MARSHALLS CREEK — Some Met-Ed customers in Smithfield Township may experience a temporary lapse in service Friday. The utility company plans to perform a system upgrade that will affect about 59 customers in the area of Marshalls Creek Road.“We’re replacing aging conductor wire with new conductor wire,” said Scott Surgeoner, spokesman for First Energy Corp., which is Met-Ed’s parent company. “It’s all being done to enhance the [...]
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الأربعاء، 26 سبتمبر 2018
Fed Raises Rates for 3rd Time This Year With 1 More Expected
The Federal Reserve signaled its confidence Wednesday in the U.S. economy by raising a key interest rate for a third time this year, forecasting another rate hike before year’s end and predicting that it will continue to tighten credit into 2020 to manage growth and inflation.
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Source CBNNews.com https://ift.tt/2QaERl9
12 Marketing Skills You Need to Survive in the Age of AI
The time has finally arrived. We’re living in the era of artificial intelligence.
It sounds crazy, right?
To the average person, artificial intelligence doesn’t seem like a reality of our everyday lives. They associate AI with movies when robots take over the world.
While we’re not quite at that point, artificial intelligence is very real.
From a marketing perspective, we need to recognize this reality and plan accordingly.
In fact, artificial intelligence ranked high on my list of the top marketing trends to look for in 2018. As we reach the final quarter of the year, this prediction has held true.
If you are unfamiliar with AI, let me explain. By definition, artificial intelligence is the ability for computers to perform tasks that would ordinarily require human intelligence.
Some examples of these tasks include:
- language translation
- visual perception
- ability to make decisions
- speech recognition
While we may be ready for computers to translate a language, it’s the decision-making abilities that bring AI to the next level.
I know what some of you are thinking. You have a simple business operation, why should you care about AI?
When comparing companies already using artificial intelligence, the top-performing brands are more than twice as likely to use AI for marketing purposes.
Businesses are using this technology to increase sales by personalizing the customer experience.
Over the last five years, jobs requiring AI have increased by 450%.
Artificial intelligence is here to stay. It’s trending upward, and you need to be prepared to handle it if you want to be successful. I’ve identified the top 12 marketing skills you need to survive in the AI era.
1. Adaptability
Adapt or die.
If you don’t adapt now, you’ll fall behind your competitors and put your business at risk of failure. Just look at how many people are currently using AI and how many are planning to use this technology in the future:
As you can see from this graphic, AI is the fastest growing marketing technology with an anticipated year-over-year growth of 53%.
In my work with business owners, I’ve seen different personalities. Stubborn and closed-minded have a more difficult time growing their businesses.
When it comes to AI, you need to have an open mind and be willing to adapt if you want to succeed.
Don’t be stuck in your old ways. The mentality of “if it’s not broken, don’t fix it” is the wrong approach to take when it comes to new technology.
If you’re not willing to adapt to the latest trends today, you won’t be able to survive tomorrow.
2. Communication
As a business owner and marketer, you know how important communication skills are for a successful business. You need to be able to communicate well with your employees, customers, and everyone else you encounter on a daily basis.
But in the age of AI, communication is more important than ever.
Here’s why. AI may eventually replace some of the human elements of your business.
For example, maybe you’re using AI to help you provide better customer service by implementing live chat on your website.
However, you don’t want your customers to feel as if they’re losing that human touch. You still need to be available to communicate with your customers.
You can’t rely on the implementation of AI to handle this for you 100% of the time.
While the technology behind AI is groundbreaking and remarkable, it can’t duplicate an actual human response.
You and your team still need to be accessible. Customers should be able to pick up the phone and talk to a real person if they want to.
3. Budget allocation
Implementing AI technology in your business won’t necessarily be the most inexpensive investment you ever make.
This could be why some of you have been hesitant to add artificial intelligence to your business. You’re not alone.
In fact, the high cost is the number one reason why brands aren’t using AI marketing solutions:
I don’t want to sound corny, but there’s a relevant age-old saying I’m sure you’ve heard before:
You’ve got to spend money to make money.
It’s the truth. Sure, the initial costs of implementing AI marketing solutions may be intimidating at first. But that’s why you need to have great budget allocation skills.
Don’t cut corners when it comes to new technology adoption. Find other ways to reduce costs so you can pay for AI solutions.
4. Ability to analyze big data
Depending on what you use AI for, there is a good chance you’ll be presented with lots of data.
Studies show 29% of brands that have adopted artificial intelligence use it to perform automated data analysis. And 26% use the technology for automated research reports and information aggregation.
An additional 26% are using AI for operational and efficiency analysis.
These applications will result in lots of data for you to analyze. You need to be comfortable doing that.
There are different layers to artificial intelligence:
Machine learning and deep learning are two concepts that are within the scope of your AI marketing strategy.
But the deeper you go, the more data there will be to analyze.
The computer is only as smart as it’s programmed to be. Decisions will ultimately be up to you, depending on how well you can analyze the information you’re presented with.
5. Coding
While coding isn’t a requirement for AI, a background in and general knowledge of coding will definitely help you.
This also helps with your budget, as discussed above. Don’t pay someone else to do something you can do yourself.
If you know how to code, you can set up the data you want to analyze. You can program the data sets, data sizes, and sources for whatever you need the AI to compute.
Many times, AI is used to identify patterns. If you have some coding background, it will be easier for you to understand that.
Those of you new to this should read through some marketing forums and learn from others in the same position as you.
View code samples and video tutorials online about basic coding.
You can even sign up for online coding classes through platforms such as Codecademy.
As you can see, this resource offers different coding options to learn.
While any of these would be helpful for your general coding knowledge, the data science coding would be the most relevant for your AI implementation.
6. Content creation
As marketers, we’ve been saying “content is king” for years now.
The basic idea behind this concept is to create content that appeals to search engines that will ultimately reach the consumers. Your entire marketing strategy lives and dies by the content you produce.
Adding AI to your business doesn’t mean you need to stop your content creation efforts.
Keep doing the things that put you in the position you are today. Don’t put all your eggs in the AI basket.
Improve your existing content production efforts through:
- blogs
- pictures
- videos
- audio
- social media
Use artificial intelligence to help you make your content even better. For example, some brands are using AI software to create Facebook advertisements aimed at different audiences.
This type of process would take humans much longer to complete. Come up with other ways to leverage AI to boost your content strategy.
7. Security
Whenever you implement new technology in your business, security always needs to be a priority.
Over the past few years, many big companies had security breaches, which severely damaged their reputations. If you develop a reputation as a brand that can’t protect your customers’ information, it could put you out of business.
Consumers are concerned that AI may compromise the ability for businesses to protect their personal information.
You need to take proper measures to make sure all your data is secure.
Put everyone’s mind at ease. Run marketing campaigns and promotions advertising your secure process and your emphasis on customers’ digital safety.
8. Ethics
As I mentioned above, AI will gather lots of data for you to analyze.
But unlike humans, computers don’t have a conscience. So it’s up to you to be ethical when it comes to what you do with all the information you collect, which is relevant to my previous point about protecting customer data.
Yes, you want to protect the information from hackers and anyone looking to steal, exploit, or cause harm to others. But you also need to protect this data from yourself and other marketers as well.
Use AI to improve your marketing efforts, but don’t do anything that will cross the line when it comes to the usage of the information you collect.
9. A competitive spirit
Marketing is a competitive game.
There is always a constant battle between your company and the other players in your industry. Consumers have lots of money to spend, but you need to make sure they spend those dollars at your store and not the shop down the street.
As you add artificial intelligence technology to your business, the competition will continue to heat up.
You need a competitive spirit and mindset to survive.
Studies show 84% of marketers agree AI will help them gain or sustain a competitive advantage.
Is your competition currently using AI?
You won’t know unless you do your research. Take advantage of my favorite helpful tools to monitor your competitors.
10. Delegation and time management
When it comes to jobs involving labor, new technology and machine advancements can mean trouble for employees worried about their jobs being replaced by a machine.
But artificial intelligence doesn’t necessarily automate or replace a person’s job.
Instead, it automates specific tasks.
You need to recognize how such automation can benefit your business. Then use that information to delegate tasks to your employees accordingly.
Don’t assign a task to a person that a computer can do.
Once AI replaces a certain task, you need to find ways for that person who used to do it to spend their time wisely.
Artificial intelligence can help you increase employee productivity if you can implement it properly and find the most efficient ways to delegate new tasks.
11. Thirst for learning
To thrive in the AI era, you need to have good learning skills.
As I said earlier, there are different layers to the ways you can take advantage of this technology. There are many unique elements associated with artificial intelligence:
Conduct your own research on this technology to further your knowledge.
Attend classes. Take advice from experts. Listen to people who are teaching you how to use the software.
Don’t approach this new technology with the notion that you know it all because you probably don’t. Even if you have a high level of education, you’re new at this unless you studied AI.
Plus, it’s worth mentioning that technology is constantly evolving.
Maybe some of you have a firm grasp of AI today. However, things may change in the coming years and decades.
Those of you who have an eagerness to learn will have an advantage over everyone else.
12. Big picture mindset
In this moment, does your business need AI to survive today?
Probably not in the same way things such as Internet access, a website, social media, and the ability to process credit card payments impact your survival.
If you don’t need AI today, it may be hard for some of you to justify jumping on board with this technological advancement.
But you need to look at the big picture. As you can see, we’re trending in that direction. It’s in your best interest to get familiar with AI now and figure out how it can benefit your business in the future.
Conclusion
We’re living in the era of artificial intelligence.
Marketers need to recognize this and leverage the new technology to their advantage.
If you’re not using AI right now, it’s not too late to start. But I recommend starting this process sooner rather than later. Otherwise, you’re at risk of falling behind your competition.
There are certain skills that will give you an advantage and help you survive in the age of AI.
Refer to the list I’ve created here to help make sure you adopt these marketing skills if you haven’t done so already.
How is your business currently using or planning to use AI to improve your marketing solutions?
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The Spiral of Improving Yourself, Your Money, and Your Life
Let’s see if this story sounds familiar to you.
You realize your financial life is in a shambles, so you dive intensely into frugality for a while. You pay off a few bills, get your head above water, and then you realize that some of the frugal strategies you’ve adopted are pretty constricting and rubbing you the wrong way. You drop most of the frugal tactics you picked up, but not all of them – a few of them have stuck.
Then, a little later, you realize that your finances are starting to sink again. You dive back into frugality, perhaps not as deep as before, and things get better, but the progress slows down. Again, you find a few more tactics that stick even as most of the rest falls away.
It’s kind of a spiral or a zigzag, isn’t it? There’s this happy medium that you’re aiming for where you feel like you have the freedom to spend that you want but you also want to be aiming for some degree of debt freedom or financial freedom.
You go too far in one direction and you’re practicing an intense level of frugality and penny-pinching that chafes you. You go too far in the other direction and you’re not making much progress on your financial goals – or you’re even backsliding.
So, you kind of go back and forth between the two. Each time, you’re not going quite as “extreme” as you once did because in previous go-arounds, you learned that certain things really rub you the wrong way or don’t work for you or don’t give you enough value for the dollar. At the same time, as you spiral away from an extreme, you retain some of the tactics that really worked so that the worst of your excesses in the other direction are blunted.
Over time, if nothing changed in your life and you kept paying attention to finding the right balance, you’d eventually get there – or pretty close to it.
Yet life gets in the way. Maybe your income goes up, or maybe it goes down. You fall in love, or fall out of love. You bring a new baby into your life, or a child leaves the nest. And the balance changes, and you start spiraling again, gradually seeking out that new center balance in your life.
I think this kind of spiraling journey is what a lot of us find ourselves on in most areas of our life. We buckle down with our money and get rid of some debts and maybe even save some money, and then the initiative wears off. We work on getting in better shape, then we slack off and maybe even go the other way. Relationships. Professional endeavors. Hobbies and interests. This kind of spiral happens again and again and again in life.
It happens to me with personal finance. There are times when I am ridiculously frugal, down to the point of washing freezer Ziploc bags for reuse. There are other times when I just don’t worry about it and feel like our financial life is going great even if I skip some of the more intense frugal stuff.
It happens to me in a lot of other areas, too. There are times when I’m super intense about exercise and other times when I don’t do much of anything. There are times when I’m very focused on devouring tons of books, and other times where I’ll go days without picking one up.
What I’ve learned over the years is that this oscillation is completely normal. It happens with almost anything in life. When we notice that something is “off” in our life, we tend to overreact and push back in a way that creates other discomforts, which then push back and move us back in the other direction. Eventually, we move toward some kind of happy medium, but then our center of balance shifts as our life changes and it happens all over again.
This is why lasting dramatic change is so hard. We might be able to pull off a dramatic change in our spending for a while, but eventually there will be pushback against the dramatic changes. They’ll chafe against other parts of our life and we’ll find ourselves being pushed hard to move back in the other direction. Over time, our own center of balance will shift, and sometimes not in the direction we expect. It’s like spinning a dinner plate on the end of a stick.
With practice, however, you can get a lot better at spinning dinner plates, and you can get a lot better at managing the spirals of your life. Here are some tactics I use to help me manage the extremes of my spirals and find the center a little faster, financial or otherwise.
Pay attention to where the center of your spiral is right now. For each of us, there’s a happy balance between the various tensions in our life. We’re constantly balancing lots of different things – our finances, our family, our careers, our friendships, our physical health, our mental health, our spiritual health, and so on. When we push too hard on some of those areas, it can send others out of balance, and if things get too out of balance, it can leave you feeling lost and melancholic and it can be very hard to recover.
One of the most powerful strategies I’ve learned over the years is to simply listen to myself, trust what I’m hearing, and take action on it. When I feel like something’s not right in my life, I don’t just brush it off. I spend some time digging into it to figure out what’s really wrong. For me, journaling really helps solve this problem; others might find it useful to simply get into a practice of thinking about their life during their commute. The key isn’t how you do it, but what you’re doing – you’re stepping back, looking at your life, noticing what’s out of balance before it gets far out of balance, and fixing that issue.
I’ve learned that if I feel happy overall and I can go through the various spheres of my life (physical, mental, spiritual, social, marital, parental, financial, vocational, avocational) and feel like they’re all in a good place, then I’m probably pretty close to in balance. However, that balance never truly lasts, and noticing when things are starting to slip is invaluable. It’s easier to make a course correction early than when things are already in bad shape.
Hang onto the tactics that really worked and drop those that didn’t. What I find is that when I dive into something because it feels out of whack, there’s probably a reason that it got into that state and there’s something (often many somethings) I’m going to have to change to alter things. What really works well about the state I’m currently in? What doesn’t?
The trick is to make changes without letting go of what really works. If a particular tactic is actually clicking along smoothly in one’s life, don’t throw it out with the bathwater. Don’t turn off your 401(k) savings at work. Don’t go back to stopping for food on your commute when going straight home is working like a champ. Don’t stop making meals in advance when they’re making your busy evenings a lot easier.
Here’s why: The best tactics we discover in life are the ones that have benefits in multiple areas of our life, and even when we move in a different direction in one area, that tactic is still a win in other areas. Take meal prepping – the tactic of making a bunch of meals in advance, popping them in the freezer, and eating them for lunch or supper later on. I do it because it saves a ton of money, helps me eat healthier, and saves time on busy evenings. Even if I changed direction on one of those areas in life for now, I’d still have two good reasons for doing it.
Put practices in place that make it much easier to maintain the benefits of one extreme, even as you oscillate away. The reality is that, in most areas of our life, we operate via the path of least resistance. Whatever the easiest path in the moment is, that’s what we’ll do. One of the best tricks for being successful in some area of life is to reduce the amount of resistance against doing something, or increasing the amount of resistance against changing something.
With finances, one of the best things you can do is increase the amount of resistance against altering good financial practices. A great example of this is automating your finances. If you set up an automatic contribution to your retirement plan at work, it’s going to require you to actually put in effort and take action to undo it, so when things swing away from strong personal finance in your life, you’re still likely to leave that savings in place. The same is true for an automatic savings plan at your bank, where a certain amount is funneled each week from your checking into your savings for an emergency. You probably won’t undo that without a really good reason because doing so would take effort.
This is a big part of why I highly recommend setting up automatic 401(k) contributions and an automatic transfer to fill up your emergency fund, and I recommend doing it now rather than later. If you do it now, while you’re excited, you probably won’t undo it later when you’re less excited. Instead, it’ll keep working for you.
As you spiral through life, keep these tactics in mind. Keep paying attention to where you are and whether things are in balance. Keep using tactics that really work well in your life. Automate as much as possible so that good behavior becomes the path of least resistance. Using all three of those things in concert will eventually help you find a good strong center in your life.
Good luck!
More by Trent Hamm:
- This Week
- The Frugal Improvement: 15 Money-Saving Tactics I Ended Up Liking Better, Regardless of Cost
- Finding Inspiration for Financial Success
The post The Spiral of Improving Yourself, Your Money, and Your Life appeared first on The Simple Dollar.
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Give Me the Goods: Why I Value Things Over Experiences
I’ve previously talked about how much I love the money-saving practice of self-massage. That being the case, I recently decided to treat myself by purchasing a top-of-the-line handheld vibrating massage tool. It cost me $300.
Before you call me a spendthrift and suggest I should have gone dumpster diving for spare parts and learned to weld them into something approximating this massage tool, hear me out.
I use this device every day, it should last for years, and it brings me so much joy. When I use the massage tool on my feet, it feels like a thousand tiny angels are tap dancing on my arches. If that’s not worth $300 — when I have no debt and a 60% savings rate — I don’t know what is.
Things vs. Experiences
My new device got me thinking about the divide in the personal finance community over those who value things versus those who value experiences. At the moment, it’s not cool to want things. I would not be worried about backlash to this post if I were writing about how I was travel hacking my way across South America for a week on “only” three hundred bucks. That would be acceptable, because it’s an experience — especially among my generation.
A recent study found that 72 percent of millennials prefer to spend money on experiences rather than things, and it’s becoming dogma that people my age should be valuing experiences over all else. The notion is so commonplace that brands are now trying to capitalize on the “experience economy” with tactics like planning custom trips for millennials. It’s even become a budgeting priority, as evidenced by articles in the popular press like “How to Create a Budget That Prioritizes Experiences Over Things.”
Don’t get me wrong. I have nothing against a good vacation or a pricey yoga class every now and then. I just want to be a small voice for the other side. For the folks who would rather spend a thousand dollars on an extremely comfortable sofa that they’ll use for the next 15 years, rather than on a one-week pilgrimage to a music festival.
The biggest issue for me is that the experience-focused mindset does not fit with my personality type. As an introverted person, I prefer quiet nights at home to going out and hitting the bars. In fact, I’m comfortable staying in on many levels, including “staying in” my city the majority of the year rather than pursuing travel. I love holiday travel to see my family, and the occasional cross-country trip to visit an old friend, but I’m not raring to explore the world. If I’m mindful of all the little wonders around me, I think that I can get as much out of a walk in my local park as I could on a walk through the Swiss Alps. It’s all about your mindset.
Rather than fighting against my genetic predispositions by pretending to be someone I’m not, I choose to work with them to maximize my personal happiness. And according to a research paper out of the University of Cambridge titled “Money Buys Happiness When the Spending Fits Our Personality,” I’m on the right track. The study found that “individuals spend more on products that match their personality, and that people whose purchases better match their personality report higher levels of life satisfaction.” So instead of criticizing each others’ choices, let’s realize that we’re all different, and that there’s no right or wrong way to spend money in the pursuit of happiness.
I also might be more inclined to spend money on things because I make sure most of the things I buy are high quality and durable. Those of us on “Team Things” aren’t saying that happiness can be found in a trendy outfit that only gets worn once. We’re saying that it’s hard to calculate the total amount of joy you can get out of a wonderfully built item that you can use day after day, year after year.
Say what you will about the life-changing experience you had zip-lining in Costa Rica, but you can only do that every so often. If you buy a top-of-the-line pair of headphones for the amount of money you’d have spent just on airfare, you get to reap the benefits of peak audio craftsmanship every single day.
Another thing I’ve noticed is that I’m becoming more sentimental about the stuff I own. I didn’t use to care about hanging on to trophies, homework from middle school, or tickets to concerts. But lately, I have been finding a lot of joy in curating a collection of stuff that has meaning to me. I’ll never be a hoarder, but I find it nice to have pieces of my past that I can look at and use to recollect a happy memory. This feeling extends to pieces of art and even to more basic consumer goods like tables and chairs. They all come with their own story.
I know that the experience-minded folks get the same feeling from looking back on pictures of their travels, and that’s great. My point is that both approaches are valid and neither side should lay claim to the moral high ground.
Finally, experiences don’t entice me because I do my best to reduce the amount of FOMO I feel. A poll by Harris Insights and Analytics found that “a craving for recognition and a fear of missing out help drive millennials’ craving for experiences.” A study by McKinsey concurs, noting that keeping up with the Joneses used to be about wanting the same car or other material goods that your neighbor owned. Now, “with more consumers opting for experiences and sharing their stories and pictures online, people feel peer pressure to join in or keep up.”
By limiting my exposure to social media, practicing meditation, and taking breaks from technology altogether, I find I can keep FOMO at bay and I’m less inclined to be swept up in the experience mania that grips some of my peers. That’s not to say there’s no FOMO when it comes to consumer goods, but that’s less of an issue for me as it is not the dominant paradigm among my peers.
Summing Up
I like quality board games, laptops, headphones, shoes, cookware, camping gear, and books. They are all things, yet they all bring me lasting joy. Spending my discretionary funds on those items instead of on travel or skydiving lessons doesn’t make me bad, just different. The key for any of us is in figuring out what truly makes us happy, and then saving and setting aside enough money to follow that bliss.
More by Drew Housman:
- Millions of Millennials Spend More on Coffee (Among Other Things) Than on Retirement
- The Most Motivating Financial Chart I’ve Ever Seen
- The Ultimate Free Life Hack? I Quit Drinking for Three Months
The post Give Me the Goods: Why I Value Things Over Experiences appeared first on The Simple Dollar.
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First 50 Funds Interview: Baillie Gifford Japanese Matthew Brett
Matthew Brett gives Moneywise’s Helen Knapman the lowdown on his fund, Baillie Gifford Japanese, one of our First 50 funds for beginner investors
What is the fund?
The fund invests in Japanese companies that we think have the potential for long-term growth.
We currently hold 62 companies. Each holding is big enough that it makes a difference, but there’s enough space for new ideas.
What do you look for in companies?
We try to think about companies over a five-year period – looking at where sales and earnings have got to and whether they can continue growing. When investing, the five key points we look for are:
- Industry background – companies that are operating in a growing industry and one where it’s possible to earn good returns.
- Competitive advantage – [companies that have an advantage over their peers].
- Management – companies where there is a strong alignment between the management and ourselves. We like the management team to have a significant shareholding in the business themselves. This is important, as in Japan there’s a range of management styles and we want to invest in those looking to grow their businesses.
- Financial characteristics – companies with strong balance sheets with little or no debt.
- Valuation – we look at the price of companies and how we differ from the market in our view. We try to look for substantial opportunity for share price appreciation – and not just small appreciation, we’re looking for double or treble.
When do you sell companies?
Over the past 10 years the annual portfolio turnover has been 15% or less. We sell companies for three main reasons:
- We’ve made a mistake and we’ve realised we’re not right in our analysis.
- Where we struggle to see any further upside in the shares – the market can become aware of the attractions and become over-enthusiastic, for example.
- We have such a weight of companies we want to buy that we need to find the money from somewhere, so we’ll sell our least favourite holding.
In the last few months we’ve sold out of Hikari Tsushin – a distributor which sells mobile phones, copiers, etc [to businesses]. We’ve held it for 10 years and it’s done very well, but we can’t see it being able to grow at the same rapid rate going forward, as the labour market is very tight and it simply can’t recruit the number of employees it will need.
Has your direction changed since co-manager Sarah Whitley left in April?
We remain growth-orientated and long term – our ethos hasn’t changed. We have nine people working on the fund and we still have the rest of the team here. I miss working with Sarah, but in a practical sense I’m confident we have the resources to keep going.
How’s the outlook for Japan?
Investors have a tendency to focus on concerns about Japan, but there are several strengths. There’s a simplicity to Japan in terms of it having one currency and an established political arrangement, as these provide a fairly stable backdrop.
So, when it comes to challenges, I don’t worry about the country as a whole, although there are some sectors that aren’t particularly exciting. For example, we’ve not found opportunities in the utilities sector for years, and growth prospects are very limited. We also struggle to see how the large conglomerates can show growth – they had great growth in the 1980s but they’re not where the growth is now. We’re looking to the future.
When we think about what Japan is good at, it’s robots. We see opportunity here, as robots are only used in narrow industries at present, such as car manufacturing and electronics, but we see the possibilities for robots to be used in different sectors. Examples of companies we own in this sector include Fanuc and Yaskawa Electric.
Our other big exposure is to internet-related businesses. One of the big areas for growth is online financial companies – SBI is an example of a firm we invest in. It’s the Japanese Hargreaves Lansdown, an online brokerage company that also offers banking services. We think these have a very big cost advantage over traditional banks.
In terms of opportunities, there are also some interesting stocks we’re thinking about in emerging healthcare. For example, PeptiDream is a company we hold at present which produces synthetic peptides to deliver drugs or be used as a therapy in their own right.
What were your best and worst investment decisions?
One of our best decisions was to invest in Hikari Tsushin. Its share price went up about 10 times from when we bought it to when we sold it.
But there are always things that go less well. One of the ones I particularly regret relates to M3, an online sales rep for pharmaceutical companies. We considered buying shares in M3 but thought it was a little expensive. That was a mistake, as the share price has continued to grow very fast since then.
What’s your top tip for a beginner investor?
I would encourage people to keep things simple and to be aware of the importance of investing in funds where they understand how they’re managed. Have an eye on costs, and be long term in your thinking.
Baillie Gifford Japanese: Key stats
Launched: October 1984
Fund size: £2,627.12 million
OCF: 0.63% (i)
Yield: 0.8%
(i) B share class. Source: Baillie Gifford Japanese Fund factsheet, 30 June 2018.
The man behind the fund
Matthew Brett joined Baillie Gifford in 2003. As well as managing the Japanese Fund, he is the manager of Baillie Gifford’s Japanese all cap and Japanese income growth strategies. Matthew graduated with a BA (Hons) in natural sciences (psychology) from the University of Cambridge and holds a PhD in psychology from Bristol University. He is a CFA charterholder.
sector-breakdown.PNG
Five-year performance of Baillie Gifford Japanese
| Year | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| Baillie Gifford Japanese B Acc in GB | 43.80 | 0.05 | 11.94 | 33.89 | 26.56 |
| Benchmark | 25.03 | 2.39 | 18.16 | 23.41 | 15.60 |
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Fund Briefing: how to invest in Asia Pacific
There is no denying Asia’s potential. With fast-growing economies, strong export markets and an increasingly wealthy middle class, it’s little wonder that investors are taking notice.
Exposure to Asia Pacific should be an essential part of a diversified portfolio for long-term investors, insists Gavin Haynes, managing director of investment manager Whitechurch Securities.
“The region, driven by China and India, is undoubtedly going to be one of the key drivers of global economic growth for the next decade and beyond,” he says.
He believes there are numerous reasons why some kind of weighting to this region within your overall portfolio makes sense for investors.
“You have economies growing at a fast pace, structural reforms, better corporate governance, greater consumerism, and relative valuations,” he explains. “These all make such markets attractive on a long-term view.”
Moneywise columnist Darius McDermott, managing director of fund ratings agency FundCalibre, adds: “The demographics in most places are good, valuations are better and there are plenty of very exciting long-term opportunities.”
Asian firms are also becoming more shareholder-friendly and paying dividends, according to Patrick Connolly, a chartered financial planner with financial advisory firm Chase de Vere.
“They are in good shape and we’re seeing positive earnings growth,” he says. “Valuations are also attractive when compared with western markets.”
However, be aware that funds focused on these regions can be found spread across a number of different sectors.
For example, the Investment Association (IA) sector Asia Pacific ex Japan has £27.5 billion of assets under management. Funds must invest at least 80% of their assets in Asia Pacific equities (company shares), but exclude Japanese securities (equities and bonds).
IA Japan, meanwhile, has £24.5 billion under management, while a further £1.2 billion is in IA Japanese Smaller Companies.
Finally, there is IA Asia Pacific including Japan. This is a relatively unpopular sector, with just £700 million under management. Funds in this sector invest at least 80% of their assets in Asia Pacific equities, while the Japanese content must make up less than 80% of assets.
Mr McDermott argues that Asia ex-Japan and Japan should be considered separately by investors, largely because there are plenty of Japanese experts to run that part of the portfolio.
“Most investors think of Asia as a developing market, whereas Japan is developed,” explains Mr McDermott. “It’s also one of the world’s largest economies, so warrants specific attention.”
Quick guide: Is this approach right for me?
Consider investing in Asia Pacific if…
- You want exposure to growing parts of the world
- You are looking to diversify your portfolio
- You are willing to accept a potentially higher degree of risk
He suggests the Baillie Gifford Shin Nippon fund is worth consideration. “Shin Nippon means ‘new Japan’ and this trust focuses on emerging or disrupted sectors, where the manager sees innovative growth opportunities.”
For those wanting China exposure, he likes Fidelity China Special Situations, while a broader fund suggestion is JOHCM Asia ex-Japan.
Whichever route you choose, it’s important to be aware of the potential risks within Asia, according to Adrian Lowcock, head of personal investing at online investment platform Willis Owen.
“The region is dominated by China and the trade war with the US is having an effect and weighing on sentiment,” he says.
In addition, he points out that Asia is sensitive to rising interest rates in the US, as many Asian countries and companies have US dollar-denominated debt. If rates rise in the US, the cost of servicing that debt goes up.
Mr Connolly adds that Asian shares aren’t ridiculously cheap, which means this isn’t a market for short-term speculators.
“Our clients will typically have between 3% and 5% of their investments in Asia, with the most aggressive investors having up to 10% of their portfolio invested there,” he says.
A fund manager with a lot of experience in Asia, therefore, is crucial – as is some element of capital preservation, because volatile markets can wipe out investment values.
Mr Lowcock adds: “Investors need a clear process, with the manager understanding the markets in which their approach will – and won’t – work”.
He suggests Jupiter Asian Income and Fidelity Asia as interesting funds, while emphasising that the amounts invested in Asia will differ between investors.
“The more adventurous can have more exposure, say 10%, while a cautious investor could hold 5%,” he explains. “Income seekers can access funds with attractive yields as well as growth in that income and in the capital.”
Looking to the future, keeping a close eye on the Chinese economy will be vital, as it’s a barometer for the entire region, according to Mr Haynes at Whitechurch.
He warns: “Chinese internet stocks have also driven performance over the past couple of years and valuations are higher, which could be a concern if these businesses cannot sustain the high levels of growth.”
Fund to watch: Invesco Perpetual Asian fund
The aim of this fund is to achieve capital growth by investing in the shares of Asian and Australasian companies – excluding Japan.
Its manager, William Lam (pictured), has been at the helm for more than three years and invests in companies where share prices are undervalued.
His investment process means he focuses on unloved areas of the market in the belief that this is where such stocks can usually be found.
The fund’s current themes include Chinese internet, South Korea, and what the manager considers to be undervalued balance sheets.
Information technology is the largest sector in the fund, accounting for 32% of assets under management, followed by 23.98% in financials and 11.86% in consumer discretionary.
The other sectors, each accounting for less than 10%, include energy, industrials, materials, consumer staples, utilities, telecommunications services and real estate.
As far as countries are concerned, the fund has a 20.56% allocation to South Korea, followed by China (20.33%), Taiwan (12.57%), Australia (12.14%), and Hong Kong (11.36%).
The fund’s largest holding is Samsung Electronics.
Patrick Connolly, a chartered financial planner at advisory firm Chase de Vere, is a fan of the Invesco Perpetual Asian fund.
He says: “It has a strong and stable investment team that adopts a contrarian approach. It is a value-oriented fund, with a strong focus on domestic consumption, looking to benefit from the increasing wealth of the Asian population.”
Value of £100 invested in the fund over five years
| Year | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| Fund percentage movement in year (%) | 5.55 | 11.34 | -2.43 | 37.91 | 36.4 |
| Value of £100 * (£) | 105.55 | 117.52 | 114.66 | 158.13 | 215.69 |
*£100 was invested on 1 January 2013. Source: Moneywise.co.uk.
| Manager | William Lam |
| Launch date | 10 February 1990 |
| Total fund size | £2.36 billion |
| Minimum initialinvestment | £500, minimum top up: £20, additional lump sum: £100 |
| Max intitial charge | 0% (Z class (i)) |
| Ongoing charge | 1.04% (Z class (i)) |
| Performance fee | None |
| Contact details for retail investors | Invescoperpetual.co.uk |
(i) Z class is only available via third party platforms and not direct.
ROB GRIFFIN writes for the Independent, Sunday Telegraph and Daily Express
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