Comparing Investments
This article is the seventh article in a series of finance articles by Steve Bishop, a retired accountant living in Bodrum.
Other articles in this series:
Part 1: No Interest?
Part 2: To Trade or not to Trade…
Part 3: Choosing Shares
Part 4: Turkish Mutual Funds
Part 5: Interesting Deposits
Part 6: Currency Trading
Part 7: Comparing Investments
Comparing Investments
So far this year we’ve looked at a number of different investments and strategies as alternatives to our old favourite, the term deposit bank account. As we near the end of the first quarter of 2010, in this last of the current series, we consider how they compare:
| BB INVESTMENT | % Change YTD | Best Stock | Worst Stock |
| Portfolio A | +4.35% | CPG +14.6% | NXT -0.7% |
| Portfolio B | +2.3% | CPG +14.6% | NXT -3.5% |
| Portfolio C | +6.04% | BARC +27.9% | PVCS -18.7% |
| Mutual Funds Type B | +1.62% | ||
| Mutual Funds Type A | +3.28% | ||
| FX trade | +0.92% | ||
| Bank Deposit | +1.43% |
For details of each portfolio see Bodrum Bulletin 11 Feb 2010 issue
2010 has so far seen very stable interest rates but high volatility in both stock and currency markets. Mutual fund returns are well down on 2009 levels whereas if you picked the right shares on 1st Jan, you could have made sizeable gains by now. Sterling has been getting weaker but at the same time the political uncertainty in Turkey has weakened both the lira and Turkish stocks. Now of course we have the additional uncertainty caused by the UK General Election on May 6 and the very real prospect of a hung parliament.
Our higher risk portfolio C has the best returns so far thanks to 2 winners, Barclays (BARC) and Punch Taverns (PUB) although they are offset by one real loser PV Solar (PVCS). Portfolio A has 3 positive and 2 neutral stocks; Portfolio B has 5 positive, 3 neutral and 2 negative stocks .The FTSE-100 has been rising the last few weeks but that could of course change after the election. Generally the more defensive stocks have been holding their own while the mining/energy stocks have increased but only to their original high levels at our purchase date of 1 Jan.
If you’d invested £10,000 in Barclays shares on 1 Jan 2010, then less than three months later you could have sold them for over £2500. Not a bad return!
The Turkish stock market has also been positive of late which has helped the Mutual A type funds. The prospect of interest rate rises in the near future in either the USA or UK seems to have diminished and even the Turkish Central Bank has indicated no rises until the 4th quarter of 2010. However, with inflation rising and the IMF deal now kicked into touch, pressure will be growing on Turkish rates. For now, B type Mutual funds continue to offer a reasonable alternative to term deposit accounts but that could change if interest rate start rising again.
In all likelihood, the economic situation by the end of this year is going to be quite different to the current one. Rising interest rates and inflation may well make bank deposit accounts more attractive again so committing funds to any medium/long term investments at this point may not be the best move. Double dip recession or not, getting reasonable returns on your money will remain a considerable challenge this year!