In a decision that was widely anticipated, the BoE increased the UK's benchmark rate to 4%. Below is a quick summary of it with included commentary.

In a decision that was widely anticipated, the Bank of England increased the UK's benchmark rate to 4%. Below is a quick summary of it with included commentary about the Federal Reserve's decision from last night further below.

However, investment is designed to be a long-term endeavour. With their minute-by-minute charts and stress-shortened lifespans, day traders can certainly second-guess Jerome Powell and Andrew Bailey, but a better bet is to either simply track the market for the least amount of money possible, or if taking a slightly more aggressive approach, try to buy assets when they're cheap.

The amount of contempt an asset gains is one sign that a place is a good place to look for inexpensive assets. On that note, the UK continues to perform quite well — not quite as well as at some moments last year, but still far into "disliked" territory.

According to the Investment Association, ordinary investors in the UK—such as retail clients—withdrew $25.7 billion from funds in 2017. That was the first-ever yearly "outflow". There was a net inflow of £4.2 billion even in 2008. Additionally, UK equities funds were the most affected, Laith Khalaf of AJ Bell noted, with "£12bn in withdrawals."

Dividends Return

Simply put, for UK equities, last year was just another terrible one. However, from a critical perspective, that implies that opinions have a lot of space to grow. The good news is that there are several possibilities for it to occur this year.

As per Stifel's report, UK stocks have been a good investment in the year leading up to January 30—at least in comparison to the rest of the globe. Many international stock markets have been outperformed by the returns of +2.0% on the FTSE All Share and +4.3% on the FTSE 100.

Let's be clear: It is not an inflation-beating return. However, it still performed better than the US S&P 500, which decreased 1.8% in pounds and more than 9% in dollars. Even higher, at 8% for the FTSE 100 and 5.6% for the All-Share if dividends are taken into account.

This generally respectable result may reignite investor interest in the UK.

In this instance, the Stifel study concentrates on UK equities income investment trusts. “We believe that the vast majority of UK equities income trusts are well situated to gain if the UK stock market continues to perform strongly in the upcoming year.”

The difference between "growth" and "value" companies is most easily distinguished by the fact that growth stocks prefer not to provide income today since they are all about making investments for a really exciting future.

Value stocks currently place a greater emphasis on money and cash flow and are more often situated within "boring" or recognised industries. Therefore, dividends may wind up accounting for a far larger portion of returns than capital gains.

The Association of Investment Companies reports that there are 22 investment trusts in the UK equity income market. They trade at about a 3% discount to net asset value on average and provide dividend yields of close to 4%.

Every investor should conduct their own research as usual. Leverage is something to be cautious of with investment trusts; these trusts are permitted to "gear up" by as much as 20% in order to increase returns.

Investors should also understand where the dividends are generated. They are in fact returns from the capital, even if they aren't necessarily paid from current dividend income. Therefore, it's critical to understand that, even if a high yield may be sustained for a while, it must be paid for in some other way.

(bloomberg.com, stifel.com, AJbell.co.uk, theia.org)