2024 and as a result, expects to deliver first-half pretax profits in the £16 million to £17 million range, nearly double the £9 million delivered last year. Yet despite this impressive first-half profits recovery, management is still conservatively guiding to full-year 2025 profits of £22.7 million, in line with consensus, management mindful of a weaker postBudget consumer environment and the additional incoming costs from Budget changes.

DISCLAIMER: AJ Bell, referenced in this article, owns Shares magazine. The author (James Crux) and editor (Tom Sieber) own shares in AJ Bell.

By James Crux Funds and Investment Trusts Editor

QUANTUM COMPUTING

uantum computing has been setting the investment world on fire in recent months, and late last year, a handful of specialist stocks hit escape velocity.

Between mid-November and the start of

By Steven Frazer News Editor

SHOULD YOU BELIEVE THE HYPE AND HOW CAN YOU GET INVOLVED?

January, companies like Rigetti Computing (RGTI:NASDAQ) and D-Wave Quantum (QBTS:NYSE), two of the most traded stocks among AJ Bell platform users, saw their share prices surge 1,400% and 600% respectively.

Headlines such as, ‘Google unveils “mind-boggling” quantum computing chip’, and ‘SAP CEO backs quantum computing as near-term game changer’, have grabbed investors’ attention, and Microsoft (MSFT:NASDAQ) wrote, ‘2025: The year to become quantum-ready’, in a recent blog post (14 January).

That Nvidia (NVDA:NASDAQ) CEO Jensen Huang and Meta Platforms (META:NASDAQ) chief Mark Zuckerberg have both said useful quantum computers are decades away, has been largely brushed off by investors eager to get in early to hoped-for upside.

finance and much else. It promises to transform multiple industries and tackle challenges that classical computers cannot solve.

For example, in December, Alphabet’s (GOOG:NASDAQ) Google unveiled a new chip, called Willow, which it claims takes five minutes to solve a problem that would currently take the world’s fastest super computers septillion years to complete. For the record, 10 septillion is a one followed by 25 zeros and looks like this: 10,000,000,000,000,000,00 0,000,000.

You can see the allure. Invest, say £1,000, in a stock today, and who knows, 10 years from now that stake could be worth £1 million – we’ve seen it happen before, a 1,000% return is roughly what Apple (AAPL:NASDAQ) has done since late 2014, while Nvidia’s 10 year return is 26,500%.

Just as easily that £1,000 could be worth a fraction of that intial investment if things don’t play out of planned.

Those are the potential risks and rewards of getting in early.

FUNDING FLOODING IN

Governments and tech firms all over the world are racing to develop quantum computers in a bid to shake up medicine, AI (artificial intelligence),

Even the man behind the Willow project has said a chip able to perform commercial applications would not appear before the end of this decade.

Making errors within quantum systems less likely to occur, and, when they do, making them easier to detect and correct, is key to the development of quantum computers.

The qubit systems we have today are a tremendous scientific achievement, but they take us no closer to having a quantum computer that can solve a problem that anybody cares about”

Sankar Das Sarma

Nonetheless, if things work out, quantum computing would have enormous ramifications for us all, and there is the potential for supercharged returns from the right investments.

To paint a picture, in 2023, the global quantum computing market’s estimated worth was a little more than $800 million, according to Maximise Market Research. By 2040, that could increase to $173 billion, predicts McKinsey, flowing through to between $900 billion to $2 trillion worth of worldwide economic benefits.

WHAT IS QUANTUM COMPUTING

Quantum computing is a new approach founded on quantum mechanics principles to perform calculations. Unlike classical computers, which store information in bits (the binary language of 0s and 1s), quantum computers use quantum bits or ‘qubits’ that can exist in multiple states simultaneously, or ‘entanglement’.

Today’s computers work on a linear basis, or in other words, they solve one problem before moving on to the next. The physics properties of qubits allows quantum computers to perform multiple calculations at once, making them

QUANTUM COMPUTING

Calculates with qubits, which can represent 0 and 1 at the same time

exponentially faster and more powerful than traditional computing systems.

But there are significant technical challenges that need to be overcome before the technology becomes useful, such as quantum-error correction and the qubits systems currently available.

‘The qubit systems we have today are a tremendous scientific achievement, but they take us no closer to having a quantum computer that can solve a problem that anybody cares about,’ says Sankar Das Sarma, the Richard E. Prange chair in physics and professor at the University of Maryland.

‘It is akin to trying to make today’s best smartphones using vacuum tubes from the early 1900s. You can put 100 tubes together and establish the principle that if you could somehow get 10 billion of them to work together in a

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10”

Bill Gates

Vs

Power increases exponentially in proportion to the number of qubits

Quantum computers have high error rates and need to be kept ultracold

Well suited for tasks like optimisation problems, data analysis, and simulations

CLASSICAL COMPUTING

Calculates with transistors, which can represent either 0 or 1

Power increases in a 1:1 relationship with the number of transistors

Classical computers have low error rates and can operate at room temperature

Most everyday processing is best handled by classical computers

Potential scale of quantum market

Table: Shares magazine • Source: McKinsey

coherent, seamless manner, you could achieve all kinds of miracles. What, however, is missing is the breakthrough of integrated circuits and CPUs (central processing units) leading to smartphones. It took 60 years of very difficult engineering to go from the invention of transistors to the smartphone with no new physics involved in the process.’

But if these obstacles are overcome, quantum computing will have a far-reaching impact on any number of different sectors. That’s why it’s important for investors to be patient and to separate reality from hype. As Bill Gates once said: ‘We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10.’

With that in mind, let’s look at some of the long-term ways you can gain exposure to the booming quantum computing market.

PURE-PLAYS IN QUANTUM COMPUTING

None of these businesses are making money from quantum computing today, and they and they probably won’t be anytime soon. While there’s been huge progress in quantum computing, remember the technology is still in its infancy.

The Maryland-based firm focuses on trappedion quantum computing, with systems available via all major cloud providers. It currently has one computer in operation but plans to build a network of machines that are accessible via the cloud.

It is funding this process with the proceeds from its 2021 SPAC (special purpose acquisition company), which saw it become the first listed pure-play quantum computing stock. The listing helped the company raise more than $600 million

Financials of popular quantum stocks

Table: Shares magazine • Source: Stockpedia, 20 January 2025

in funding at a $2 billion valuation. The stock has seen some significant volatility since and is currently valued at $9 billion.

RIGETTI

The Berkeley, California firm develops superconducting quantum processors and has recently created a modular qubit architecture. The company is also developing a cloud-based platform called Forest that enables programmers

to write quantum algorithms. Currently valued at $2.7 billion.

Founded in New Jersey in 2021, the $1.4 billion company specialises in room-temperature quantum systems and marketable applications in the fields of logistics, bioinformatics, life and physical sciences, quantitative finance and electronic design automation.

Quantum Computing is also now facing claims by Capybara Research, alleging the company has engaged in issuing misleading press releases to artificially inflate its stock price.

D-WAVE

QUANTUM

(QBTS:NYSE) $5.81

D-Wave Quantum is a pioneer in ‘quantum entanglement’ technology, and provides a quantum cloud system for its customers.

The $1.6 billion company uses annealing technology, a heat treatment process that changes a material’s properties by altering its microstructure, that is already commercially useful and gaining traction with a growing number of customers.

QUANTUM COMPUTING EXPOSURE

US big tech firms like IBM (IBM:NYSE), Microsoft, Amazon (AMZN:NASDAQ), and Alphabet –as well as those in China-based firms like Baidu (BIDU:NASDAQ) and Alibaba (BABA:NYSE) –are all investing heavily in a race to build reliable quantum computers.

Microsoft’s Azure has released quantum tools, as have Google and Amazon’s cloud platforms. But of the bunch, IBM is arguably the current leader in quantum computing. The firm was one of the pioneers in the field and already has 28 nascent quantum computers deployed, the largest fleet of

No matter which firm wins the race toward quantum supremacy, they’re all going to be ploughing lots of money into the physical hardware necessary to make this a reality.”

devices designed for commercial and scientific use.

No matter which firm wins the race toward quantum supremacy, they’re all going to be ploughing lots of money into the physical hardware necessary to make this a reality. So, another route into quantum computing is to invest in the ‘picks and shovels’ manufacturers of crucial components.

Honeywell (HON:NASDAQ), and Keysight Technologies (KEYS:NYSE) and the UK’s Oxford Instruments (OXIG) are among the companies that design quantum computer components.

The advent of quantum computing will speed up the machine-learning algorithms that analyse both existing and new data sets, which will increase that data’s value in the long term. The shift will benefit companies already adept at managing data, along with the firms that supply them with data-gathering hardware: think Splunk (SPLK:NASDAQ), Palantir Technologies (PLTR:NASDAQ), Analog Devices (ADI:NASDAQ), Elastic (ESTC:NYSE), and Alteryx (AYX:NYSE). ETFs would present a broadly spread and costeffective way to invest in quantum computing but there are currently no specialist thematic options available to UK but hopefully that will change in time as interest from investors builds.

US banks reap the spoils of post-election jump in risk assets and funding

After a blow-out fourth quarter, investors expect further gains this year

As we predicted a fortnight ago, US banks enjoyed strong revenue growth in the fourth quarter of 2024 helped by elevated levels of trading in stocks and bonds as well as higher investment banking fees as companies took advantage of low borrowing costs and buoyant stock markets to raise fresh capital.

Given the sharp rise in the KBW Nasdaq Bank index over the last year, and gains of around 50% for banking behemoths like JPMorgan Chase (JPM:NYSE), that was just as well.

Equally significantly, most of the major players raised their revenue growth guidance for this year, thanks to a combination of higher-for-longer interest rates, a strong US economy and hopes of deregulation under President Trump, so analysts are predicting another year of double-digit shareprice gains.

2024 ENDED ON A HIGH

JPMorgan Chase, typically the first bank to report earnings each quarter, posted record profit and revenue for the final three months of 2024, underlining its status as the biggest and most successful bank in US history.

Total income climbed 10% to $43.74 billion, well ahead of the consensus forecast of $41.73 billion, thanks to better-than-expected net interest income, while EPS (earnings per share) rose 50% to $4.81 against a forecast of $4.11, helped by higher fixed-income trading and investment banking revenues.

In the press release, chairman and chief executive Jamie Dimon flagged the fact that each line of business posted solid results, with nearly two million new checking accounts opened last year and a staggering net inflow of $486 billion of client assets taking two-year net inflows to a mindboggling $976 billion.

Adding to the sense of exceptionalism, Dimon

pointed to the bank’s ‘fortress balance sheet, evidenced by $547 billion of total loss-absorbing capacity and $1.4 trillion of cash and marketable securities’.

It was a similar story at Citigroup (C:NYSE) and Wells Fargo (WFC:NYSE), with both banks comfortably beating fourth-quarter estimates for revenue and earnings.

Citigroup chief executive Jane Fraser pointed to record results at the bank’s services, wealth and personal banking divisions, as well as the $7 billion-odd of capital returned to shareholders last year and the promise of a further $20 billion share buyback this year.

Wells Fargo chief executive Charlie Scharf said the bank had gained market share ‘in many of the businesses we believe will drive higher growth and returns over time’, highlighting credit cards, where the bank saw strong growth with a strong credit profile, and checking accounts which grew ‘more meaningfully’ in 2024.

Wells returned $20 billion of capital last year via buybacks as well as upping the dividend by 15%, boosting total returns.

JP Morgan outstripping peers

2025 PROMISES MORE OF THE SAME

On a call with journalists, JPMorgan Chase’s chief finance officer Jeremy Barnum said group net interest income this year would be around $94 billion, up from a previous forecast of around $91 billion and last year’s tally of $92.6 billion.

This comes as expectations for US interest rate cuts have been rolled back from three or four this year to just one, or in some quarters none at all, meaning higher-for-longer borrowing costs and better margins for the banks.

The US economy has proved remarkably resilient, with unemployment remaining low and consumer spending staying healthy, while household balance sheets are in good shape meaning ‘delinquencies’ or bad loans are expected to stay low this cycle, which is more good news for banks.

Also, as Jamie Dimon observed, businesses are more optimistic about the economy, meaning they are more willing to borrow money to invest, ‘and they are encouraged by expectations for a more pro-growth agenda and improved collaboration between government and business.’

LOOSER REGULATION

This ‘pro-growth agenda’ includes a tacit commitment by Donald Trump to loosen regulations on big business.

Although Dimon sought to play down talk of banks benefiting from an easing of the rules, a good part of the sector’s rally post-election was

based on the premise a Trump administration would be more accommodating, not to say lenient, in its dealings with Wall Street.

‘Regarding regulation, we have consistently said it should be designed to effectively balance promoting economic growth and maintaining a safe and sound banking system. It is possible to achieve both goals. This is not about weakening regulation but rather about setting rules that are transparent, fair, holistic in their approach and based on rigorous data analysis, so that banks can play their critical role in the economy and markets.’

However, analysts expect one of Trump’s first moves to be a watering-down of the Basel 3 capital regime, thereby allowing banks to reduce the amount of capital they have to hold as a proportion of their risk-weighted assets.

In the case of JPMorgan Chase, the bank’s yearend Basel 3 CET1 (common equity tier 1) capital was $276 billion or 15.7%, and the market is betting some of this will be returned to investors if the rules are relaxed.

Unlike Citigroup and Wells Fargo, JPMorgan Chase has been sparing in buying back shares after Dimon said in May 2024 the stock was expensive, but since then they’ve only continued to climb.

By Ian Conway Deputy Editor

Fidelity Special Values PLC

An AJ Bell Select List Investment Trust

The recent strong relative performance of the UK equity market has gone largely unnoticed by investors, reinforcing its unloved status. Alex Wright, portfolio manager of Fidelity Special Values PLC, believes the value-oriented areas of the UK market represent a strong investment opportunity.

Turning insight into opportunity

Despite the UK being a value market, many of those who invest in the market don’t invest with a value bias. However, Alex looks to construct portfolios focused on unloved UK companies entering a period of positive change. The market is often slow to recognise change in out-of-favour stocks which creates opportunities to add value by identifying companies whose improving growth prospects are not yet recognised by other investors.

Our broad analyst coverage means that we are able to find ideas across the market cap spectrum, giving us many shots on goal. Our network of over 390 investment professionals around the world place significant emphasis on questioning management teams to fully understand their corporate strategy. They also take time to speak to clients and suppliers of companies in order to build

Past performance

Past performance

conviction in a stock. Our approach translates into a clear bias towards small and mid-cap value stocks, compared to most of our competitors who are often less differentiated.

It’s a consistent and disciplined approach that has worked well; the trust has significantly outperformed the FTSE All Share Index over the long term both since Alex took over in September 2012 and from launch over 30 years ago.

Past performance is not a reliable indicator of future returns

Past performance is not a reliable indicator of future returns

Past performance is not a reliable indicator of future returns

Morningstar as at 31.12.2024, bid-bid, net income reinvested. ©2024 Morningstar Inc. All rights reserved. The FTSE All Share Index is a comparative index of the investment trust

Source: Morningstar as at 31.12.2023, bid-bid, net income reinvested. ©2024 Morningstar Inc. All rights reserved. The FTSE All Share Index is a comparative index of the investment trust

Source: Morningstar as at 31.12.2023, bid-bid, net income reinvested. ©2024 Morningstar Inc. All rights reserved. The FTSE All

Important information

a comparative index of the investment trust

The value of investments can go down as well as up and you may not get back the amount you invested. Overseas investments are subject to currency fluctuations. The shares in the investment trust are listed on the London Stock Exchange and their price is affected by supply and demand. The Trust can use financial derivative instruments for investment purposes, which may expose it to a higher degree of risk and can cause investments to experience larger than average price fluctuations. The investment trust can gain additional exposure to the market, known as gearing, potentially increasing volatility. The trust invests more heavily than others in smaller companies, which can carry a higher risk because their share prices may be more volatile than those of larger companies and the securities are often less liquid. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Investment professionals include both analysts and associates. Source: Fidelity International, 30 September 2024. Data is unaudited. The latest annual reports, key information documents (KID) and factsheets can be obtained from our website at www.fidelity.co.uk/its or by calling 0800 41 41 10. The full prospectus may also be obtained from Fidelity. The Alternative Investment Fund Manager (AIFM) of Fidelity Investment Trusts is FIL Investment Services (UK) Limited. Issued by FIL Investment Services (UK) Ltd, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0125/399908/SSO/0325

My Financial Life – juggling demands on your finances in your 30s with the need to plan ahead

Pensions might not feel that relevant just yet but the earlier you start the better

AJBell’s Money Matters campaign is designed to help every woman feel good investing, whatever their age.

We’ve put together a series of articles which breaks down some of the financial pressures you are likely to face as you step into the different decades of your life and provide you with some tools to help you navigate that journey.

This article focuses in on your 30s, and thinking back, for me, those years came with some seriously massive demands on my finances.

It was the decade I bought my first house, splashed out on a white wedding in the Scottish Highlands, and took time out of the workplace when I had my two children.

I think it’s fair to say I wasn’t prepared for the impact all those changes would have on my finances. I hadn’t talked to my partner about how we would manage things like childcare costs, and I hadn’t considered how taking maternity leave would impact my pension.

SETTING UP FOR LATER LIFE

Much of that planning would really have been better done in my 20s – so if that’s still you look out for the article which drills down into that decade. But if you are in your 30s right now there are some simple things to think about, to help you better deal with what you’re likely to be facing right now and setting you up for later life.

First, it’s really important to remember that no two financial lives are the same, we are all individuals, and we all make different choices but some of the same themes are probably going to come up.

It is likely you are settled in your career and are hopefully earning considerably more than you did in your 20s but those additional cost pressures can be overwhelming so, as ever, it makes sense to take a bit of time to make a plan.

Work out when you want things to happen because different time frames will require different steps. If trying to get on the housing ladder is your priority then you’re probably squirreling every

Danni Hewson: Money Matters

spare penny away for a deposit.

I know how lucky I was to have been part of a generation when house prices were still reasonable and 100% mortgages commonplace.

HOUSING LADDER DIFFICULTIES

Recent figures from the Institute for Fiscal Studies found that the number of 25–34-year-olds still living with their parents had risen by over a third in two decades and that nearly a fifth of people in this age range now were back at home last year (2024).

Many of that 18% find living back home is the only way they can even begin to save up enough money for a deposit on a home of their own and there has been a lot of criticism about one of the tools created to help people save for their first home.

The Lifetime ISA replaced the Help to Buy ISA and on paper it’s a tax efficient way to save up to £4,000 a year and get a 25% government bonus on your savings – that’s up to £1,000 of free cash every year.

But you probably won’t be surprised that there are a couple of important caveats. You must use the cash to buy your first home and one that you are going to live in, and that home can’t cost more than £450,000, which might sound like a lot but there are a growing number of areas where that

won’t be enough, and even if you’re going in with your partner that limit stays the same.

If you don’t meet the criteria and need to pull out your cash you will be charged 25% of the whole pot, which will add up to the government cash and a chunk of yours as well. You can leave it in there until you turn 60 and not get penalised, but if you’re saving for a house, it’s a pretty sure bet you need that cash to make that dream a reality.

AJ Bell is actively lobbying the government to get them to reduce the exit fee to just the government bonus and to raise the house price limit which has remained the same since LISAs were introduced back in 2017.

MARRIAGE PLANNING

If you’re thinking of a wedding in a year’s time, you’ll probably want to keep your savings in cash. Just make sure you’re hunting out the best interest rate you can and don’t get caught out by the taxman. Remember you will pay tax on interest earned on your cash savings that exceeds your personal savings allowance which currently stands at £1,000 for basic rate taxpayers and £500 for higher rate earners and when you think about how much a wedding costs you might have £10,000 or more put by and if you’ve got rates of around 5% it could be enough to potentially trigger a tax liability if you’re in that high rate bracket.

And with the average wedding last year costing £20,775 according to wedding planning app Bridebook it’s easy to understand how some people can get caught out. If you are saving over a

number of years think about using a tax wrapper like an ISA and remember a stocks and shares ISA offers the potential for growth over time.

Marriage isn’t for everyone and in fact, the 2021 census found that the number of UK adults married or in a civil partnership had fallen below 50%.

Similarly, not every woman will choose to have children and our recent research showed that finances are playing a huge part in that decision with a fifth of people saying they’re planning not to have children because of the financial implications.

FACTORING IN A FAMILY

But if you are hoping to have children you can take a couple of proactive steps you can take to get your finances more ready for the changes heading your way.

Try to pay off or at least down any debt like credit cards, store cards or buy now pay later debt and if you can give yourself an emergency fund – enough money to cover at least three months of expenses – you’ve got a cushion to fall back on.

Research your company’s maternity policy and ask your partner to do the same. Discuss how much time you can realistically take off work and if your partner can/wants to share the time and figure out if returning part time at least for a period of time, might be the right option for you.

Only 55% of women went back to work full time after they had their first child compared to 92% of men and that number fell significantly with subsequent children.

So, while retirement is probably one of the last things you’re thinking about in your 30s, if you can pump up your pension payments by even a couple of percent before the patter of tiny feet run through your world, you’ll be doing your future self a massive favour.

My financial life 30s check list

1 Build an emergency fund: A financial buffer can help you deal with all the changes coming your way.

2 Prioritise: It’s easy to get overwhelmed by the number of financial pressures but making a list can help you see things more clearly.

3 Invest for the future: Whether it’s buying a house in a few years or your retirement way off in the future be savvy and use pensions, ISAs and Lifetime ISAs but check they work for you.

4 Be kind to yourself: Your 30s comes with a lot of pressure to follow the herd but do things when they work for you.

5 Be prepared and don’t do it alone: If you’ve got a partner make sure your conversations about the future include who will pay for what.

With time on your side, it’s a brilliant opportunity to take a bit more risk and invest for growth because you have time to recover from any potential losses. And don’t forget to enjoy every moment of the journey because with all the changes heading your way this is a decade that will pass in the blink of an eye.

DISCLAIMER: AJ Bell, referenced in this article, owns Shares magazine. The author (Danni Hewson) and editor of this article (Tom Sieber) own shares in AJ Bell.

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Four groups who should consider a Lifetime ISA

The people for whom the tax wrapper is relevant with its future in focus

The Treasury Committee made a recent call for evidence on the future of the Lifetime ISA, which has got everyone talking. They’re asking big questions, like whether the account needs a bit of a makeover, some tweaks, or even if it should be scrapped entirely.

With more than 750,000 people putting nearly £1.9 billion into Lifetime ISAs in the 2022/23 tax year, it’s clear this account is popular. Let’s look at four groups who could really make the most of a Lifetime ISA.

SELF-EMPLOYED AND SAVING FOR RETIREMENT

If you’re self-employed, pensions can be tricky. There’s no employer to top up your contributions, so you’re on your own. That’s where the Lifetime ISA comes in. For basic-rate taxpayers, it’s a solid option. You get a 25% government bonus on your contributions, up to £4,000 a year. That’s like getting the same tax relief you’d get on a pension –but with added flexibility.

Here’s a quick example: If you’re saving £4,000 a year from age 18 to 50, you’ll earn £32,000 in government bonuses. With a 4% annual growth

rate, your pot could grow to £326,000 by age 60. Now, if you’re taking money out of a pension at age 60, you’ll pay tax on anything over 25% of your pot. With a Lifetime ISA, though, your withdrawals are completely tax-free.

Based on today’s tax rates, someone who took an ad-hoc lump sum of £20,000 from their pension at age 60 would pay £486 in tax (assuming they had no other taxable earnings). The same investor would pay no tax at all on their Lifetime ISA withdrawals.

The difference in tax paid expands as the withdrawals get bigger. If the entire £326,000 fund was withdrawn at once (not an advisable retirement strategy in most cases), the pension investor would pay a whopping £96,228 in income tax, whereas the Lifetime ISA saver would pay nothing.

FIRST-TIME HOUSEBUYERS

Saving for a first home? The Lifetime ISA is pretty unbeatable. The 25% bonus gives your deposit savings a huge boost. If you save the maximum £4,000 a year, you’ll get a £1,000 bonus straight from the government. And because it’s added almost immediately, you’ll get any interest or investment growth on top of that, which will compound over time.

If you had saved £4,000 into a Lifetime ISA for

Personal Finance: Lifetime ISA

each of the past nine tax years since the account was launched and had seen 5% investment growth a year, you’d have a pot worth £50,000. However, if you’d saved that same amount of money in a standard ISA, still earning 5% return a year, you’d have a pot worth just over £40,000. That means by shunning a Lifetime ISA you’d be £10,000 worse off.

The downside? The Lifetime ISA has a £450,000 property price cap, and that hasn’t changed since 2017. If you’re in an area where house prices are soaring, you might find yourself priced out. It’s something to think about before committing.

IF YOU’RE NEARING 40 DON’T MISS OUT

If you’re approaching your 40th birthday, you should think about opening an account and funding it, to have the option of using it in the future. Once you hit 40, you can’t open a Lifetime ISA. But if you open one now – even with a small contribution –you’ll keep the door open for future savings. You can contribute and get the government bonus until you’re 50. After that, the account can stay invested until you’re 60, when you can withdraw the money tax-free.

You might not even need it right now. Maybe you’ve already bought a home or have a solid pension through work. But life’s unpredictable and having a Lifetime ISA ready to go could come in handy down the line. It’s a simple way to keep your options open.

HELP TO BUY ISA HOLDERS

Still holding onto a Help to Buy ISA? For some savers it might be wise to think about switching

LIFETIME ISA EXPLAINED

A Lifetime ISA is designed to help savers save for their first home or retirement. For every £4 you put in, the government adds £1 of free money up to a maximum contribution of £4,000 a year and government bonus of £1,000 a year. You must have had your account open for at least 12 months before using it to purchase a property if you want to use the government bonus. You can open one between the ages of 18-39 and continue to contribute until you turn 50. You may face an early access withdrawal charge of 25% if you withdraw from your Lifetime ISA prior to buying your first home or before age 60.

accounts. Firstly, the property limit. With the Help to Buy ISA, you can use it on a property worth up to £450,000 in London, but only on property worth up to £250,000 outside London. This has proved a problem for some outside of London. With the Lifetime ISA there is a limit of £450,000 regardless of what area of the UK you’re buying in. So, if you’re priced out of the Help to Buy ISA, you could transfer to a Lifetime ISA.

Second, the maximum government bonus. Both the Help to Buy ISA and Lifetime ISA get the same 25% government bonus, but with the Help to Buy ISA this is limited to the first £12,000 saved – meaning a maximum bonus of £3,000. With the Lifetime ISA you can get up to £1,000 a year in government bonus, up until the age of 50. If you opened a Lifetime ISA at age 18, that is a maximum government bonus of £32,000. If you’ve maxed out your Help to Buy ISA bonus and still have more to save, you could switch to a Lifetime ISA.

However, any transfers from your Help to Buy ISA count towards your Lifetime ISA annual limit of £4,000 – so if you have a chunky amount in your Help to Buy ISA, you’ll have to transfer it over multiple tax years. But with the new tax year looming you could move £4,000 now and another £4,000 in a few months’ time.

By Laura Suter AJ Bell Head of Personal Finance

Why the 2020s may not roar like the 1980s in America

How US and Chinese markets compare and why Trump inherits a very different backdrop than Reagan

The US and China are at loggerheads, philosophically, politically and economically – though thankfully not in military terms – and the contrast between how the two are perceived by financial markets could hardly be greater. Stock markets offer part of the story, as America’s headline indices sit at or near to all-time highs, while the Shanghai Composite equity benchmark languishes where it did back in spring 2007.

Sovereign bond yields are plunging in China and rising in the US

Even more telling is the different trajectories of the coutries’ respective government bond markets (where the gyrations are even more eye-catching than those seen in the UK of late). The yield on the 10-year Chinese sovereign bond has collapsed to what looks like an all-time low of 1.60%, while the US equivalent is pushing toward 20-year highs.

At first glance, the trends in fixed-income markets may also reflect the mood of American optimism, as markets embrace president Donald Trump’s agenda of tax cuts and deregulation and anticipate faster economic growth (albeit perhaps at the cost of hotter inflation) and fret about China’s economic trajectory in the wake of an epic real estate bust.

It may be that bond markets are pricing in a slowdown in interest rate cuts from the US Federal Reserve and a shift to looser monetary policy from the People’s Bank of China, which traditionally steers bank lending rather than adjusts the price of money as its main tool of control.

But there may be another trend at work, at least in the US, especially as the S&P 500 now represents almost two-thirds of the market capitalisation of the FTSE All-World, a level that exceeds the prior high achieved at the peak of the technology, media and telecomsbubble in 2000.

BACK TO THE FUTURE

It is easy to understand why there is such enthusiasm for US assets, not least as mood tends to be led by price, given the temptation is to assume that what has worked for a long time will

Chart: Shares magazine • Source: LSEG

keep on working. It can also be argued that there are parallels between president Trump’s agenda and the supply-side policies implemented by Ronald Reagan to great effect in the early 1980s, which did so much to revive America’s economy and financial markets alike.

US equities stumbled before the Reagan reforms really took hold

US equities were much cheaper when Reagan began his reforms

However, there are some differences which do not sit entirely comfortably with such a beguiling narrative. First, the US economy double dipped as Reagan’s first administration applied what it saw as the necessary reforms. Second, the S&P 500 was much less highly valued than now, using professor Robert Shiller’s cyclically adjusted price earnings (CAPE) ratio as a guide. Finally, the US Federal deficit was barely 30% of GDP in 1981, compared to 120% now, to leave Reagan with so much more room for fiscal manoeuvre.

Finally, expectations were just so much lower. Indeed, America still viewed itself as under threat from a new rising economic power throughout the 1980s – only back then Japan was seen as the threat. Such fears were heightened by Sony’s purchase of music company CBS in 1988 and movie studio Columbia in 1989 and then encapsulated in Michael Crichton’s 1992 novel Rising Sun, by which time, ironically, the debt-fuelled Japanese property and debt bubble had well and truly popped, given how the Nikkei-225 stock index peaked on 31 December 1989.

RISING FRICTION

The tale of woe represented by China’s sovereign bond and equity markets may not suggest America has much to worry about, but the warning offered by the Japanese experience may yet also have a bearing, unlikely as that may seem right now, especially as China has tripped up twice in the last 20 years thanks to speculative boom-and-bust cycles in equities and then property.

In the cases of both Japan and then China, debt had a huge role to play, so it may yet prove significant that America’s government, corporations and consumers have continued to pile up their borrowings. The surge in 10-year US Treasury yields may reflect Trump’s apparent desire to let the American economy run hot (and strong nominal growth could indeed help to salt down the debt-to-GDP ratio).

But it may simply reflect how the total federal deficit is $36 trillion and rising, the annual deficit is running at 6% of GDP when the economy is growing and the stock market booming (to the benefit of the tax take) and the interest bill exceeds $1 trillion a year – with the result that supply of treasuries could be about to rise - and fast. Bond vigilantes could therefore still have a say before a lid is put on benchmark US sovereign bond yields, especially if they demand the sort of hair-shirt policies enacted by Reagan, which brought longterm gain, but short-term pain.

Shiller CAPE ratio (x)

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Can I bequest my SIPP assets to charity tax free?

Our resident expert helps with another question about pensions and retirement

I have worked in the public sector for most of my life and since I retired, I am receiving a pension. I also have a small SIPP which I have not yet touched.

My husband has a good pension of his own plus his state pension. When I die he will receive my share of our joint assets and will have enough money to live on.

Instead of leaving my small SIPP to him when I die, I would like to pass it onto charity. Would that be tax free?

Sarah Rachel Vahey, AJ Bell Head of Public Policy, says:

Pension freedoms were introduced nearly 10 years ago and completely changed the way that pension wealth can be passed on when someone dies, both in terms of who they can pass the money on to but also how the money is taxed.

However, the rules look set to change in the next two years. The government is currently consulting on new rules to bring pensions within someone’s estate when working out any inheritance tax (IHT) due on death.

We don’t yet know how the final rules will work, and this means it’s difficult for people to plan with any certainty. It’s worth keeping up to date with how discussions are going, and not to rush to make decisions until you know what the final rules will be. If the rules did change, then that would take effect from April 2027.

Currently, an individual has the freedom to nominate whoever they want to receive their pension fund when they die, meaning these funds can be passed easily to children and grandchildren, rather than always having to go to the living spouse or dependant.

However, usually the trustees of a pension scheme

have the ultimate decision who to pay the pension fund money to. When making this decision the pension scheme trustees will consider if there are any dependants still living – such as a spouse or partner. They will also look at who the pension saver has nominated to receive their pension funds.

PENSION FUNDS CAN GO TO CHARITY TAX-FREE

People can nominate a charity to inherit their pension funds. If they don’t have any dependants, then the lump sum will be paid completely free of income tax to the charity. This is irrespective of how much pension wealth the person had built up and their age when they died. If pensions are to be counted in the estate for IHT, then HMRC proposes that this type of payment will be free of IHT as well. This payment has a specific name – a Charity Lump Sum Death Benefit.

However, where the pension saver does have a living dependant, the trustees will need to first consider whether they are financially secure before they decide to pay out to a charity instead. But if the trustees are happy that the dependants don’t need the money from the pension, they may agree to the

Ask Rachel: Your retirement questions answered

charity donation.

In this situation the tax treatment of the lump sum is different. If the pension saver died before age 75, then it will be tax free if all other tax-free lump sums paid out in life or on death are less than, usually, £1,073,100. Any excess over this may be subject to income tax. But if the pension saver was aged 75 or over then the entire lump sum paid to the charity will be subject to income tax at a rate of 45%.

If it looks likely that a lump sum would be subject to income tax if paid to the charity, then the pension saver could nominate someone to receive their pension funds, and they then pay the money onto the charity. They will probably have to pay tax on the lump sum, but it might be less than 45%, and if they are working, they could claim gift aid when they later donate the funds to the charity which may increase the amount of money the charity receives, meaning

the charity doesn’t lose out. (The pension saver would have to be confident their wishes would be carried out though!)

HOW NEW RULES COULD IMPACT THINGS

We don’t yet know whether this type of payment would be free from IHT. The Government’s initial proposals suggest it won’t be – but this could change, and as I said, it’s worth keeping up to date with how discussions progress. If it is, then, again, the pension saver may want to consider passing the money onto their spouse or civil partner (which would be IHT free) and ask them to make the payment to the charity instead. Pension freedoms give people many options about how to pass pension wealth on. Perhaps the essential thing to remember is to discuss options with loved ones to make sure they know what a person wants to happen to their pension money after they die.

Finding Compelling Opportunities in Japan

04

FEBRUARY 2025

NOVOTEL TOWER BRIDGE

LONDON EC3N 2NR

Registration and coffee: 17.15

Presentations: 18.00

During the event and afterwards over drinks, investors will have the chance to:

• Discover new investment opportunities

• Get to know the companies better

• Talk with the company directors and other investors

COMPANIES PRESENTING

HERCULES SITE SERVICES

Hercules Site Services provides labour and construction services to blue-chip clients in the UK infrastructure sector. Four reportable segments: Labour supply, civil projects, the provision of suction excavator services and other activities. It generates maximum revenue from Labour supply segment being its core business.

POLAR CAPITAL TECHNOLOGY TRUST

Polar Capital Technology Trust plc provides investors access to this enormous, fast-evolving potential. Managed by a team of dedicated technology specialists, PCT is a leading investment trust with a multi-year, multi-cycle track record – a result of the managers’ active approach and their ability to not only identify developing technology trends early on but to invest with conviction in those companies best placed to exploit them.

WHO WE ARE

EDITOR: Tom Sieber @SharesMagTom

DEPUTY EDITOR: Ian Conway @SharesMagIan

NEWS EDITOR: Steven Frazer @SharesMagSteve

FUNDS AND INVESTMENT

TRUSTS EDITOR: James Crux @SharesMagJames

EDUCATION EDITOR: Martin Gamble @Chilligg

INVESTMENT WRITER: Sabuhi Gard @sharesmagsabuhi

CONTRIBUTORS: Dan Coatsworth

Danni Hewson

Laith Khalaf

Laura Suter

Rachel Vahey

Russ Mould

Shares magazine is published weekly every Thursday (50 times per year) by AJ Bell Media Limited, 49 Southwark Bridge Road, London, SE1 9HH. Company Registration No: 3733852.

All Shares material is copyright. Reproduction in whole or part is not permitted without written permission from the editor.

Shares publishes information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. Comments published in Shares must not be relied upon by readers when they make their investment decisions. Investors who require advice should consult a properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions.

Members of staff of Shares may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it will be disclosed. Shares adheres to a strict code of conduct for reporters, as set out below.

1. In keeping with the existing practice, reporters who intend to write about any securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor agrees that the

reporter can write about the interest, it should be disclosed to readers at the end of the story. Holdings by third parties including families, trusts, selfselect pension funds, self select ISAs and PEPs and nominee accounts are included in such interests.

2. Reporters will inform the editor on any occasion that they transact shares, derivatives or spread betting positions. This will overcome situations when the interests they are considering might conflict with reports by other writers in the magazine. This notification should be confirmed by e-mail.

3. Reporters are required to hold a full personal interest register. The whereabouts of this register should be revealed to the editor.

4. A reporter should not have made a transaction of shares, derivatives or spread betting positions for 30 days before the publication of an article that mentions such interest. Reporters who have an interest in a company they have written about should not transact the shares within 30 days after the on-sale date of the magazine.