2018 is well underway and the first few weeks of the year have seen record high levels of the FTSE 100 index, as well as the Dow Jones.
The main concern is whether this optimism is based upon solid foundations, or it is a bubble about to burst.
Within the UK there are lots of reasons for the buoyant markets. The weak Pound, especially against the Dollar and Euro, has certainly helped, as evidenced by increasing yields from the FTSE 100 companies.
There are though other positive stories, such as the pick-up in manufacturing productivity. This is arguably most encouraging as it shows the UK economy is moving forward and not totally reliant on exchange rates and overseas earnings.
The US continues to defy expectations as their financial markets buoyed by the relaxed taxation rules.
Looking ahead we are fairly realistic in that the main indices such as the FTSE 100 in the UK and the Dow Jones in the US, will ultimately suffer a correction and fall back from their highs.
But for our clients who hold truly diversified investments this isn’t a concern as their exposure is fairly modest.
The majority of our clients investments include numerous asset classes and funds which cover almost all geographies and sizes of companies, not just the largest 100 as in the FTSE 100 index.
The year ahead is looking encouraging for investors. Brexit negotiations continue and the media hype is unlikely to distract stock markets too much in 2018.
Investors holding a varied and well distributed portfolio will hopefully see steady growth even allowing for any short-term blips in the FTSE 100 or main US indices.
As with previous market updates, we encourage our clients to keep in touch.
Contact us should you have any queries or worries. Our team are always happy to have a chat. Whether it is a review driven by concerns in financial markets, a change in legislation or simply an alteration in your situation or priorities, please contact us.
In the past week, as we make our way through February, we have seen the corrections alluded to in the recent market update.
The positive news is that most pundits and investment managers consider this dip a short term blip and something which has been a long term coming as the US continues to strengthen as an economy.
This strengthening has an impact on potential interest rates and exchange rates, all of which have a knock on effect to stockmarket fluctuations.
Overall, longer term investment opportunities continue to present themselves and investors with balanced portfolios could benefit from the recent volatility.
As the evenings close in and leaves start to fall, it’s time to take brief look at the past and future months.
Most surprising is how little financial markets and the world situation has changed over the past few months.
The media has been full of stories of political infighting, stalling Brexit negotiations and certain world leaders attempting to outdo each other in posturing and false propaganda.
Despite all these recognized risks, the wider economy, both at home and overseas, has settled down. GDP figures have shown growth, and stock markets have continued their steady run.
The UK’s main index, the FTSE 100, recently had a slight wobble when exchange rates changed and Sterling strengthened against most currencies.
This improvement in exchange rates has been driven by the economic data and, in part, due to the announcement by the Governor of the Bank of England, Mark Carney, that they foresee a slight interest rate rise in the future.
Thankfully, the wobble was short lived and the main UK indices reasserted themselves. This is largely due to Mark Carney’s announcements not being unexpected, but also due to the strong position many UK companies are still seen as being in.
Given the record of the previous months we do not see substantial changes ahead in the short-term.
It seems unlikely that Brexit negotiations will resolve themselves in the next few months, nor do we anticipate many surprise changes in the upcoming budget.
That said, it is important to be vigilant and we will continue to look out for risks to our clients’ portfolios. Equally, we will watch for any announcements by the Chancellor of the Exchequer, Phillip Hammond, in the run up to the budget announcement.
As with previous market updates, we remain focused on diversity. With most clients, we continue to build portfolio’s including all sorts of asset types within investments including equities, property, fixed interest, absolute return funds, and, most recently, infrastructure funds.
Long term we are confident clients will see real growth in the portfolio’s. Similarly, clients taking natural income should see their regular withdrawals continue in a sustainable manner.
As always, Platinum is happy to discuss matters with clients. Whether it is a review driven by concerns in financial markets, a change in legislation or simply an alteration in your situation or priorities, please contact us.
As we reflect on the three months since our last market update, ‘unpredictability’ seems to be a continuing theme.
Within three months, it seems that politically we have moved from what many foresaw as a clear direction, to having a snap General election and politicians learning that the UK electorate is not afraid to voice their opinion.
The overriding theme seems to be that whilst Brexit continues, many feel that ‘austerity’ needs to be slowed or even ended.
Despite the media’s portrayal of this being unprecedented, many of the arguments are very familiar and well established. It has always been a balance of economic and social goals.
From an investors perspective, the unique situation is how we extricate ourselves from Europe, our productivity in terms of GDP as a country, plus the ongoing period of low interest rates.
This has a direct impact on how global markets view the UK and as a result our currency exchange rates continue to fluctuate. At the moment, the slightest change has a direct impact on the FTSE indices.
Yet despite these concerns the UK and global equity markets have been fairly steady. Overall the year to date has been one of steadiness. Clients have seen their portfolio valuations rising steadily.
Looking ahead, most pundits are in agreement. In the short term, the UK looks as though it is going to have some volatility politically, but most foresee opportunities for investors over the longer term and most global investors are looking at equity investments as being a good opportunity.
Overall, we agree with this positive outlook and remain focused on what is described as a ‘value’ investment strategy.
That said we are equally focused on diversity and with most clients, we continue to build portfolio’s including all sorts of asset types within investments including property, fixed interest, absolute return funds, and, most recently, infrastructure funds.
Long term we are confident clients will see real growth in the portfolio’s.
As always, do not hesitate to get in touch with Platinum, and our team, if you would like to discuss your investment strategy or if you have any concerns.
Theresa May’s decision to call a snap election, initially felt like an attempt to throw a stone in the relatively calm ‘investment’ pond, as markets have had an unparalleled and unexpected period of low volatility and positive market growth.
Yet the sudden announcement didn’t create the feared market turmoil. Rather markets settled down and Sterling strengthened as a currency.
The main reason being financial markets, around the globe, saw the announcement as an opportunity for more stability and predictability.
On listening to and reading the various market updates from investment houses, they’re united in their view that Brexit could still create ups and downs for investors, yet the opportunity for a clear political direction for the upcoming five years is very welcome.
Plus, the various polls showing the Conservative’s should be in a strong position to negotiate with the EU over Brexit is also perceived as a stable and predictable outcome.
Equally, the French election has now been settled and reasserted some stability in Europe.
As always, we would add that very little is 100% predictable in life therefore there is still cause to consider all options. For our clients, we consistently look to ensure they’re diversified across various sectors, asset classes and geography.
Our aim is always to take advantage of investment growth opportunities yet being prudent to hopefully protect against harsh stock market falls. That objective seems more pertinent at the moment as ever.
Only a year ago, our April 2016 market update was looking ahead at the referendum. Now Brexit is officially underway.
From a financial aspect, probably the greatest surprise for all pundits and financial managers is how consistent and bullish markets have been over the past 12 months.
On the build up to last year’s referendum, markets dipped, but since then there has been positive growth.
Earlier in the year, the US election looked to derail the growth, but once again pundits were caught out.
The market correction has failed to materialize, and the main indices have had 3 months of what is near record levels of low volatility whilst also surpassing previous market highs.
Where now is the key question?
As a result of the low volatility and a reasonable level of encouraging data, there is an air of optimism, despite the upcoming negotiations with Europe.
From an asset allocation basis, property continues to offer steady, if unspectacular, returns.
Fixed interest, such as gilts and corporate bonds, remain muted and are less favoured despite being an almost essential constituent of everyone’s portfolios. Equally absolute return funds, continue to offer the hedge or potential cushion if markets do take a surprising turn.
Equities remain the focus of most investment portfolios.
On a global view the US is still offering great opportunities as their economy looks to be moving into a growth phase. Other global markets are similar.
Regarding the UK and Europe there is an understandable wariness. Within both regions, it is important to focus on actively managed funds who make their investment choices based upon fundamentals rather than simply following the herd.
This type of value investing is something we agree with and has been a constant theme in helping us manage our clients’ portfolios.
Overall, we are positive and thing the long-term view is encouraging. For our clients, we are also keeping an eye on the short-term and will continue to adjust portfolios and investments accordingly.
As always, do not hesitate to get in touch with Platinum, and our team, if you would like to discuss your investment strategy or if you have any concerns.
2016 was a torrid year dominated by political tensions, global changes and a rebuff of the status quo. Yet at the end of the year the main stock market indices maintained their surge and finished the year in positive territory.
As 2017 gets underway the FTSE 100 has again pushed its way upwards.
Despite this optimism, 2017 still looks like a challenging year for investors as Brexit negotiations continue, President Trump takes office and European countries face key elections.
Arguably one main reason for the FTSE 100 maintaining it’s high level is the strength of the pound. Whilst Sterling exchange rates remain poor compared to other currencies the larger companies look forward to greater profits which in turn boosts their share prices. Sterling though is likely to recover over the long term which would then put pressure on those same FTSE 100 firms.
That said, investors shouldn’t panic and the outlook need not be gloomy for diversified investors.
For example, the sustained period of low interest rates and exchange rates is helping the smaller companies, i.e. those outside the FTSE 100. These companies take some time to benefit from the economic conditions and this is slowly starting to filter through.
Equally other asset classes such as property continue to generate steady returns. Property can be a complicated investment, yet as a minor portion of any portfolio it is now showing ‘reliable’ returns in a very uncertain world.
There will also be some good opportunities arising for corporate bond investors, although the sector will continue to be punished in the short term by low interest rates and a weak pound.
Looking at the year ahead it is important not to get distracted by the media. We seem to be inundated with in-depth negative analysis of every slight comment and tweet.
Long term investors and financial markets will return to what is described as value investing, which is selecting investments based upon long term profitability and fundamentals.
This value style investing lends itself to a balanced investor who has a diversified portfolios of different asset classes and funds. Investors also benefit from selecting fund managers capable of picking out the quality investments rather than a scatter gun approach designed to follow the average index.
As always it is important to continue to review any investments on a regular basis. For our clients, we are constantly mindful of the pitfalls ahead and will help to alter your portfolios to benefit from future opportunities.
We look forward to helping review your plans. However, in the meantime, don’t hesitate to get in touch with Platinum if you would like to discuss your investment strategy or if you have any concerns.
After months of increasingly controversial and bitter campaigning, the 2016 US Presidential Election reached a dramatic climax, culminating in a surprise victory for Republican Party candidate Donald Trump. The Republican Party retained control of the US Senate and the House of Representatives. Generally, investors had been expecting a narrow victory for Democratic Party candidate Hillary Clinton; therefore, Trump’s unexpected victory initially threw markets off balance.
The price of oil fell and equity indices initially dropped in response to the news that Trump was the new President-elect, although their fall was generally less pronounced than it was in the wake of the Brexit vote in June. Then we saw markets make a swift recovery later that day.
A few days later and there still seems to be some uncertainty. Overall our client’s portfolio valuations have seen fluctuations but on average they have remained positive.
Looking at the short-term future, the rollercoaster ride looks as though it may continue. Especially as the UK’s Chancellor of the Exchequer, Philip Hammond, prepares his Autumn statement in a couple of weeks, shortly followed by the next meeting of the US Federal Reserve (Fed), in December, when policymakers decide whether to implement a rise in US interest rates. Overall though, our clients’ portfolios are very diversified and well positioned to ride out the uncertainty. Looking ahead, as the world heads further into uncharted territory, we would encourage investors to take a “wait-and-see” approach.
As the wind direction becomes clearer we will continue to ensure our clients are well positioned for the future.
As always we are here to help. Do not hesitate to contact us if you have any concerns or queries regarding your financial plans.
Brexit continues to claim the headlines. Yet, as mentioned in our previous quarterly update, it is not a doomsday. For every perceived negative, a positive arises.
The past few months have seen politicians re-iterate that they will abide by the Brexit vote, expecting to trigger the required Article 50 by April next year.
As an economy, the overriding desire is for a clear direction and stability above everything else. The announced deadline for triggering Article 50 has to be welcomed, along with the most recent announcement to adopt the current EU rules into UK legislation until such time as they can be reviewed; Both announcements clearly demonstrate momentum is building and, as such, give confidence to businesses and investors over the UK’s future outside the EU.
The fly in the ointment is exchange rates. The step towards Brexit has coincided with a dent in the value of Sterling on the world stage. The Pound has fallen in value against both the Euro and the US Dollar.
Whilst poor exchange rates aren’t the best thing for someone planning a holiday overseas, nor for overseas companies selling goods to the UK such as Apple, the lower exchange rates can prove very fruitful for UK companies exporting goods or UK companies whose businesses profits are earned overseas.
It is the drop in exchange rates which has caused the FTSE 100 to surge above 7000 recently which is welcome news for any existing investor.
Even more encouraging than the FTSE 100 surge has been that index’s ability to maintain the highs and not immediately fall back. This has allowed the other UK indices, such as the FTSE 250, to catch up.
Some of the best performing funds over the past few months have been smaller company equity based investments.
Equally property funds have started to lift their temporary suspensions as the concerns about panic selling of commercial properties has failed to materialize.
Looking ahead, there are reasons to feel reasonably optimistic yet not to be overconfident. There will, no doubt, be many opportunities for reasonable investment returns but it is also a time not to get over-enthusiastic.
The largest changes to portfolios we envisage making is a move away from overseas income producing assets such as overseas corporate bonds, and a move towards UK income producing assets like property and equities focused on taking advantage of the more favorable export markets.
For our clients, we are gradually looking to tweak investment portfolios over time, if appropriate for that individual client, as will be apparent when we carry out our regular reviews.
Equally we await the first Autumn statement from the new Chancellor of the Exchequer, Phillip Hammond. We will obviously keep you updated if this has an impact on our outlook.
In the meantime, as always, please get in touch with Platinum if you would like to discuss your investment strategy or if you have any concerns.
On occasion we are asked whether it is worthwhile coming out of the stock market and encashing investments whilst the stock market is at a high, to then re- invest once markets have fallen. This can be a ‘dangerous’ game.
Market timers often try to predict big wins in the investment markets, only to be disappointed by the reality of unexpected turns in performance. For those who do not wish to subject their money to such a potentially risky strategy, time- not timing -could be the best alternative.
Market timing is a strategy in which the investor tries to identify the best times to be in the market and when to get out.
Advocates of market timing say that successful forecasting can result in higher returns than other strategies. The difficulty is reliably predicting the unpredictable.
Although some professionals may be able to use market timings to reap rewards, one of the biggest risks of this ‘strategy’ is potentially missing the market’s best-performing cycles. That is why perhaps the best move for most individual investors- especially those striving toward long-term goals- might be to invest and hold on to these investments throughout market cycles. This is commonly known as a ‘buy-and-hold’ strategy.
Buy and hold, however, doesn’t mean ignoring your investments. Remember to give your portfolio regular checkups, as your investment needs will change over time. Annual reviews may be enough to help ensure that the investments you select will keep you on track toward meeting your goals.
Most experts agree that generally, a portfolio made up primarily of the ‘riskier’ funds may be best for those saving for goals more than five years away. On the other side those saving for shorter-term goals, might consider a portfolio weighted toward money market instruments.
Remember, though, even those enjoying retirement should consider the potential inflation-beating benefits as well as the risks of stock market related involvements.
As always please contact the team here at Platinum if you would like to discuss your portfolio, and review whether it is best structured to achieve growth in line with your timescales.