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Alliance Trust and Witan join forces to create £5bn investment trust

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Mapped: Millionaire Migration in 2024

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June 26, 2024 Article/Editing:

See this visualization first on the Voronoi app.

Visualizing Millionaire Migration in 2024

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The United Arab Emirates is set to attract the most millionaires in 2024, while China and the UK are expected to lose the largest number of high-net-worth individuals (HNWIs).

This graphic shows the top 10 countries projected to have the highest net inflows or net outflows of HNWIs in 2024. HNWIs have a liquid investable wealth of $1 million or more. All figures come from the Henley Private Wealth Migration Report 2024.

Why is Attracting Millionaires Important?

According to Henley & Partners, 20% of HWNIs are entrepreneurs (rising to 60% for centi-millionaires and billionaires). As a result, countries that attract HWNIs from other parts of the world may see powerful benefits like job creation and investment.

Countries Attracting the Most Millionaires in 2024 RankCountryNet flow of millionaires (2024P) 1🇦🇪 UAE6,700 2🇺🇸 U.S.3,800 3🇸🇬 Singapore3,500 4🇨🇦 Canada3,200 5🇦🇺 Australia2,500 6🇮🇹 Italy2,200 7🇨🇭 Switzerland1,500 8🇬🇷 Greece1,200 9🇵🇹 Portugal800 10🇯🇵 Japan400

The UAE’s strategic focus on economic diversification and government investment has positioned it as a global economic powerhouse.

The country has seen significant investments in tourism, real estate, logistics, financial services, and technology markets.

In addition, the adoption of international standards in regulatory and market frameworks, coupled with attractive tax initiatives, has drawn young entrepreneurs worldwide to the country.

According to Warwick Legal Network, the UAE accounts for over 30% of foreign direct investment inflow to the MENA region.

Countries Losing the Most Millionaires in 2024 RankCountryNet flow of millionaires (2024P) 1🇨🇳 China-15,200 2🇬🇧 UK-9,500 3🇮🇳 India-4,300 4🇰🇷 South Korea-1200 5🇷🇺 Russia-1000 6🇧🇷 Brazil-800 7🇿🇦 South Africa-600 8🇹🇼 Taiwan-400 9🇳🇬 Nigeria-300 10🇻🇳 Vietnam-300

Meanwhile, uncertainty over China’s economic trajectory and geopolitical tensions have led millionaires to leave the country. China saw

Japanese yen falls to weakest level since 1986

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China’s EV architect says investing in Europe is a way forward

China’s Ministry of Commerce said over the weekend it was launching consultations with the EU over the bloc’s probe into the role of subsidies in Chinese electric cars. “I believe the governments [of China and the EU] are now considering how through negotiations they can combine investment together with commodity trade,” said Wan Gang, now president of the China Association for Science and Technology. Wan became China’s minister of Science and Technology around 2007 and is known for spearheading the country’s early push into electric cars. Wan Gang is widely credited for spearheading China’s electric car strategy many years ago. Bloomberg | Bloomberg | Getty Images

HEFEI, China — The man who spearheaded China’s electric car strategy on Wednesday said that Chinese investment in the European electric vehicles industry could be a way forward for both sides amid trade tensions.

“I believe the governments [of China and the EU] are now considering how, through negotiations, they can combine investment together with commodity trade,” said Wan Gang, now president of the China Association for Science and Technology.

Wan was speaking via an official English translation during a livestream of a panel at the World Economic Forum’s “Summer Davos” meeting in Dalian, China. Spokespersons for China’s foreign ministry and the European Commission were not immediately available when contacted by CNBC.

China’s Ministry of Commerce said over the weekend that it was launching consultations with the EU over the bloc’s probe into the role of subsidies in Chinese electric cars. The EU said earlier this month that it would increase tariffs on imports of the vehicles.

“Even though we are not exporting a large number of EVs, perhaps the Chinese companies can try investing in Europe,” Wan said, noting that such funding could create local jobs.

Wan became China’s minister of Science and Technology around 2007 and is known for spearheading the country’s early push into electric cars.

He said that, when China joined the World Trade Organization in 2001, he had already worked in Germany for about 15 years, including at Audi — and he experienced several periods of oil price volatility.

Wan added that 2001 was also the year when the Chinese government set a goal of developing a “moderately prosperous society,” which would mean every family would soon have their own

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Your 401(k) is up, and a new report shows increased savings. But Americans need to do more

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How’s your 401(k) looking? A new report shows Americans are saving more, but probably need to do even more. 

Vanguard has released its annual report, How America Saves 2024. Vanguard and Fidelity are the two biggest sponsors of 401(k) plans, and this is a snapshot of what nearly five million participants are doing with their money. 

The good news: stock market returns are up and, thanks largely to automatic enrollment plans, investors are saving more than they did in the past. 

The bad news: account balances for the median 401(k) of a person approaching retirement (65+) remains very low. 

The takeaway: Americans are still very reliant on Social Security for a large chunk of their retirement. 

Higher returns, participation rates, savings rates 

Why do we care so much about 401(k) plans? Because it’s the main private savings vehicle Americans have for retirement. More than 100 million Americans are covered by these “defined contribution” plans, with more than $10 trillion in assets. 

First, 2023 was a good year to be an investor.  The average total return rate for participants was 18.1%, the best year since 2019. 

But to be effective vehicles for retirement, these plans need to: 1) have high participation rates, and 2) hold high levels of savings. 

On those fronts, there is good news. John James, managing director of Vanguard’s Institutional Investor Group, called it “a year of progress.” 

Plan participation reached all-time highs. Thanks to a change in the law several years ago, a record-high 59% of plans offered automatic enrollment in 401(k) plans. This is a major improvement: ipreviously, enrollment in 401(k) plans were often short of expectations because investors had to “opt-in,” that is they had to choose to participate in the plan.  Because of indecision or simple ignorance, many did not. By switching to automatic enrollment, participants were automatically enrolled and had to “opt-out” if they did not want to participate. 

The result: enrollment rates have gone up. Plans with automatic enrollment had a 94% participation rate, compared with 67% for voluntary enrollment plans. 

Participant saving rates reached all time highs. The average participant deferred 7.4% of their savings. Including employee and employer contributions, the average total participant contribution rate was 11.7%. 

A few other observations about Vanguard’s 401(k) plan investors: 

They prefer equities and target date funds.  They love equities over bonds or any other investments. The average plan contribution to equities is 74%.  A record-high 64% of all 2023

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Marks & Clerk’s Michael Shaw: Brand reputation in the age of finfluencers and navigating FCA regulations

The concept, referring to individuals who establish their credibility on social media through personal reviews of products and services and usually focusing on a niche area, first emerged in the early 2000s. However, the diversification and surge in popularity of social media platforms throughout the last decade has seen the concept skyrocket – and with this meteoric rise, regulators have sometimes struggled to keep pace. ‘Finfluencers’ face FCA legal action over trading scheme With influencers now occupying new avenues of consumer product marketing such as financial services, wher…

Alliance Trust and Witan Deal Will be First of Many

Alliance Trust (ATST) and Witan Investment Trust (WTAN) have agreed to merge, in what is the largest deal to date within the investment trust sector.

There have been a number of investment trust mergers in recent years, including the tie up of Troy Income & Growth Trust (TIGT) and STS Global Income & Growth Trust, which took effect in March 2024. One might expect the trend to continue.

Closed-ended investment companies can represent an attractive investment vehicle for investors. They comprise long-term capital, meaning that, in theory, they do not face the same liquidity constraints as their open-ended peers. This permits a broader investment universe and some more specialist investment strategies.

In addition, trusts can gear up which can accentuate returns (and losses). Despite this, many have proven unpopular in recent years. Discounts to NAV have generally widened.

Why Investment Trust Discounts Won’t Disappear

Indeed, the number of investment trusts trading at a discount has increased, and they have been impacted by a number of unwelcome developments.

Of the 207 investment trusts over £100m on Morningstar Direct, just seven traded at a premium to NAV at end May 2024, including the giant closed-end investment company 3i (III). The average discount among this group was a whopping -13.8% to NAV. This makes for poor reading in the industry.

Discounts to NAV have long been studied by academics, who dub this the “closed-end fund puzzle.” It is well known that closed-end funds typically trade a discount to the sum of their holdings. The efficient pricing of their shares is impacted by liquidity and sentiment towards a strategy (i.e. expectations of future performance), but some argue the market fully discounts the impact of fund costs, which they say are fully baked into the price. Indeed, costs are paid from by from NAV.

This latter point is important. Under “PRIIPS” fee disclosure rules, representative fee figures include the cost of debt and other operational costs, and treat all investment trusts the same way as the hedge fund industry. More fee transparency is a good thing, but critics of the regulation say that these costs were already reflected in discounts to NAV: costs are being double-counted.

That is open to debate. Still, the claim will become more germane as the costs of gearing may be expected to go up as trusts roll over their debentures and other forms of debt at higher interest rates.

The General

Alliance Trust and Witan in £5 Billion Merger

Two of the UK’s most popular closed-ended investment vehicles, Alliance Trust (ATST) and Witan Investment Trust (WTAN), are to merge to create a £5 billion multi-manager investment vehicle.

The deal, which will create a new trust called “Alliance Witan”, follows a strategic review triggered by the retirement of Witan chief executive Andrew Bell.

Under the terms of the arrangement, Witan will undertake a scheme of reconstruction to roll into Alliance Trust, which has a market value of £3.42 billion. That will come in exchange for the issue of new Alliance Witan shares to existing Witan shareholders.

The newly merged trust will create a rival to FTSE 100 listed F&C Investment Trust (FCIT), which has a current market value of £5.13 billion, and a Morningstar Medalist Rating of Bronze.

Alliance Trust is one of the UK’s most visible investment trusts, and beat its benchmark, the MSCI All Country World Index, in the last financial year. It is currently trading at a -5.64% discount, which means the shares are trading below the net asset value.

The smaller of the two trusts, Witan has a market capitalisation of £1.64 billion and is trading at a -7.83% discount to NAV. Shares in Witan rose nearly 4% on Wednesday morning to 271p.

The “multi-manager” approach used by both trusts is set to continue.

“Since Andrew Bell announced his decision to retire, we have been through an extensive process to identify the best candidate to take on the management of our shareholders’ assets,” Witan chairman Andrew Ross said today.

“The board assessed a number of very strong proposals, including single-manager candidates with impressive track records. However, the Board was unanimous in recommending the combination with Alliance Trust, which allows the continuation of our multi-manager approach at lower fees and in a larger, more liquid, vehicle.”

Witan/Alliance Trust Portfolios Are Different

Alliance Trust and Witan Investment Trust have both previously used multi-manager strategies. Alliance Trust has used Willis Towers Watson as an investment manager, while Witan has a panel of six outsourced investment managers – including both Lindsell Train and Artemis.

Following the merger, Willis Towers Watson will have “overall responsibility” for managing the assets of the combined trust, whose investments will be selected according to a 10-20 “best ideas” approach.

Despite the similar approach, both trusts’ portfolios look distinctly different. Alliance Trust’s top three holdings include “Magnificent Seven” constituents Alphabet (GOOGL), Microsoft (MSFT) and Amazon (AMZN), with