Cover of MoneyWeek magazine issue no 478

Clapped-out currencies

19 March 2010 / Issue 478

Where is your money safe?

PLUS:

  • Profit from the 'holy grail' of green energy
  • Inflation-linked gilts are too expensive
  • EMI: how the City ruined British pop

Excerpt

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We’ve warned here several times against investing in China. Like many others we are concerned about the sustainability of Chinese growth and the possibilities of bubbles developing and bursting across the country. But our main concern is simply that the market is expensive. Buy in and you’re paying a heavy premium for a lot of risk. Forced to invest our own money now, I think most of us here would stick with cheaper developed markets.

But, if you’re a fund investor, it turns out that is easier said than done: there’s a strong chance that by investing in, say, Europe, you are investing in China whether you want to or not. Put your money into Neptune’s European Opportunities Fund, for example, says Andrew Ellson in The Times, and 6% of your money goes to China and Taiwan. And in total, 20% of your money is invested outside Europe (another 9% or so is in America).

Neptune isn’t the only fund manager investing in unexpected places. Fidelity’s European Opportunities Fund has around 27% of its assets invested outside the European equity markets and Investec Europe has 19.5%. Amazed? Perhaps you should be.

• Read the full editor’s letter here:
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