Why things are a little different for investors these days

The demise of stockmarkets in favour of private equity; the rise of passive investing; the hit everyone's taking from Covid – strange times indeed for investors, says Merryn Somerset Webb.

Listen to financial experts at the moment and you will regularly be told that you need a large part of your portfolio in alternative assets – and that one of the best is private equity. All the real growth in the corporate world is here – so your money should be too. The first bit may be true: listings are picking up now but good growth companies have been staying private longer than in the past. However, the second is not. The vast fees charged by private equity (think 6%-7% a year with performance fees, says Jonathan Ford in the Financial Times) tend to gobble any growth there is. There may be outsize returns on offer – but mostly only for the managers, says Ford.

This comes as no great surprise to us. We tend to favour listed equities over most other investments, most of the time. That’s partly because they tend to be easy and cheap to get in and out of; partly because over most ten-to-20 year periods they have delivered inflation-beating returns; and partly because there is a kind of honesty in stockmarkets. Liars get found out; bad companies are, over time, penalised; and good ones rewarded. In the end fundamentals have always mattered.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.