Here you go. Have another £25bn

The recent assurance from Gordon Brown that Britain will enter recovery by the end of this year looks more likely to materialise, after the Bank of England extended their quantitative easing (QE) programme by a further £25bn.

They have already spent £175bn on QE, effectively printing money to buy assets and improve the flow of money within the economy.

The announcement today means they will be spending another £25bn over the next three months. This is a slower rate of spending than before and could signal a gradual reduction in this stimulus.

QE is a potentially dangerous strategy.

Spend too much and we could get thrown into hyper-inflation as the money pumped into the system pushes up the overall cost of goods and services. Spend too little and Britain could continue to fall behind other world economies, remaining in a prolonged recession.

At face value the announcement made today seems fairly balanced and could signal the beginning of the end for the QE strategy. It will be interesting to read their minutes, when published, to get a bit more detail on the various views held by the Committee.

The other news from the Bank of England today was interest rates kept on hold at 0.5%. This was widely predicted and is the eighth month in a row they have remained at this historic low.

Putting all of your pension eggs in one basket

Diversification is an important part of investment success. Not putting all of your investment eggs in one basket is equally as relevant when looking at your pension fund.

It appears that nobody told the Church of England about this.

A report from consultant John Ralfe found that the Church of England pension scheme invested all of their assets in company shares (equities).

At face value this might look like a reasonable long term strategy. Equities are likely to deliver the best results of any investment asset class long term.

Short term, it can all turn into a bit of a nightmare.

By the end of last year the Church of England pension scheme had assets of £500m but a deficit of £360m.

In common with many other defined benefit (final salary) pension schemes, they will now have to face up to some very tough choices. The foolish investment strategy could result in them having to reduce benefits for members or increase the retirement age. It will almost certainly mean having to increase funding for the pension scheme.

The simple lesson? Diversification is good. Investing in a single asset class is (very) risky.

Another good month for house prices

October turned out to be another good month for house prices, with a 1.2% rise reported by Halifax.

This is the fourth monthly rise in average house prices as reported by Halifax. The average price of a house now stands at £165,528. This remains 4.7% lower than October last year.

The average UK house price has risen 2.9% since the end of 2008. They are now 7.1% higher than six months ago when prices reached a low in April 2009.

It appears to be a combination of factors driving up house prices. The slightly improved availability of mortgages is working together with a lack of supply in terms of property for sale. These factors could both continue to push up house prices over the next few months.

Higher house prices are generally bad news for first time buyers, making it even more of a challenge to get a foot on the property ladder.

Rising house prices do however result in an improved 'feel good factor' for existing property owners. Our houses are often are most valuable assets, so being told that the value of that asset is increasing each month can lead to greater consumer confidence; something our fragile economy desperately needs right now.

Market numbers: Friday 30th October 2009

The FTSE 100 index of leading UK company shares finished the week at 5,044.55, down 93.17 points or -1.81% on the day and down 198.02 points (-3.78%) over the week.

The index has risen from 4,434.20 since the start of 2009, a rise of 610.35 points or 13.77%. Over a year the FTSE 100 has risen from 4,291.60 (752.95 points or 17.55%).

£1 is currently worth $1.6447 US or €1.1164 Euros.

Brent Crude Oil Future is currently priced at $75.22/barrel. Gold is $1,040.00/ounce and Silver is $16.57/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 1.1% for the year to September 2009.

Are your savings suffering in a dog fund?

Informed Choice chartered financial planner Martin Bamford was quoted in the Independent today, in an article discussing the findings of the latest dog fund survey from discount broker Best Invest.

"The survey highlights a massive level of investor inertia," warns Martin Bamford, financial planner at Informed Choice.

"Performance is only one factor in selecting a suitable fund, but it is the easiest to measure. Fund selection can make a difference to overall returns, with the contribution it makes to a portfolio marginal compared to the importance of asset allocation. Hopefully, the research will prompt investors, and their advisers, to review existing fund holdings and ensure they remain suitable."

You can read the article in full here.

We publish our own regular survey of underperforming investment funds - the LemonAid survey. The latest version of this survey will be able within the next couple of weeks.

Catching the commercial property upswing

When investment markets fall in value, there is a real risk that investors will leave and then fail to return in time to catch the upswing.

Equity markets, corporate bonds and gold have all rallied sharply during 2009. The Nationwide House Price Index published today even suggests that residential property might post gains this year.

For investors who moved to cash or gilts when the markets were crashing, they may have been hit twice - by falling markets and then by missing out on the rallies.

Henderson New Star published an interesting briefing note for investment advisers this week, describing the position of the commercial property asset class. This is one investment asset class which has been reluctant to participate in any upturn.

In fact, UK commercial property moved into positive territory for the first time in August, posting gains of 0.2%. This was the first monthly gain for over two years. During September, UK commercial property prices generated an average gain of 1.1% (according to the Investment Property Databank).

Do two months worth of positive data in an investment asset class signal the start of a sustained rally or are they simply a blip?

UK commercial property prices have fallen by 44% over the past two years. Any investor with exposure to this asset class in isolation within an investment or pension portfolio will be feeling a great deal of pain.

The good news for investors is that demand for UK commercial property now appears to be improving.

This is due, in part, to weaker Sterling making the asset class look attractive to foreign investors. With the pound 21% weaker against the euro, it is now possible for a eurozone investor to buy a UK property for less than half of what it would have cost in euros two years earlier.

Confidence also appears to be returning. The latest survey from the Royal Institution of Chartered Surveyors found members more upbeat in the third quarter in respect of UK lettings and investment activity.

The returns from commercial property are a combination of income (the rental yield) and capital appreciation.

Lower capital values means reasonable looking yields, particularly in comparison to low interest rates available on cash and low levels of price inflation. Yields on UK commercial property are now back to where they were in the 1990s and higher than they were in the late 1980s.

With all this positive news, some challenges remain.

Getting access to UK commercial property remains difficult, particularly with the banks continuing their restrictive lending practices. One option is to invest through collective investment funds, but investors need to pick these carefully in terms of liquidity, geographical diversification and tenants.

Should you take your pension money now?

Informed Choice chartered financial planner Nick Bamford was quoted in an article in Money Mail yesterday, about people approaching retirement who have benefited from recent increases in investment values.

Talking about whether people near retirement should be debating further stockmarket rises, Nick said:

'The risks of markets dropping again are far greater than the risk of missing out on continued recovery.

'Ideally, these savers should have already switched into safe havens such as cash and bonds. For those still heavily exposed to the stock market, it's a no-brainer to take some of your pension now.'

You can read the article in full here.

FT New Breed Adviser Awards 2009

We are pleased to announce that Informed Choice Chartered Financial Planner Andrew Neligan has won Best Newcomer at the FT New Breed Adviser Awards 2009.

The award ceremony took place yesterday evening at the Sheraton Park Lane Hotel in London. Andrew received his award from BBC business presenter Declan Curry.

The New Breed Adviser Awards are designed to recognise best practice, innovation and service across the advisory community in the wealth management industry. The awards programme was focused on the achievements of the 'new breed of advisers' that are helping to shape the future of retail financial services in the UK.

Andrew was named Best Newcomer; the adviser who has made considerable achievements within the first two years of joining a firm.

Please join us in congratulating Andrew on this major award.

Personal Finance Society Retail Distribution Review (RDR) webcast

Informed Choice chief executive Nick Bamford is participating in a webcast from the Personal Finance Society (PFS) on Wednesday morning.

The webcast is one of a series exploring the different considerations for the forthcoming implementation of the Retail Distribution Review (RDR). This webcast will look specifically at the subject of Adviser Charging - the new fee-based approach to the payment for financial advice from the end of 2012.

Nick will be joined on the panel by Brett Davidson, Chief Executive, FP Advance and David Golder, Managing Director, IFA Services, Bankhall. The session will be chaired by Kevin Watkins, Director of UK Individual Business, Friends Provident.

You can find out more and register to watch the webcast live on Wednesday morning from 9am at http://www.thepfs.org/pages/memberservices/RDR/rdractionweek09.aspx.

Informed Choice responds to Retail Distribution Review (RDR) Consultation Paper

Informed Choice, the award-winning firm of Chartered Financial Planners, has today responded to the FSA Consultation Paper CP08/19 Distribution of Retail Investments: Delivering the Retail Distribution Review.

Within this response, we are broadly supportive of the proposals.

We agree that the range of products on offer is an important measure of 'independence', but go on to suggest that equally as important are independence of outcome and independence of ownership. In fact, it is the combination of these three factors which results in true independence and impartiality.

We encourage the FSA to introduce a mandatory written and verbal disclosure statement for all firms offering 'restricted' advice under the new regime. This will be important to ensure that restricted advisers do not resort to 'weasel words' in their description of non-independent services.

We are fully supportive of the proposals for Adviser Charging, and cite our own successful experience of introducing this remuneration model. We do ask the FSA to consider a highly transparent form of industry standard factoring for regular payment plans, to help ease the transition for those adviser caught in the old commission mindset.

Rather than establish a new Professional Standards Board with its own Code of Ethics, we ask the FSA to consider making membership of an existing professional body mandatory under the new regime. This would, in our opinion, prevent the introduction of an additional layer of cost and bureaucracy.

You can download and read our response in full at http://www.box.net/shared/r1nxfv20pr.