As we move swiftly into the joys of summer holiday travel (traffic jams on the motorway, queues at airports and overcrowded trains, not to mention the dreaded caravan), it is worth looking at some possible destinations and ways you can benefit from an investment perspective. All investments can go down in value as well as up and you could get back less than you invest so they should be held for the long term.
The recent recession appears to have impacted the number of foreign holidays we take. But still you can get 24 hour payday loan online and have the holiday you want the most. 2009 saw 39 million foreign holidays taken, down from 46 million the previous year. Apart from job losses and worries about financial security, the most obvious reason is the dramatic decline in Sterling’s value seen over the last few years. Back in 2007 Li bought you $2.10. Today it only buys you $1.50 – your Pound buys you 25% fewer Dollars than it did three years ago. And this is one of the reasons in the last years, which can make you learn how to fix your credit when you need this.
Sterling is not the only currency to experience dramatic declines. I remember going to Australia in 2002 thinking it was one of the cheapest countries to travel to as Li bought almost AUS$3. However my colleague Mark Dampier recently returned with the view that it is one of the most expensive countries he has ever visited. Today £1 buys you AUS$1.7o – a dramatic turnaround in under a decade.
What is this attributed to? Well the American Dollar’s appreciation is mainly down to its status as the reserve currency of the world. As the economic crisis worsened, the US Dollar was seen as a safe haven and investors flocked to buy it.
The Australian Dollar is a slightly different story. This really reflects the strength of the economy and the fact it is a country with a huge wealth of natural resources such as gold, platinum and iron ore. In fact Australia’s economy has been so strong over the last few years they now have one of the highest official interest rates in the developed world.
I believe one way to gain exposure to the Australian economy is via a natural resources fund. One of my favorites is JPMorgan Natural Resources managed by Ian Henderson and Stuart Connell. The fund is high risk and aimed at sophisticated investors who are prepared to accept volatility. It can invest (within its specific investment remit) where it likes globally, with 16% currently invested in Australian assets. It also has a high exposure to emerging markets. Many of the companies the fund invests in are smaller companies making it prone to volatility.
Of course natural resources as a story are very dependent on Chinese growth continuing. If China slows down, natural resource companies tend to take a large hit. The managers of JPMorgan Natural Resources maintain a balanced approach, diversifying the fund across base metals as well as precious metals such as gold. Gold is another big Australian resource play. It is not so dependent on Chinese consumption, bu more linked to global volatility am uncertainty. But you have to be careful with gold trading because if you are not, you will have to make research about debt consolidation leads companies in the future.
Another recent popular holiday’ destination is South Africa (obviously for the football – the least said about England till better!). South Africa, similar to Australia, is another resource play and often the easies way to gain exposure is through either resource fund or a global emerging make fund such as First State Global Emergin; Market Leaders.
Approximately 15% of the fund i currently invested in South Africa, and gives exposure to other high risk emerging markets such as Taiwan and South Korei Over the long term I believe many emerging markets look set to deliver growth great€ than developed economies. Please note thi fund can invest in a relatively small numb( of stocks and is aimed at sophisticate investors.
Moving closer to home and marginal] less exotic climes, Europe is still the ma popular holiday destination for Brits. Spaii Portugal, the Greek Islands, Turkey, Italy the list goes on.
Due to the recent weakening in the Eur, European holidays have suddenly become that bit cheaper. Europe is widely available investors, and is a sector full of quality fur managers with a long history outperformance.
Many areas of Europe may well be indid straits financially as governments wrest with huge budget deficits. However, as wi the UK, in Europe you need to divorce corp rate and government issues. Some governments are almost bankrupt, many companies are not. The weak Euro is al certainly helping European export orie tatted companies.
There are many fine European company prospering at the current time, a vi( supported by Richard Pease of the high regarded Henderson European Special situations fund. His fund is relatively concentrated (currently 54 holdings from cross Europe) meaning each holding has proportionately more impact on performance, either positive or negative. This increases risk 3 a long term investment horizon is essential. He is still fully aware that tough scal measures could hamper growth in some intern European countries though, so has low weighting in these areas. He also invests in smaller companies which can be iore volatile than their larger counterparts. What about the dear old UK? It is one of to most popular holiday destinations and ankly I think we are having a great summer either wise. Hotels, guesthouses, holiday Irks and caravan parks are prospering. unfortunately there is very little in the way of ;ted businesses you can tap into to benefit. stead, I think investors looking for UK :posture should look for quality fund angers such as Harry Nimmo of the inward Life UK Smaller Companies fund. Harry Nimmo has been working in the industry for 25 years, so has plenty of stockcking experience. His fund looks to invest higher quality UK businesses, which show silence and potential for long term growth. particularly favors smaller companies in e computer services, pharmaceuticals and 3d production sectors. The share prices of taller companies can be volatile so ‘Testing in this fund should be for the long.
Finally with a bit of lateral thinking to bring all holiday ideas together into one investment you might want to consider the First State Global Listed Infrastructure fund. How do you get to your holiday? You use ‘infrastructure assets’ such as roads, rail, ferries or airports. Somebody is building them, somebody is operating them, somebody is charging you to use them and therefore someone is making a profit. This is the kind of investments the First State fund attempts to tap into.
The fund takes a long term approach and seeks out income producing assets, although the income from the fund can fluctuate. It can invest in smaller companies which add to the risk. It can also be concentrated, allowing the manager the freedom to reduce diversity in favor of backing their best ideas. Investing in a specific sector can carry more risk than a diversified fund so this fund should be held for the long term.