Taras Rybak

UK Economic Assessment: May 2024 1. Probabilities of Recession The UK economy is currently navigating a delicate path. The British Chambers of Commerce (BCC) reports that the UK experienced a (mild) technical recession in the latter half of 2023, marked by two consecutive quarters of negative growth. The BCC anticipates modest growth for 2024 and 2025, at 0.5% and 0.7% respectively, with a slight improvement to 1.0% by 2026​ (British Chambers of Commerce)​​ (Welcome to ICAEW.com)​. Despite these positive projections, the overall growth outlook remains subdued, with persistent global economic headwinds and internal economic challenges. 2. International Trade UK trade dynamics are challenging. The country's trade performance has been hampered by global uncertainties and internal economic adjustments post-Brexit. According to the latest forecasts, UK exports are expected to decline by 1.3% in 2024 before rebounding slightly in subsequent years. Imports are projected to remain weak due to the relatively tepid domestic economic environment​ (British Chambers of Commerce)​. Furthermore, ongoing geopolitical tensions, including conflicts in Europe and the Middle East, continue to impact trade flows. 3. Trade with the EU The introduction of new trade barriers post-Brexit has complicated trade relationships, leading to reduced export performance. The EY Regional Economic Forecast highlights that these barriers, alongside subdued global demand, are expected to constrain trade growth. The ongoing negotiations and adaptations in trade policies will be crucial in shaping future trade dynamics between the UK and the EU​ (EY US)​. 4. UK Unemployment Trends The UK's labor market shows a mixed picture. While employment is set to grow by an average of 1.1% annually from 2024 to 2027, regional disparities persist. London and the South East are forecast to lead in employment growth, whereas other regions, particularly in the North and Wales, are expected to lag behind. Despite these challenges, average earnings are projected to rise, outpacing inflation over the next few years​ (British Chambers of Commerce)​. 5. GDP Trends UK GDP will slowly grow; a meager growth of 0.1% in 2023, GDP is forecasted to grow 0.5% in 2024 and 0.7% in 2025, with improvement to 1.0% by 2026. This sluggish growth is driven by weak consumer spending, inflation, and cautious business investments​ (British Chambers of Commerce)​​ (Welcome to ICAEW.com)​. The National Institute of Economic and Social Research (NIESR) notes that while inflation is expected to ease, core inflation remains stubbornly high, dampening economic recovery efforts​​. Conclusion The UK economy is facing a cautious recovery phase with modest growth prospects. The risk of recession remains. Trade challenges, particularly with the EU, continue to impact economic performance. Strategic policy measures and sustained international cooperation will be pivotal in steering the UK towards a more robust economic future.

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Zapaygo is just the latest example of why the UK's Insolvency system is unfit for purpose. Founded by serial failure Elliot Hall, Zapaygo took £500k off Crowdcube investors and £5m off British Business Bank via a Future Fund loan. Various others investors also wasted their cash. From the outset it was clear to anyone with any business sense and experience that this was a joke outfit. Elliot was a joke as was his team of mincers. They had a 'contract' with the NEC Group which if it had been of any commercial value would have let them build their business. But it was mainly smoke and mirrors and never produced a penny. In fact despite the huge valuation given to the company (by Elliot), this risible shambles never turned over more than few pennies. It never functioned and is now in liquidation although as you will see below, even this has been farcical. In January 2023 - so almost 2 years ago, the filing at Companies House stated Order of the Court to wind up. But nothing has happned since. The company has been in limbo for more than 3 years. Elliot Hall who has a lot of questions to answer about where all the cash went, has been let off and is as we write starting up some new nonsense again. The last filed accounts if they are to be believed, showed current creditors of over £10m for a company with a revenue of £24k. Losses for that year were £1.6m and apparently the company employed 14 people. What were they doing? Back when Elliot was taking cash off investors via Crowdcube, we wrote about this company revealing some uncomfortable truths about the NEC 'contract' and the use of passing off by Elliot to fool investors. Elliot set his lawyers onto us very quickly and we were obliged to withdraw our articles and all mention of Elliot and Zapaygo or face legal action. The investment was a success as a result. We were quite sure we were right but the risk was too great at the time. Now it appears that the legal firm was also in on the game; which is worrying! We contacted them but they have refused to comment. It is a huge mess - one that involved millions of pounds and many millions of pounds of UK taxpayers cash. So why is it in limbo? Why isnt Elliot facing charges? Why hasnt he been banned as a Company Director? What the hell is going on? We are told that Elliot has tried to erase this experience from his LI page - you couldnt make it up mate 🤣

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IMPENDING ECONOMIC “BOOM” Based on the article from Kyiv Post (https://lnkd.in/eh8hXWfT), several factors are contributing to destabilisation and erosion of russia's economy: 1. Hidden inflation: Official reports from the Kremlin claim inflation rates of 7.2-8%, but independent analyses, such as those by the US prof. Steve Hanke, suggest the real inflation rate is closer to 27%. This significant underreporting of inflation indicates economic mismanagement and potential instability. 2. Labor Shortages: The war in Ukraine and the deportation of Central Asian migrant workers have led to a severe labor shortage in russia. This shortage is exacerbated by extremely low unemployment rates, which are causing inflation to overheat. Additionally, the ongoing conflict has resulted in a brain drain, with many skilled professionals leaving the country. 3. Unreliable Partnership with China: While China and russia share a common ideological stance against the West, China's economic interests and reputational concerns make it in a medium perspective an unreliable partner for kremlin. China's economy is heavily dependent on trade with the West. And Beijing is wary of potential economic consequences if it provides too much support to moscow. Furthermore, China's public opinion and peace mediation efforts also limit its willingness to fully and unconditionally back russia. 4. Military Focus and Economic Neglect: russia's economy has increasingly focused on military production at the expense of other sectors. This dramatic shift has led to a decline in the production of consumer goods and a deterioration in the quality of life for the general masses. The inability to leverage its larger population for military advantage without risking domestic unrest further complicates the situation. 5. Sanctions and Trade Restrictions: International sanctions have severely impacted Russia's financial resources and restricted the export of high-tech goods and components, affecting key manufacturing sectors like automotive and electronics. The need to replace Western imports with lower-quality alternatives has led to inefficiencies and a decline in the quality of goods available in the market. 6. Energy and Budget Deficit: EU's embargo on Russian oil and the G7's price cap on Russian crude oil have significantly reduced Russia's energy revenues, which constitute a substantial share in its federal tax income. This reduction in revenue has led to a widening budget deficit, forcing the government to sharply cut spending in other critical social sectors such as healthcare. 7. Geopolitical Isolation: Broad international condemnation and isolation have limited Russia's ability to engage in global trade and finance, further constraining its economic growth. As American economist Alexander Lugovskyy, stated, "The next major economic shock could be the last one for russia”. Godspeed!

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Scrap AiM? Things are really hotting up in the war of words over London's junior market. "The UK’s capital markets are “not fit for purpose” and require “radical surgery”, the report from the Tony Blair Institute for Global Change and the centre-right think-tank Onward said." “Aim has failed in its stated purpose of providing a home for scaling businesses. It should be fully merged with the LSE’s main market, with a special route to listing specifically for high-growth firms in emerging technology sectors. Sorry to say, but I believe that is also wrong and it's not AiM's fault. The solutions put forward are always structural, like merging AiM with LSE makes it all better. The reason that companies are not going to AiM is that it is expensive and the reason that investors are not interested is because it's boring and has been engineered by the regulators to be so. Let's say you start a brokerage to specialise in AiM Securities because you and your investors are passionate about UK businesses and they have a risk tolerance. Firstly you will have to plaster your website with risk warnings about the hideous dangers that lurk in these horrible little businesses... and that, more than likely, you will lose all of your money. Then, when something inevitably happens with one of these small businesses (which is the nature of trading in small businesses), something the management has done but is nothing to do with you.....you will spend months justifying why you allowed people to invest in the business which was clearly a bad and dodgy business.. because the FCA have the greatest hindsight risk management tools you could imagine and will bring those to bear. ..and if they come for you as a Senior Manager you could be personally liable. So, my friend, would you build a business in the UK to allow people to bet on small UK businesses when you can just just take your coms from people trading Tesla? CEOs could not give a monkeys what you call the market, what the structure is or where it is frankly. They want the best deal for their shareholders in costs to list, cost of the ongoing compliance with regulations, liquidity and access to capital. Reforming the structure of UK markets is a start but it will not save them, reforming how people invest in them will. The reason AiM was great in 2006/2007 was that it was exciting. Shares going from 3p to 30p was not unusual. There was a community of investors ripping companies apart and building them up. Like it or not, risk capital is in competition with Crypto because crypto is more exciting. It is, of course, monumentally more risky, and one would have thought the FCA would prefer you gamble on a UK business swinging for the fences than a frog meme coin created by a kid 'for lols'? #AiM #LSE

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From a Cash Flow Returns On Investments point of view, the UK looks undervalued. These are the largest UK companies excluding Financials and Real Estate. Please feel free to contact me if you want a full breakdown of companies on the list. We also have a list for the UK small, over 1,100 of the largest US companies, and 500 of the largest companies in Europe. #investing #finance #assetmanagement #investmentmanagement

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UK Government Apologizes for Leaking Contact Details of Europe's Wealthiest Individual The UK government has acknowledged a significant blunder in which the personal email address of Bernard Arnault, the founder of luxury conglomerate LVMH and Europe’s wealthiest individual, was inadvertently disclosed. This incident occurred ahead of a pivotal investment summit aimed at attracting global investors to the UK. Key Details of the Incident Human Error: The Department for Business and Trade (DBT) attributed the leak to an "administrative human error." The email, which was sent to various summit participants, included Arnault's email address visible to all recipients, including executives from major banks and corporations. Official Apology: The DBT issued a public apology, emphasizing their commitment to data protection and confirming that the matter has been referred to the Information Commissioner’s Office (ICO) for review. Investment Summit Context: The summit, organized by Prime Minister Keir Starmer and Finance Minister Rachel Reeves, is set to begin in London on Monday. It aims to reassure investors about the UK's business environment amid concerns over high interest rates and regulatory challenges. Background on Bernard Arnault Profile: At 75 years old, Arnault has a storied career as a real estate investor and luxury brand revitalizer. He founded LVMH through the merger of Louis Vuitton and Moet Hennessy, which now boasts a market capitalization of approximately €325 billion ($355.6 billion) and oversees 75 luxury brands. Wealth Fluctuations: Following a decline in LVMH's share price earlier this year, Arnault's net worth fell from $231 billion to $177 billion. Currently, Forbes estimates his wealth at $195.5 billion, ranking him as the fifth richest person globally. #BernardArnault #UKGovernment #DataProtection #InvestmentSummit #LVMH #LuxuryBrands #BusinessNews #HumanError #EmailLeak #KeirStarmer #RachelReeves #Finance #CorporateGovernance #Runic24cafe #PrivacyBreach #EuropeanBusiness #RichestManInEurope #LuxuryMarket #WealthManagement #BusinessLeaders #InvestorRelations #SyndicateCapital #MazharPasha #EconomicGrowth #UKInvestment #DataPrivacy #InformationCommissioner

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The final rules on the UK Overseas Fund Regime are now out. Many are concentrating exclusively on the new application process, how much it will cost and how long it will take to obtain the recognition. There is clearly more to the new UK regime than the mere application for marketing authorisation.     Not as many are looking at the issue from a perspective of new awareness. We are used to think of the UK as part of Europe. This is no longer the case after Brexit. European recognised funds will now compete against local UK funds, which are governed by different rules and offer different and more comprehensive investor protection.     Key to success in distributing and selling EU recognised funds in the UK going forward is linked to understanding these differences.    We have packed the latest regulatory intelligence on how selling EU funds in the UK has changed under the UK Overseas Fund Regime. Available on Substack: https://lnkd.in/eqv3kWQF #UK #OFR #FCA #OverseasFundRegime #Brexit #BrexitNews

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Equity Distributions with High Cash Flow CLO Equity is having another stellar year. Reported IRRs for CLO Equity: ~15% YTD for many of the top CLO managers. CLOs start with a warehouse line allowing CLO managers to accumulate/ramp their BSL portfolio of performing & highly diversified loans (~200 BSLs when CLO is priced). The most favorable CLO warehouse lines have non-marked-to-market facilities with roughly 4x leverage. Bank facilities provided with favorable terms are about SOFR +125 to +150bp range. During the warehouse ramp, equity seeks to earn 20-30% IRR, but this can vary widely, however it’s for a short period (~3 – 6 months), so the MOIC is low as it’s just a component that drives the overall CLO equity return. The BSL market is performing well. I expect the credit markets to perform well in this environment with default rates for BSL declining in the coming year, which should prove positive for CLOs debt and equity. AAA CLO tranches represent about 60% of the CLO cap stack and AAA’s have tightened to ~+130 from its wide earlier this year of S+150. The CLO equity arb is driven by the difference between the rate earned on the BSL portfolio vs. the liability costs (and admin costs). Holding all things constant, tighter liability costs are accretive for CLO equity investors. Credit selection and asset management is critical to performance as the best CLO managers employ dedicated teams of investment professional’s expert in loan underwriting, building, and managing highly diversified CLO portfolios. Strong credit profile is key to maintain low default rates, and its best to avoid CCCs, as mitigating risk is critical to performance. CLO equity also benefits from reinvestment during the investment period, active management that can add alpha via relative value, and repricing/extensions of CLO liabilities later in the CLO life span. CLO equity holders earn strong current cash distributions for well performing deals, with the potential to earn mid-teens IRRs, strong DPI and MOICs. The added kick is when the CLO manager shares a portion (10-20%) of its management fees they earn from managing the CLO (~40 bps) with the CLO equity investors. This fee sharing arrangement was first introduced post-GFC when CLO managers raised CLO equity funds required under risk-retention requirements as The Volcker Rule was introduced. Since the Volker rule no longer applies to U.S. CLOs, fee sharing arrangements are less prevalent today, but available from select managers. For these reasons and more, I am a proponent of CLO Equity and believe there is a place within in broader portfolio to hold these high yielding assets. Big shout out to Marathon Asset Management's CLO team who just closed Bryant Park 2024-24, a $405M CLO yesterday, bringing Marathon’s CLO capital market transactions to $2.4B YTD.

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       Brexit is having “profound and ongoing stifling effects” on goods trade between the United Kingdom and the European Union, according to a new report that adds to evidence of the economic damage wrought by Britain’s exit from the world’s largest trading bloc. Researchers at Aston University in England estimated that between 2021 and 2023, annual UK exports of goods to the EU were 17% lower than they would have been had Brexit never happened. Exports in most sectors have decreased since 2021, according to the report. “The study highlights that the negative impacts of (Brexit) have intensified over time, with 2023 showing more pronounced trade declines than previous years,” the researchers wrote in the paper published Tuesday.   #Selfgoal #brexit #EU #Trade https://lnkd.in/d3kXfNrU

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**Politicians are excellent at just one thing: digging financial black holes.** 💣 Just read an article about Labour's planned unveiling of a staggering £20bn black hole in VAT revenues, which could hit businesses like a ton of bricks. 😱 Here's the harsh truth: governments keep changing tax policies, and businesses are left scrambling to adapt. This isn't just a nightmare; it's a reality with a severe ripple effect on economic stability and business planning. So, what should you do? Well, staying ahead with prompt financial analysis is non-negotiable. Imagine your business navigating these murky waters without the right tools and insights! Absolutely terrifying, right? Let me paint a picture for you—companies using Finotor, an accounting and financial analysis software, can run instant VAT impact simulations to adapt their strategies efficiently. 📊💡 When policies shift like sand, tools like Finotor become your solid ground. Want some actionable tips? 1️⃣ **Stay Updated:** Subscribe to reliable financial news sources. Ignorance isn't bliss when it comes to VAT changes. 2️⃣ **Invest in Tools:** Use robust accounting and financial analysis software like Finotor to forecast the impact of policy shifts. 3️⃣ **Consult Experts:** Get professional advice to interpret and act on financial developments. The stakes are too high for guesswork. Remember, being unprepared is not an option. Equip yourself with the tools and knowledge required to navigate these turbulent financial times. Let’s not allow political maneuvers to sink our ships! ⛵️🌊 Franck BRUNET ---------------------- Liked this post? Want to see more? Ring it on my profil 🔔 Connect with me 🔝 Follow me : #franckbrunet #finotor

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Forex up 6000% in 10 years ? Can we do that at Stały Kurs ?

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UK investor sentiment bounces back with first positive inflows in a year: CityAM reported on update from the Investment Association, which showed UK investor sentiment bounced back in March. Inflows of £446M recorded, the first inflow to the fund market since April, and followed outflows of £2.7B in February. However, appetite for UK-focused funds remained poor. Net £1.3B withdrawn from UK compared with £753M going into global-focused funds and £654M going into US. Biggest inflows went into fixed income with £809M invested, though Investment Association highlighted signs allocations may be starting to plateau as investors anticipate rate cuts and other asset classes gain in popularity. Data like findings from Calastone, which showed UK investors placing a record amount into equity funds in Q1 but continued to shun UK stocks. Volumes into UK markets continue to struggle from drip feed of negative news. Recent decision by Flutter to favor primary US listing has received attention. London Times highlighted ongoing concerns that oil major Shell could also shift primary listing to New York. However, some thoughts also UK stocks might benefit in "higher-for-longer" world on shift to value stocks (Bloomberg).

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The British economy is playing a game of financial roulette, and the odds aren't in our favor. 🎲💥 The article "Labour has left Britain just one shock from financial disaster" raises some serious concerns. The vulnerability of our current economic infrastructure is unsettling—one unexpected downturn, and we might face a chain reaction we aren't ready for. Just like playing a high-stakes poker game with no backup plan, this situation feels like an invitation for disaster. In today's fast-paced world, being proactive isn't just advantageous—it's crucial. Falling behind means one missed critical insight could spell doom. Whether it's keeping a close eye on financial health using tools like Finotor or diversifying investments, a robust strategy is essential to navigate potential turbulence. But here's the real talk: Are we collectively doing enough to safeguard what's ours? Every entrepreneur, professional, and leader must ask themselves—are you prepared to weather the storm? Let's use the power of community and relentless innovation to not just survive but thrive in the face of economic uncertainty. 💪🌍 Have your strategies in place? Let's hear them! Share your thoughts 👇 Stay prepared and keep thriving! 🚀 Franck BRUNET ---------------------- Liked this post? Want to see more? Ring it on my profile 🔔 Connect with me 🔝 Follow me: #franckbrunet #finotor

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Distorted Election Results Will Embolden the Right: On 7th May 2015 David Cameron found himself the unexpected and outright winner of the UK General Election. In his celebratory speech he derived great pleasure in mocking Nigel Farage, then leader of UKIP, for the fact that his party won a derisory one seat in the House of Commons. The error of judgement Cameron made on the steps of Downing Street in May 2015 is one that Kier Starmer will almost certainly repeat on 5th July and that is to ignore the fact that the first past the post electoral system does not accurately reflect the preferences of the British people. In the May 2015 General Election, UKIP won 3,881,099 votes, equating to 12.6% of total votes. The SNP won 1,454,436, or 4.7% of the vote and gained a staggering 56 seats in Parliament. Cameron’s Tory party won 331 seats but won only three times as many votes as UKIP. By ridiculing Farage, Cameron effectively disenfranchised 12.6% of the electorate, making it clear their concerns would not be represented by his government. It was Farage and his supporters who had the last laugh a year later when the Leave campaign won the Brexit referendum, Cameron resigned as leader of the Conservative Party and the country was engulfed by eight years of Tory infighting. Forecasts suggest Labour could now win anything from 406 to 513 seats on 4th July, giving them a staggering majority over the Conservative party, with potentially profound repercussions for national cohesion. An Ipsos poll indicates that combined, Reform and the Conservatives are on course to win 37% of the vote, the Liberal Democrats 10% and Labour 43%.The majority of the electorate will not vote for Labour, but the party is expected to dominate Parliament. How then, is this representative of the will of the people? Obviously, it isn’t. It is demonstrative of the flaws in a first past the post system that are being accentuated by the move towards multi-party politics. Underrepresented, the right will seize the opportunity to attack the Labour government from day one. Farage, irrespective of whether he wins in Clacton, will be de facto leader of the ‘opposition’. Given that he has more charisma than the other party leaders combined and a personal support base of millions, he will be more impactful than any number of opposition MPs. At a time when the UK needs a government with majority support to deal with the challenges confronting the nation, we will instead find ourselves with a leader who is not magnanimous in victory and takes the country in a direction the majority of the electorate do not want to go. This is compounded by an election campaign devoid of democratic content. Neither party is being honest about the challenges that confront the economy and the trade-offs that will be made to manage them, will exacerbate the divide. The Brexit referendum was a failed attempt to marginalise the right. The distorted outcome of the 2024 election is likely to empower them still further.

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Euro / Dollar tug of war continues EURUSD took a tumble at the start of the month, dropping from 1.12 to 1.0950, falling from grace like a certain UK Labour party member. Comments from Jerome Powell softened the recent belief that more aggressive cuts from the FED were still a possibility this year. As the FED chair hinted that the central bank was in no hurry to cut rates too quickly, and would be guided by the data, the Dollar started to pressure the recently dominant Euro. With inflation in the Eurozone falling recently as well, bets on further rate cuts from the ECB have started to increase, taking away some of the power the Euro had been asserting against the Greenback lately and fueling speculation on what’s to come from the ECB next. With the ECB’s latest interest rate decision just 10 days away market gossip between now and then will likely drive EURUSD’s next move. This, combined with US election uncertainty and FED member comments on their next decision, could lead to a choppy few weeks ahead. #forex hashtag#markets hashtag#gbpeur hashtag#eurusd hashtag#kierstamer hashtag#currency

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** This is not Financial Advice, so do your own due diligence ** History repeats itself. Dont believe me? well here is my proof. CIEN just reported FY2Q24 results and offered a relative soft FY3Q24 guide but reiterated an essentially in-line FY24 guide, which implies a significant 25+% Q/Q growth in FY4Q24. Investors like sheep, are worried about the steep ramp implied in FY4Q guidance and the stock has given up its almost 10% early gains. But here is the thing, its Deja vu time, history is repeating itself. This has exactly been the setup over the past three years. Reminds me of that Bill Murray movie the "Ground Hog Day". For the last three years, the setup for CIEN has been massive 2H ramp over 1H, in particular in the FY4Q. And like clockwork, CIEN delivers on its 4Q boggie and the stock rockets up 10-15+%. I suspect we will see this cycle repeat itself, again! Telecom is a long-duration market, operators have multi-year projects that dont just stop and start again on a dime. Macro overhang will continue but we will be 6 months closer to actual stimulus dollars flowing through. I often struggle why investors don't read history and if they do, then why fail to remember its lessons?

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Great reporting by Ed Conway and Sky News on transshipment to Russia through Central Asia! I wrote about this recently, showing with Q2 data that the trend is only getting worse.. Read here: https://lnkd.in/drR_fwR2

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There's interesting analysis in the Telegraph of a £4.7bn takeover offer from Abu Dhabi-led consortium for Hargreaves Lansdown. HL was a big success story for decades. But competition from cheaper rivals and reputational damage resulting from the Woodford scandal have weighed heavily. For me, the company faces two big problems. First, the fees its charges are unsustainably high (its 0.45% platform fee especially). But secondly, and more importantly, its USP — the notion that it can identify, in advance, the star fund managers of the future — has been shown to be an illusion. HL has the potential to be a force for good in UK financial services.. But it has to go back to the drawing board first. #Investing #FinancialAdvice #AssetManagement https://lnkd.in/eiD2cn9X

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