CITY stalwart Brewin Dolphin today reported that funds under management have raced past £50 billion, as stock markets soar and new investors try share investing for the first time.
Wealth managers and investment platforms such as Hargreaves Lansdown are enjoying a boom as record amounts of cash flow into the stock market.
That’s a boost to City firms initially biffed by Covid-19, but has prompted fears of a stock market bubble that could burst, hurting small investors unaware of how much risk they are taking.
Today Brewin said funds are up 8% to £51.4 billion in the last three months alone, thanks to strong investment performance and the arrival of new investors.
Since March the FTSE 100 has rallied more than 1500 points which in turn has sent pension funds and share ISAs surging.
Brewin, founded in 1762, launched an £8 million cost cutting programme as the pandemic emerged, but is now enjoying record results. Income was up 7% to £96 million.
Chief executive Robin Beer said: “With a Brexit trade deal behind us and the rollout of vaccinations in the UK, market sentiment is starting to improve and we look forward to benefitting from this recovery over the coming year.”
In America, there is something close to a share frenzy underway as investors bet big on tech stocks, Tesla and bitcoin.
Yesterday video game retailer GameStop surged 50% with retail punters taking delight in squeezing market professionals who had been betting against the stock.
AJ Bell investment director Russ Mould said: “Amateur investors on social media platform Reddit are engaged in a battle with hedge funds which are shorting GameStop (and several other stocks including Blackberry and Virgin Galactic) raising fears about a bubble in the markets given these stocks are being backed on little tangible news.”
This week Bank of America calculated that $255 billion has flooded into equities in the last three months.
The FT reports that there are 79 US companies whose shares have more than doubled in the last three months.
The Bespoke Investment Group has created the so-called “ludicrous index” to track the phenomenon. That index is at levels last seen just before the dotcom bubble burst twenty years ago.
Beer says Brewin’s job is to protect investors from such speculative booms.
He told the Standard. “When you look back through history there are always bubbles, shifting valuations. We need to take account of that, but it is not necessarily problematic.”
Beer says there are three types of investor coming to Brewin. Those over 55 planning for retirement; the same people investing money for grandchildren; and those between 30 and 50 who have more spare cash than before, but who are worried for their jobs due to Covid.
Brewin Dolphin shares today rose 9p to 305p.