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The era of low nominal returns is slowly, but remorselessly, altering the the investment industry.
Building society investors were the first to be aware of the change back in 1993-1994, after Britain's withdrawal from the Exchange Rate Mechanism allowed the government to cut interest rates dramatically. Those savers who had enjoyed the heady days of 15 per cent base rates saw their interest income more than halve.
The rest of the savings industry has been slower to adjust. Equity markets took the fall in bond yields and short-term interest rates as an excuse to re-rate share prices in the late 1990s. The result was a bull market that culminated in the 1999-2000 dotcom mania.
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