Last night Rachel Reeves delivered her Mansion House speech.
From new investment opportunities for Stocks and Shares ISAs to plans to bolster London IPOs, here are the main takeaways.
New investment opportunities for Stocks and Shares ISAs
Rachel Reeves announced that Long Term Asset Funds (LTAFs) can be held in Stocks and Shares ISAs from next April, which is something HL has been advocating for some time.
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These allow more investment into private assets and infrastructure projects.
At the moment, investors can’t hold them in Stocks and Shares ISAs – they’re only allowed in innovative finance ISAs, which are much more niche.
Changing ISA rules to allow them in more mainstream ISAs will open up far more investment – while existing FCA rules around the retail distribution of LTAFs make sure they only make up an appropriate part of experienced investors’ wider portfolios.
This article isn’t personal advice. Unlike cash, investments can fall as well as rise in value, so you could get back less than you invest. ISA and tax rules can change, and any benefits depend on your circumstances. If you're not sure what's right for you, ask for financial advice.
What are Rachel Reeves’ plans to boost UK IPOs?
There’s a plan to get the initial public offering (IPO) pipeline moving again, revitalising what has appeared to be the lethargic nature of the listing process.
The length of time between a prospectus being issued and an initial public offering is being halved, to help fast track new listings.
By revising the rules on the documents companies need to produce before a public offer, it should also make it simpler for them to open up secondary capital raising rounds to retail investors.
It will also mean that companies will be able to issue corporate bonds to retail investors more easily, reducing costs and enabling bonds to be issued in smaller batches.
Meanwhile, the new public offer platforms announced by the FCA should also help companies raise money more easily from retail investors via authorised firms.
Companies will be able to use the platform to offer big chunks of bonds or shares without needing to compile a costly and lengthy prospectus.
You could be one of the first to own shares from a brand you know and trust.
Reeves' plan to get more people investing
It’s incredibly positive to see Rachel Reeves take some key steps towards closing the UK’s yawning retail investment gap.
There will be a new era of investment with the advent of new rules. These will allow companies to offer targeted support to their clients, alongside changes to risk warnings, so they actively help retail investors understand their options.
Changes to the advice/guidance boundary will help companies offer more useful support to their clients – something HL has been pushing for a while.
It will give people the understanding and confidence to realise the right balance of savings and investments for their needs, and take advantage of the huge potential that investment offers.
Will the UK stock market benefit?
As the UK stock market hits record levels, retail investors have had a welcome boost for their long-term resilience.
With Rachel Reeves’ plans to help get more UK savers investing, we could see more flows into UK investments.
The UK stock market has already been benefiting from a ‘best of the rest’ trade – tactical allocations from global investors who are too nervous about the US and Europe markets thanks to tariff uncertainty.
Sector specific trends have also helped the UK, such as increased defence spending and higher interest rates boosting banks.
Much of the good news is priced into these sector stories, so investors should be mindful of valuations when making new allocations. But the UK remains attractive on a relative basis.
We like active management (where fund managers try to beat the market rather than track it) for this market – smaller companies funds for value and UK Equity Income funds offer sustainable dividends.
Just remember, past performance isn’t a guide to the future and no income is ever guaranteed.
If you’re looking for UK fund ideas, our Wealth Shortlist can help you find some of the best opportunities on offer.
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We put funds under the microscope to make sure the list only contains the funds that our in-depth analysis indicates have the greatest performance potential.
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Article image credit: Carl Court / Getty images.
