The Federal Reserve, the Bank England and the European Central Bank have all held their interest rates this week and given out the same message that it is too early to be thinking about interest rate reductions. The equity and bond markets have decided that it is not, responding positively to a growing belief that the current rate-hiking cycle has peaked. Investment trusts are in demand again on this change in sentiment.
Relief rallies all round Having highlighted a potential turning point in my last set of comments, it seems that, having crawled over the wording of the latest central bank an...
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Some quick thoughts on developments last week. The US equity market is going into third quarter results season and the S&P 500 index has reached a critical point from a technical perspective.
Big picture macro It has been another tough week in the financial markets. The rise in the yield on the US 30-year bond to above 5%, its highest level since the summer of 2007, is an ominous development. While the yields on short-dated Treasuries are largely determined by the Federal Reserve's policy actions, the price of the so-called long bond is influenced more by the views of international marke...
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The analysts at broker Stifel made a good point this week about the differential in discount rates that's opened up between alternative assets trusts and plain vanilla equity ones. Whereas until two years ago the ratings on alternatives were generally superior, and often traded at premiums, while equity trusts were less handsomely rated, the reverse is now the case. Has this switchback gone too far?
Discount opportunities continued The story of the past 18 months is neatly captured in the chart that Stifel uses and which I could have readily replicated from other sources. You can see that di...
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I have updated the list of large and liquid trusts that I think look to have good risk/reward potential on the basis of their current discounts and added a comment about this week's interesting announcement from the board of Hipgnosis Songs Fund (SONG), one of the 15 names. If as appears likely we are close to the current peak in the interest rate cycle, you would expect to see that reflected in an end to the persistent derating which has characterised the sector since early last year.
Discount opportunities continued So the kick to Hipgnosis Songs Fund (SONG) from the Round Hill Music deal ...
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Round Hill Music Royalty Fund is the smaller and newer of the two music royalty funds although its investment adviser, Round Hill Music, has been around since 2010. The two music trusts (Round Hill and Hipgnosis) look similar in many ways but Round Hill's catalogue of songs is older and more skewed towards rock music, it has a slightly lower level of gearing and it has been much less acquisitive. Round Hill joined the market in late 2020 and is targeting a long-term annualised return of between 9 and 11% including an initial dividend yield of 4.5%. The continuing rise of free and ad-supported ...
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This has been another choppy week in the markets, notable mainly for the fact that the rise in US bond yields persists. This is not unexpected, and it only takes the 10-year Treasury yield back to where it was before the pandemic hit, but it continues to bear down on the performance of the equity and corporate bond markets, while real yields continue to edge up, unhelpfully for gold. The Federal Reserve has so far resisted the pressure to change its policy stance, despite the US bond market having its worst start to the year for many years.
Jonathan Davis James Anderson's departure The plann...
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