Summer 2019 stocks and shares round-up

Merryn Somerset Webb / 27 November 2019

Interested in what's out there on the stock market? Merryn shares her thoughts

Agritech – the future of farming?

One industry that has been little disrupted over the past 30 years has been agriculture. But that is changing now. Our industrial farming methods and tendency to use bigger machines and more pesticides have led to: stagnant yield growth; degraded soil health; and a nasty contribution to global greenhouse gas (GHG) emissions.

Enter agritech, a newly named sector that covers everything from productivity-enhancing apps (telling you when conditions are best to plant, for example); precision farming (sensors indicating where to water); ripeness sensitive harvesting robots; gene editing technology; and electronic weed-zapping devices. The hope is these might increase yields, cut the environmentally damaging use of pesticides and, crucially, reduce the sector’s GHG emissions without us having to cut down on our calorie intake!

Why low valuations could be the way to go

Almost all long-term studies of investment will tell you the same thing – that the best strategy for making money long term is to buy stocks trading on low valuations and hold them until that changes. That means looking for a low price to earnings ratio (the share price divided by the earnings per share) or a low price to book ratio (share price divided by the tangible assets owned by the company per share).

This hasn’t worked as well as it should have over the past few years – all the more reason, say the historians, to think that it will soon start to work very well indeed. With that in mind, look to the recently launched AVI Japan Opportunity Trust. It’s a small fund with a short track record, but Japan is one of the few countries left with an abundance of cheap equities and this fund is one of the very few interested in looking for them. One to buy and hold.

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Could you boost your yields?

Bad news: we are living in a low-growth, low-interest environment. Look for a good savings account and you’ll be lucky to find one paying you 1%. Good news: that doesn’t mean you have to accept a low or falling income from your investments. Look to the world of investment trusts and you will find four – City of London, Caledonia Investments, Bankers Investment Trust and Alliance Trust – that have increased their dividend payouts every year for 50 plus years. All four remain perfectly good investments today: the City of London trust yields an attractive 4.5% for example and Caledonia, while it has a lower yield (2%), has shown impressive capital gains over the past five years.

However, if you are looking for something a tad newer to the scene, you might try the Troy Growth & Income Trust. It is quite small but yields 3.3% and has a straightforward portfolio filled with the kind of defensive dividend paying firms one would expect to still be churning out cash another 50 years from now.

Merryn Somerset Webb is editor-in-chief of Money Week. Her views are personal: always seek professional advice

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The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.