A decade is a long time in investment, points out Tigue

As we enter a new decade, the one thing we can be certain of is that no-one can really tell what it will hold for investors.

At the end of 1999, the FTSE 100 index had reached an all-time high of nearly 7000 points and all the talk was of the ‘new paradigm' of internet and technology stocks. But as Jeremy Tigue, manager of Foreign & Colonial Investment Trust, points out, things did not play out exactly according to the script.

"The internet has changed the world, as it was forecast to do, but in technological change the benefits tend to go to the consumer rather than the manufacturer," he says, pointing out that the huge improvements in productivity both at home and at work have not translated into the untold riches investors in tech companies were led to expect. "If you look at the technologies of the last decade, 10 years ago Google was in its infancy, and there was no iPod, no BlackBerry, no smartphones - all things we take for granted now. There will be as much technological change in the next 10 years as there has been in the last, and many of the most successful companies probably haven't been started yet."

In fact the overriding theme of the last 10 years turned out to be emerging markets, which will probably continue to dominate the investment landscape in the next few years, though, as Tigue pointed out before Christmas, most of the easy money has probably been made and the path from here is unlikely to be smooth.

The ‘noughties' may have been a lost decade in terms of stockmarket capital values, particularly in the UK, where 2009 ended with the FTSE 100 Index at 5412.88, more than 1,500 points lower than 10 years earlier. But as Tigue points out, reinvestment of income has meant investors have actually made money in many cases. Foreign & Colonial, which invests globally in a broad portfolio of listed and private equity, has produced a total return of 34%over the decade, although its share price has remained broadly flat. (Figures to 31/12/09, source: Lipper.)

The focus on income could benefit investors in solid defensive sectors such as tobacco, utilities and pharmaceuticals, which also did well in the fallout from the tech bubble. However, Tigue says that although these stocks are cheap, they do not represent the same kind of compelling value they did a decade ago.

"When markets are euphoric, the only way is down, and when they are discounting Armageddon, as was the case in early 2009, the only way is up," says Tigue. "You make money by doing the opposite of the consensus. But at present the consensus is far from clear, so it will be interesting to see how the early part of this new decade pans out."