UK: Suitable for retail investors. Rest of Europe and Singapore: For sophisticated investors only.

Source: Bloomberg/Quilter Investors/Dividend Monitor.

Between the linesMulti-asset investment thinking from the Quilter Investors team.

04Week

Coining it in The UK stock market delivered a record £100bn in dividends last year meanwhile the ‘big six’ US banks enjoyed record profits of $120bn.

LEGO: Building a new asset classLEGO could be a new alternative asset class after it outperformed large equities, bonds, gold and other alternative investments across 1987-2015, according to recent research.

Victoria Dobrynskaya, an assistant professor at Russia’s Higher School of Economics, determined LEGO yielded an average return of at least 11% per year (8% in real terms), with 58% of the sets studied earning more than a 10% return. Meanwhile, the top five performers: Star Wars’ Darth Revan; Elves’ Workshop; Seal’s Little Rock; Star Wars’ TC-4 and Ice Skating, earned between 425-613% during one year.

However, the author warned that the LEGO market isn’t as liquid as the stock market and requires relatively high transaction and storage costs.

Ford shares skid on profit warningCar giants Ford and Volkswagen last week announced a global alliance that would see them team up on the development of vans and pickup trucks to reduce costs.

The joint projects will be overseen by a committee including Ford’s chief executive Jim Hackett and Volkswagen CEO Herbert Diess. Sales from the partnership should start in 2022, boosting profits from 2023. The two manufacturers also said they would look into developing electric and self-driving cars together.

However, Ford’s share price fell more than 6% on Wednesday last week as the news was overshadowed by Ford’s preliminary results statement suggesting it would miss analyst estimates on earnings per share (EPS) for the fourth quarter.

Credit: mingcreative/iStock Credit: jetcityimage/iStock

Licenced to print money: US ‘big six’ bank $120bn annual profits Last week the ‘big six’ US banks – JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley – reported their biggest ever combined annual profits ($120bn) lifting shares across the sector.As Quilter Investors portfolio manager, Hinesh Patel explains, “2018 was like an accumulator bet for the big US banks. Tax cuts and deregulation, rising interest rates, a surge in commercial and industrial lending and a record year for M&A and buybacks all contributed to the haul, while massive profits from volatility trading more than offset weakness from their fixed-income desks.

“However, the exuberance is likely to be short lived; financials benefited from an element of short covering and the market is a forward pricing mechanism.”

UK: Suitable for retail investors. Rest of Europe and Singapore: For sophisticated investors only.

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2018 was like an accumulator bet for the big US banks. Tax cuts and deregulation, rising interest rates, a surge in commercial and industrial lending and a record year for M&A and buybacks all contributed to the haul...

Chart of the weekSeparating the tweet from chaff: Trump’s honeymoon with US consumers comes to an abrupt end. Consumer confidence on the outlook for the coming business year has hit a four-year low.

Dividends from UK plc hit all-time high The latest numbers from Dividend Monitor show that total UK dividends hit a record £99.8bn in 2018, up over 5% on 2017. Strong dividend growth in the mining sector was the chief driver although the move to quarterly dividends from an enlarged British American Tobacco was the single largest contributor.

A bumper fourth quarter from a thawing banking sector helped to push 2018 into record territory. Royal Bank of Scotland paid its first dividend in a decade; Standard Chartered made its first payout since 2015 while both Lloyd’s and Barclays raised dividends.

Meanwhile, 2018 dividends from the Alternative Investment Market (AIM) are expected to pass the £1bn mark for the first time.

Source: University of Michigan

Hinesh Patel, portfolio manager, Quilter Investors.

Important informationPast performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter Investors Limited (“Quilter Investors”), Millennium Bridge House, 2 Lambeth Hill, London, United Kingdom, EC4V 4AJ. Quilter Investors is authorised and regulated by the Financial Conduct Authority.

This communication is for information purposes only. Nothing in this communication constitutes financial, professional or investment advice or a personal recommendation. This communication should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the document.

Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Quilter Investors as a result of using different assumptions and criteria.

Quilter Investors is not licensed or regulated by the Monetary Authority of Singapore (“MAS”) in Singapore. This document has not been reviewed by MAS.

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Primark separates ABF from the bread lineAssociated British Foods (ABF) saw its share price gain almost 8% on Thursday last week after it reported better than expected sales by Primark over the Christmas period.

The share price had slumped towards the end of the year after Primark acknowledged it had a “challenging” November and some predicted the decline could continue over the festive period.

Instead, ABF said UK sales in the Christmas period had “exceeded our expectations” with a 4% rise in the 16 weeks to 5 January helping Primark to grow its share of the UK clothing market. As a result, ABF hit its full-year earnings guidance, reporting revenue growth in the Christmas quarter in all its businesses except sugar.

Credit: Heiko Küverling/iStock

Business conditions expected during the next 12 months

Lowest in more than four years

Trump elected

Optimism plummets