As we’re approaching the end of January already, it seems a little late to wish you a Happy New Year, but as this is the first News Letter of 2023, I will take the opportunity to do so.
Although this News Letter will focus on ABC and some considerations that UK tax resident clients should be thinking as we approach the tax year end, I did want to make a few comments about investment markets.
As we know, 2022 turned into an extremely challenging year for markets and investment management in general. There were many factors driving uncertainties in markets, not the least of which being the war in Ukraine and the potential for runaway inflation during the year. Whilst the former shows no signs of abating as yet, at least we’re seeing inflation numbers starting to reduce. Of course, that doesn’t mean that costs are going down, but simply they are going up at a slower rate and the expectation is that this decline will continue during the current year and should be significantly lower by the end of the year.
This in turn, should take the pressure off Central Banks and we’re likely to see some easing of the interest rate policy, with some commentators forecasting that rates will start to fall in the US by the end of the year and probably elsewhere shortly thereafter.
As we know, markets tend to look ahead 6 – 9 months and therefore, during January, we’ve already seen positive movements across all major markets and whilst it’s too soon to say that we are out of the woods, it is nonetheless encouraging to see some positive regaining of values and we will continue to watch this going forwards.
News from ABC
As you may recall from earlier correspondence, rather than sending Christmas cards again in 2022, we chose to make charitable donations of £200 each to Demelza House and Chestnut Tree House and we’ve had rather a nice acknowledgement from both organisations to thank us for our small contributions.
Chris (Alexander) as some of you will know, used to work for the Kent, Surrey and Sussex Air Ambulance and was closely involved with their fund raising and other activities. From her experience, although she knows that funding is one of the most important factors for any charity, what is less known is that giving time to a charity is almost as valuable to them.
With the staff at ABC, we aim to have two main social functions a year, one being a Christmas party and the other being a mid-summer celebration, which is an opportunity for all the staff to get together. In the intervening months, we are also aiming to have some other group activities and Chris suggested to the staff earlier this month that we might think about offering our time for 1 day each to the two charities we have supported, and the suggestion was almost unanimously taken up and we are now liaising with those charities to see how we could dedicate some time to them. We understand this might range from helping in the garden through managing some events or coordinating collections, which is a good opportunity for us to have a team event whilst helping others – I will let you know what involvement we have and how that goes in later News Letters.
I also thought it might be useful to introduce you to the team by including our organisation chart, so that you can see who everybody is and where they fit in to the organisation. Some people you will already know and going forwards, there are other people that you may well have contact with in due course.
We are trying to fully integrate the teams across the various groups of clients within the firm, so that we maintain continuity and personal contact. If you phone the office now, you will be greeted with a short menu of options, but there are only 3 to direct you to either the private client team, the corporate client team or for any other enquiries. You will not be faced with a whole menu of options thereafter and you will get straight through to a person to speak to.
We are always mindful of looking for new ideas or ways that we might improve the services that we provide or the relationship that we enjoy with clients and therefore, if you have any suggestions, we’d be very pleased to hear from you.
Similarly, as the integration of the business is now well underway, we find that we have some capacity and whilst we’re not looking to go ‘empire building’, we have room to take on some additional clients. We are very fortunate that the majority of our clients come to us by way of referral and hopefully, this reflects the services that we are providing and going forwards, we would be very pleased to receive any further introductions.
UK Tax Year End 5th April 2023 – Considerations
Some of the recipients of this News Letter are overseas clients and therefore, I’m sorry to say the next section will not be relevant to you, but it might raise some questions that we could help with anyway as they relate to you.
As we know, the political scene in the UK turned into somewhat of a pantomime last autumn, with changes of Prime Minister and Chancellor of the Exchequer happening in quick succession. Having rocked the markets, things seem to have stabilised, with Jeremy Hunt, as the latest Chancellor, who has taken a much more rigorous approach to balancing the books and we know that there are a number of tax changes that were announced in the Autumn Statement, which will have an impact going forwards and could affect future financial planning strategies.
It's not my intention to turn this into a boring review of all the tax changes, but I am highlighting in bullet points key changes and things to consider as a consequence and with the tax year end approaching, which I hope that you will find useful.
I appreciate that some of these changes will not affect you, but these are the key points and probably the Capital Gains Tax and dividend allowances are the ones most noteworthy.
If you would like further information on any of these subjects or how they might affect you, then do get in touch to let us know.
As always, if you have any questions or if there are areas where we can assist, we would be pleased to hear from you and going forwards, I’m going to try to encourage other members of the team to make contributions to the News Letter, so you may well be hearing some different views and seeing some different styles included.
As always, stay safe!
Best wishes from all at ABC
I know they say that as one gets older times goes quicker, but 2022 really seems to have disappeared at an incredible pace and it’s hard to believe the year is now drawing to a close, with Christmas less than a week away.
Mind you, we started to get in the Christmas spirit right at the beginning of the month with our staff Christmas party on December 2nd. This was the first one after the merger of the business earlier in the year, so it was good to have a larger group together. Sadly, 2 or 3 people were unable to attend, but we still had a group of 14 and although we were at a much bigger function, we had a really enjoyable evening and I have to say, Martyn and myself managed a pretty good display of ‘Dad dancing’ – or we thought so anyway!
The following weekend, Chris and I took the opportunity to visit Wroclaw, which is in the southwest corner of Poland, towards the Czech border, where they were celebrating with quite an extensive Christmas market, which is where the picture below comes from. A great city with lots of history so well worth a visit. We thought it was going to be cold there, but actually, little did we know what was in store when we got home, the next day we had all the snow and the last week has been bitterly cold, although I’m pleased to say the snow has now all gone.
There was one other Christmas surprise in store for me and that was on Monday of last week, I tested positive for Covid, which left me feeling under the weather for a few days, but this morning, I have tested negative, and I’m pleased to say, normal service has therefore been resumed!
Charity Donation Rather than Christmas Cards
As you may have noticed from our email sign off, once again this year, we have decided rather than sending Christmas cards to everyone, that we will be making charitable donations and this year, we have chosen two children focussed charities in the southeast of England. These are:
Demelza provides clinical care, therapies, specialised activities and practical support across Kent, South East London and East Sussex.
They have two hospices and provide community based support in the home as well as a programme of on-line activities. Their end of life care for children and young people and bereavement support for family members of all ages is available to all.
£28 – keeps the hydro pool clean for a day, giving families the chance to have fun splashing around together.
£72 – keeps the soft playroom open for other siblings.
£360 – enables a child to receive a series of art therapy sessions.
Chestnut Tree House
Chestnut Tree House is a registered charity, that offers care to 300 children and young adults and their families with life limiting conditions in Sussex and South East Hampshire. Their aim is to provide the best quality of life for the children they care for and support for their families.
This care is provided free of charge, and therefore they rely on donations to support the work they do. They have a number of shops located throughout Sussex, including Arundel, Bognor Regis, Brighton, Chichester, Eastbourne and Seaford.
£10 - can pay for a memory box full of precious keepsakes for a bereaved family to cherish.
£28 – can pay for support for a bereaved family.
£50 – helps to fund a session with a child and young person’s psychotherapist or family counsellor.
With so many good causes around, it can be difficult to know which to support, but we thought children based charities at Christmas time, is where we would like our support to go this year.
We are proposing to close the office and the end of play on Thursday 22nd December and will be reopening on Tuesday 3rd January.
Market Thoughts and What can we Look Forward to in 2023
Looking back over the last 12 months, we can see that exactly 1 year ago, markets were ending 2021 on a relatively high point, but then markets turned early in the New Year and with the invasion of Ukraine in February by Russia and all the associated instability that this has caused, it has turned into a very volatile and disappointing year to say the least.
Whilst there have been a number of low points during the year, it would seem that the absolute low was at the end of September and since then, we have seen some reasonable recovery in most global markets.
As we now know, the Central Banks got it very wrong in terms of their expectation for inflation rates and that was clear even before the invasion of Ukraine, but with soaring energy costs, we have seen inflationary numbers that we thought perhaps we would never see again.
Consequently, Central Banks have been playing catch up with a series of interest rate increases over recent months, December included, and this is likely to continue for a while into the New Year. However, there is a fine balancing act to be considered inasmuch that if Central Banks are too aggressive, this is likely to compound the position with regard to recession, which in itself would be arguably counterproductive.
Last week, the Bank of England announced that in their view, inflation in the UK has now peaked and indeed, the same appears to be true in the US. You may recall that I commented last month, that in my view, this was the case, and therefore, this is pleasing to see and again, I think that inflation will continue to fall.
Ironically, with the aggressive interest rate policy and the fears about recession, normally Stock Markets would react negatively to this, but that does not appear to be the case at the present time!
Earlier this morning, I was reading an investment commentary that was looking at the situation and was talking about “deeply inverted yield curves” in both the USA and the UK, which the article argued is a tried and tested recession indicator – the article got quite technical from there onwards (if indeed, inverted yield curves are not technical enough already!), but then went on to try to explain why markets are not reacting in the way you might expect. The answer it would seem is that along with potential recession, one would not only expect to see interest rates peak, but to start to reduce once more and factoring this in could indeed, be helping to buoy markets at the current time. As the article commented, “equity markets are focussing on the interest rate cuts, since they are designed to make credit cheaper, boost loans, oil the economic engine and fuel a fresh upcycle!”
Markets have indeed proven themselves to be cyclical and I think as we look ahead to 2023, it’s fair to say that we should expect volatility to continue in the short term, but as inflationary pressures ease and perhaps interest rate policies do plateau, if not reverse, we will start to see an environment for growth materialise as the year wears on and one would hope that this time next year, we will be reflecting on a much more positive outcome.
As always, time will tell and making predictions is a dangerous game!
Let me close by wishing you and your families a very safe and Merry Christmas and with you, I look forward to and hope that 2023, will be a better year all round.
As always, stay safe and our best wishes from all at Alexander Bates Campbell
As today is 11th November, it is of course Remembrance Day and this Sunday, King Charles III will be laying the Remembrance Day wreath at the Cenotaph in Whitehall, London, with this being a time to honour those who have lost their lives in conflict and for many, it is also a time of reflection and remembrance for all those who are no longer with us. I am sure this will be very close to the heart of King Charles III, who I understand has chosen to pay tribute to his Mother, the late Queen Elizabeth II and her Father, King George VI.
It should also be a time when we remember those suffering in current conflicts around the world, including of course, the Ukraine.
When I wrote my last News Letter at the beginning of October, little did I know that pantomime season was about to go into full swing somewhat earlier than usual, and I’m thinking here about the UK political scene.
On 14th October, the Daily Star started to video a head of iceberg lettuce that had a supposed shelf life of 10 days, and they asked the question whether it would last longer than Liz Truss as Prime Minister! As we now know, the lettuce won the contest with the resignation of Liz Truss just 1 week later on 21st, having fired her Chancellor (and supposedly best political friend), Kwasi Kwarteng for his mini Budget, which of course, was as much her doing as his!
I remember raising the question in last month’s News Letter ‘do Liz Truss and Kwasi Kwarteng know what they’re doing?’ You may think the answer is now clear – what is certain, is that when they said it was too much too fast, they were right in terms of how markets reacted, and this has to go down in history as one of the most humiliating political own goals of all time.
Whilst it is good to see that markets have stabilised in the terms of the UK’s long term borrowing costs and value of Sterling, which today is back to $1.17 from its low point of $1.03 last month, it would seem the installation of Rishi Sunak as PM, with Jeremy Hunt continuing to hold the purse strings has been accepted – at least for the time being. My concern is that we will swing from the gung-ho attitude of Truss all the way back to Project Fear that we became all too familiar with previously.
In in one his first speeches as PM, Sunak said ‘the UK is facing a profound economic crisis’ – designed I think to launch Project Fear once more.
Unfortunately, this tends to lead you to believe all the problems are UK based and we know that this is simply not the case. There is no doubt that the UK is facing tough economic times right now, but this is a global problem, largely being driven by inflationary concerns, some of which clearly emanate from the war in Ukraine, but we should not forget, we are still experiencing some of the Covid legacy in supply chain issues.
Central Banks face a major dilemma, as they traditionally use interest rates as a means to control inflation but over aggression will undoubtedly lead to or deepen recessionary influences.
I have previously expressed that I believe we have already seen the peak in core inflation, and it is only a matter of time before this will be seen in the headlines.
Yesterday, Stock Markets around the world reacted very strongly in a positive way to inflation figures published in the US that were lower than those anticipated by the markets. To my mind, this demonstrates strongly how hungry the markets are for good news and whilst I’m not suggesting that we’re out of the woods yet, it does go to show how a little good news can have such a major impact and as we go forwards, I believe we will see this repeating.
Politics of course is not confined to the UK and at the time of writing, I am currently in the US, where this week, we have seen the mid term elections with results still coming in. At the time of writing, the Democrats have 48 seats in the Senate and the Republicans 49, with 3 more results to come. In the House, we have a similar position with the Democrats having 192 seats compared to the Republicans 211, with a total of 435 seats.
Whilst the Democrats are therefore looking likely to lose the House, the Senate remains too close to call, although it is being widely publicised that the Democrats have not fared as badly as they might and the red wave has not been as strong as the Republicans had hoped.
I’m pleased to say, I don’t really understand US politics and therefore, I cannot get drawn with any personal comments, even though it would appear that a stalemate is possible, and this may hamper much progress over the next couple of years. As an aside, it was interesting to see that Ron DeSantis had an overwhelming majority in Florida where we are staying, and he is flagged as being a likely candidate for the 2024 Presidential election. That having been said, Donald Trump is expected to make an announcement shortly and has taken to referring to the Governor of Florida as Ron DeSanctimonious – so it would seem the gloves are coming off already!
Moving away from markets and politics, we were reminded this week what a huge country of contrast the United States is. Whilst we were aware of very wet and windy weather back in the UK, 2 days ago, as we watched the weather forecast with Tropical Storm, soon to become Hurricane Nicole, approaching our part of Florida, they were also forecasting up to 12” of rain in Los Angeles, 48” of snow in the Sierra Nevada and tornados in Oklahoma, whilst Tucson, Arizona remains in the worst drought for allegedly 1,200 years.
The next big event in the US will be Thanksgiving and then it will be full steam ahead to Christmas, with the shops already filling with decorations and Christmas music. We’ve already seen Christmas decorations going up outside various houses where we are staying, which does seem remarkably early. I’m sure in many ways, we will all be pleased to put 2022 behind us and look forward to a brighter future next year.
As always, stay safe and our best wishes from all at Alexander Bates Campbell
I think this is probably one of the most difficult News & Views I have had to write, largely because there is so much going on, both globally and domestically, with what seems like unprecedented volumes of commentary coming from totally diverse sources – it is trickier than ever to work out where the truth lies through all the rhetoric!
I apologise therefore if this comes over as a rather “dry read” but I thought it appropriate to try to address current concerns.
As I think you already know, I see part of my role when expressing my views, is to peel back the curtain or to lift the bonnet, to see what is really going on behind the headlines and to find some central or what I would describe as sensible ground.
Where to begin?
I guess the UK is as good a place as any to start – in the last month, we have seen a new Monarch, a new PM, a mini-budget and the unfolding of the political party conference season, with plenty of sabre rattling and accusations, both within parties and on a cross-party basis.
Do Liz Truss and Kwasi Kwarteng know what they are doing? Listen to one side and “their way is the only way to see the UK economy grow”, whilst their opponents will argue the exact opposite. The truth is that only time will tell, and at the moment, there is no certainty that the mini budget will actually pass-through the process of acceptance/adoption in Parliament. I actually think, the strategy is a huge gamble from a political perspective because even if it proves successful in time, the upside is unlikely to be manifest in time for the next General Election, which has to be in January 2025 at the latest. I read an article the other day which looked at the financial strategies driven by John Major, which were unpopular but over time proved to be successful, but not in time to save him at the ballot box! Will history repeat itself; we will have to wait and see.
What we can be certain of, is that the mini budget added a huge amount of fuel in the UK, to the global fire of problems that was already raging and impacting the UK economy. This was seen most dramatically in the exchange rate, with GBP dropping to a record low against the US$ and in the cost of UK debt – (not mortgages but the rate at which the UK borrows) – this jumped to over 4% and was higher than the cost of Government borrowing for Greece.
I have extracted below, some parts of a piece written by James Penny, who is the Chief Investment Officer at TAM Asset Management, as I think he explains quite clearly how these aspects have impacted the UK.
What On Earth Just Happened?
For stock market geeks like me, yesterday will likely go down in history as a memorable moment in the UK, akin to that of a 2008 crash moment - one which people will be talking about for decades to come.
What happened? It has all spun off Kwasi Kwarteng’s “Mini Budget” which has proven akin to a fiscal hand grenade thrown into the UK bond market. UK Government bonds, under the triple threat of a massive increase in UK bond issuance to fund the energy price cap, further interest rate rises and quantitative tightening (that’s the Bank of England selling back all of the bonds they have been buying off the government for the past 13 years [started in 2009, I think]) the UK Government debt market has tanked quite spectacularly (hence the hand grenade reference). To put the selloff in perspective, in the history of the UK Government bond market, the largest single sell off was -9%. September’s sell off, as of Wednesday morning, from the highest point to the lowest, was down a touch over -30%. To call that a new record doesn’t quite do the situation justice and it’s chiefly why I have chosen to write a note explaining what’s going on.
As almost everyone knows, the backbone of the UK’s behemoth pension industry is UK government bonds and on Wednesday morning it looked like there were some very large pensions funds about to tip into insolvency from the losses being inflicted on portfolios. This is what prompted the BoE to intervene.
Shortly after the market opened on Wednesday the Bank of England got wind of the potential implosion in UK pensions and stepped in swiftly to prop up the market and essentially save a large number of UK pension savers. This came in the form of the central bank halting quantitative tightening (selling the bonds they have been buying for the last 13 years) and recommitting to buying £65 billion worth of UK government bonds at £5 billion a day for 13 days. Essentially the BoE turned from quantitative tightening into quantitative easing in a matter of minutes to save the UK pension industry. This had the desired effect. The mainstream UK bond market bounced up over 7% with long maturity bonds rallying over 18%. The positivity spread over into the US with government debt rallying over 1% and US stocks also rallying nearly 2% on the news. Great for investor portfolios.
The intervention we saw yesterday was welcome but doesn’t change our thinking when it comes to UK bonds and the UK economy. Economically it doesn’t make sense to be pumping money into the bond market at the same time as you are fighting inflation. They are opposing forces which will further clobber the pound and create unwelcome volatility - which will then need more aggressive interest rate hikes to tame. It’s a scenario which is simultaneously destroying the credibility of this government and of central bank at exactly the time as the UK population needs to be able to trust their leaders.
As with all scenarios before this and the many still to come, it’s worth remembering that it is darkest before the dawn and there will absolutely come a time for the UK to shine on both the bond and equity front and at this juncture TAM know what to invest into and in what size to capture the best value from the UK but we still see further uncertainty from here for UK inc.
CIO, TAM Asset Management
Turning now to the value of GBP, exactly one month ago, the inter-bank exchange rate for GBP was £1 = US$1.147 and €1.157. Today the rates are £1 = US$1.137 and €1.152, so relatively small changes. In the intervening period however, we saw lows of £1 = US$ 1.03 and €1.10 at some trading points, which were dramatic falls over a short period, partly driven by the mini budget but also driven by market speculation and significant “betting against GBP”. The real story in my mind though, is that we are seeing a strengthening of the US Dollar against most other currencies worldwide and sooner or later, this trend will have to reverse as concerns grow about exports from the US, which to my mind, is the cyclical nature of markets at work.
One final comment about the UK, is in regard to the level of Government borrowing as I think there is some comfort when you look at the other G7 countries and the following chart demonstrates our relative position in relation to debt versus GDP.
That having been said, the numbers are still eye wateringly huge and will need to be controlled over the longer term.
Looking Further Afield!
The main problems for markets are still coming from a number of factors, the key ones in the headlines at the moment being the concerns over the war in Ukraine and whilst on the one hand, the successes being achieved by Ukraine are good to see, the concern is when Putin has his back to the wall, what will happen. Will he “lash out” or will he simply disappear perhaps!! (we can but hope!)
Inflation is probably the major global concern, which is of course being driven by supply shortages and escalating fuel costs and to combat this, we see increasing interest rates as the “traditional weapon” of the central banks. These are the things that are driving up mortgage rates, rather than the mini budget in the UK (which didn’t help but is not the main cause). I am not sure whether this “traditional” use of interest rate increases, is totally appropriate, after all, inflation is more typically driven by high demand rather than short supply. You could also argue that interest rates should have been increasing sooner, even before the inflationary pressures started to manifest, as rates had been held artificially and historically low for too long. That is another factor in why they are increasing so rapidly now as we are playing catch up!
But that is not the end of the story, because we need to think about what happens next?
A little research shows that the expectations are that global inflation will start to fall next year – one source, the US Federal Reserve Bank’s survey of Professional Forecasters suggests that the Consumer Price Index inflation will fall in 2023 to 3.2% and to 2.5% in 2024. This reflects other commentary I have read that suggest the back of inflation has already been broken and in due course, this will take the pressure off interest rates. Morningstar are predicting that interest rates in the US will fall back in 2023 as the inflationary pressures recede and as this trend unfolds, I would expect the UK will follow in time, but that path is less clear.
Even though UK inflation is expected to peak in October 2022, interest rate rises are likely to continue for some time before levelling off. So, analysts are then predicting a reduction in rates in 2023 and 2024.
The Impact On Investments and Investment Decisions
A frequent question and of course a major concern, is what does the near future hold and what investment decisions need to be considered now.
To my mind, there are three key factors to think about here:
• Attitude to Investment Risk/Capacity for loss
Arguably, these all overlap to a degree, because if, for example, your objective is to generate income over the longer term and your investments are structured in an appropriate risk profile for you, then the short-term capital values should be less of a concern. I fully understand that human nature says that none of us like to see reduced values, and instinct may suggest “we should run for cover” but over time, that has proven to be a bad decision in the longer term. The main reason being, that the same instinct will see you wait too long before re-entering the market and missing the best part of the upturn.
The same situation applies if you are investing for value preservation or growth; opting out at the wrong time will have a serious impact over the longer term.
As James Penny commented in his piece, when referring to the UK, specifically, there will absolutely come a time for the UK to shine on both the bond and equity front – I believe the same to be true when looking at the global position and as I have written previously, when markets do turn, they could well turn rapidly.
So What About Those Green Shoots?
Well, they are not there just yet, but I think that we will start to see them soon and with inflation peaking and interest rates slowing and even reversing next year, we will see those green shoots appearing and, in the meantime, try not to be overly influenced by the doomsayers!
As always, stay safe and our best wishes from all at Alexander Bates Campbell
After my rather lengthy News & Views last time, you will be pleased to know this one is “refreshingly short”!
Many eloquent words have already been written about Her Majesty, far better than I could craft myself and therefore I will keep my words very simple and brief.
Like many people I am sure, we were taken by complete surprise at the news that unfolded last Thursday. We knew The Queen was getting progressively frailer but after seeing off PM 14 and welcoming PM 15 on Tuesday, events clearly took a rapid downwards spiral.
We would like to extend our condolences and best wishes to The Royal Family and hope that King Charles III settles into his new role – he has a hard act to follow!
Our Office Move
Whilst the closure of the Goudhurst office went fairly well and all of the computer kit etc has been up and running again without a hitch, unfortunately, the same cannot be said about the phone system which is causing some teething problems at the moment.
We are adopting an MS Teams system which will enable calls to be transferred between members of the team regardless of whether they are in the office or working remotely; at present, outgoing calls are fine but incoming is where we have the problem.
This should be resolved shortly, but if you need to contact us, the most reliable way is via email please.
Once it is resolved, when you phone, you will be greeted with a short message, advising that our calls are recorded (this is a regulatory requirement these days) and asking you to select one of 3 options:
Whilst we are not fans of automated menus, ours will be kept very short and should ensure that you connect with the right people more easily – we will keep it under review to make sure it is running smoothly (once it does start that is!!)
As always, we appreciate you bearing with us through this process.
Best wishes from all at Alexander Bates Campbell
It’s hard to believe that it’s the beginning of September already and I dare say before too long, we’ll start to see the Christmas cards arriving in the shops!
The first 8 months of this year, perhaps with the exception of July, have proven to be very challenging in investment markets and it is likely that we will see this continue through the month of September.
Even though it may not feel like it, when you consider the news headlines and the continuing negativity, it is my view that the worst is probably behind us and as we know, the hour before the dawn tends to be the darkest!
Whilst history shows that September can be a difficult month in the investment world, some commentators are suggesting that with market reductions during the preceding month of August, this may well help to minimise further reductions during September and perhaps we will see an evolution towards a stronger last quarter of the year – only time will tell of course.
Move of Office
Turning now to something I can be certain about, with the restructuring of the business, we are now approaching the closure of the small office we have in Goudhurst and in fact, our last day there will be September 9th. Thereafter, all of the business activities will be focussed from the office in Forest Row, with various members of the team either working remotely or dividing their time between the office and home.
As our main means of communication tends to be via email, the closure of the office will have no impact on this and this could be a good opportunity to update your contact details to our new email address, which for all members of the team are in the format of their first name and last name without email@example.com. For example, my email address is firstname.lastname@example.org
I can confirm however that we will be maintaining and monitoring the old ra-fp.com email addresses for the foreseeable future, and therefore if you happen to write to us at an old email address, don’t worry, we’ll still receive your communication.
If you do find that you need to send anything to us by mail, the postal address is:
Unit 9/10 Riverview Business Park
If you need to make contact by phone, the main switchboard number is 020 3167 0880.
If you need to reach a specific individual in the firm, everybody will have their direct dial phone numbers, and these will be published on their email signatures.
Whilst overall there should be no interruption to business services due to the office move, there may be a short period of time on 9th September when computers are closed down to be moved etc, when we will be out of communication. We will however, revert to you as quickly as possible and I would like to thank you for your patience and understanding in this regard.
Regulation and Compliance – A Runaway Train!
As you know, the financial advisory world is a heavily regulated one already and it seems that we live in an age of consistent change. Whilst there are many updates on a regular basis, the last big overhaul in the UK was implemented at the beginning of 2013, with the completion of the Retail Distribution Review (RDR) by the Regulator.
This broadly moved the UK Adviser market away from a commission based structure to a professional fee based structure only. This brought huge changes in the industry for many, but I’m pleased to say, we had worked on a fee-based structure for many years prior to the implementation of RDR and so whilst there was less impact on our business at the time, we still had to embrace the new disciplines.
We now face a similar situation with the completion of the latest regulatory review, which falls under the heading of Consumer Duty.
This is a whole new raft of legislation that will affect every person working in the financial services industry and businesses of all sizes, both large and small.
There are four main areas or as the Regulators calls them, Outcomes, that they are focussing on, which are as follows.
Ful implementation of this is planned with effect from the end of July 2023, but all firms need to have a plan of action in place by the end of October 2022. I have to say, as we start to consider the implications of this and new disciplines we may need to adopt, it really does feel as though the regulatory burden is a runaway train heading towards us down the tracks, but it is something that is unavoidable and therefore, we will face up to the challenge!
In putting together our implementation plan, we will be going through a ‘gap analysis’ and as we start to look at this, I can see that we are already fulfilling many of the requirements in the way that we conduct our business, which is reassuring. One thing that we will have to change though, is how we record some of these things because evidencing the way that we conduct our business is something the Regulator is going to be looking at going forward in a rather more detailed way. (Oh the joy!)
Once again, this should not have any direct impact on our clients, other than one might hope to see some progressive improvements going forward. As always, I will keep you apprised as we progress through this and will inform you of any changes that we may need to make.
Words of Warning
Even though interest rates are increasing slowly, and whilst this might have an impact on people with mortgages and other loans, it is having little impact in terms of investment returns for people and therefore, the quest for higher returns becomes more prevalent in people’s minds and without doubt, this is an area where caution is needed.
It is worth remembering the old saying that ‘if something looks too good to be true, it probably is too good to be true’ and we tend to see this with certain types of investment products that purport to guarantee levels of return way above what the market is able to support at present.
These are often referred to as structured products and may well have a fixed term of say 5 or 6 years, with a ‘guaranteed return’ of 5% or more over that period. It is important though to “lift the bonnet” and have a look underneath to see what’s really on offer.
The word guarantee tends to suggest certainty, whereas in the context of this type of product, you would be guaranteed a rate of return, subject to a number of circumstances being fulfilled, which are by no means guaranteed. This could be the underlying performance of an index or some other tracked financial data and even where the income or rate of return is guaranteed, you will probably find that the capital is at risk and therefore, you may not get back all of your money and possibly, you could face a total loss.
We saw many of these products come unstuck during the Banking crisis of 2008 and notably, Lehman Brothers were party to many structured products that failed at that time and many investors lost out significantly.
My suggestion would be, if you are tempted by an advertisement or an investment that looks particularly attractive, do run it past ourselves or another professional, who understands the small print and can guide you accordingly.
In a not dissimilar vein, we have people asking on occasions about Crypto currency and in particular, Bitcoin, which in the past, has shown spectacular performance, but this has been as spectacular downwards as it has been upwards on occasions. This is a high-risk rollercoaster investment and is not either for the fainthearted or for the majority of your capital.
Beware the Pension Scammers
In a similar vein, one of our clients, drew my attention to an article that appeared in the Times newspaper back in July under the heading ‘The Ex-Pat Pensions that Vanished’.
Although the UK Regulator has done much over recent years to protect people with accumulated pension funds from the scammers who are trying to persuade people to transfer their pensions, there are still huge areas of vulnerability, particularly for ex-pat British nationals, who are living overseas. The same regulatory rules and disciplines do not apply to salespeople in the financial services world globally as are applied in the UK and as should be applied throughout the EU, but that’s not always the case either!
As we know, financial advice relationships rely on trust between the parties, and it is this trust that is misplaced when scammers are involved. Unfortunately, it’s a trait of human nature that we take comfort in familiarity and when Company names that we’re familiar with are being proposed, the assumption is that these are safe investments. The article refers to a number of Companies, including RL360, Friends Provident International and Royal Skandia Life Assurance, all of whom have been used by scammers, which does to my mind, raise a question of culpability. The Companies I have named are not the only ones involved, but they all take the view that they are providing products and investment vehicles and that they are not providing the investment advice. Personally, I would have thought they need to be more rigorous in their due diligence with regard to who they accept business from, but of course, it’s a commercial world and these organisations are often driven by hunger for market share.
Having said that, with each of the Company’s named, we have used these for clients and continue to use today, (Royal Skandia has now become Utmost, having gone through various name changes of Old Mutual and Quilter).
I would just like to add that there is no risk for our clients with whom we have these solutions in place, because the investment recommendations that we have made are sound.
Unfortunately, the numbers involved with pension scams are eye wateringly huge and one class action that’s quoted in the Times article, refers to 800 British ex-pats who between them, have lost between £145 million and £200 million – that is just astonishing!
The message here though, is if you are approached directly though telesales or any other means, looking to ‘help’ you with your accumulated pensions – be very careful and at the very least, take third party independent advice before committing to anything.
As always, we’re happy to receive any questions from you, but in the interim, do stay safe and we will keep in touch.
Best wishes from all at Alexander Bates Campbell
Although I am not a football fan, and I confess, I did not watch the final of the Women’s Euro 2022, I do think it was a tremendous result, not only or the England team, but for women’s sport in general.
I wonder if in 56 years’ time, we will still be talking about that result in the same way that we harp on about the 1966 World Cup Final – hopefully, we won’t have to wait that long for another success!
I did find it quite interesting to read in some of the notes that the Football Association banned ladies football from 1921 right the way through until 1971 and therefore when England won the World Cup in ’66, ladies football was not allowed – that just seems incredible!
Just in case you were wondering, I’m not a complete sporting philistine though – the reason I wasn’t watching the football is because I was watching the finals of the rugby 7’s at the Commonwealth Games – with only 14 minutes per game, it really was a fast and furious competition, for both men and women and highly entertaining.
There was a common point of interest though, with both the ladies football and the Commonwealth Games, and that was how much of a family environment both events enjoyed and was rather a refreshing change from some of the other spectator behaviour that we see all too often.
Turning now to the political scene, as I was writing last month’s News Letter, things were unfolding at No. 10 Downing Street and following the initial contest between potential candidates for the Tory party leadership, we are now down to a blue on blue war of words, which frankly, leaves me rather pleased that I’m not a Tory part member (nor a member of any party come to that), and therefore, won’t have to make a decisions as to who to vote for. Thankfully, this should all be resolved by early September, and it will be interesting to see how markets react to the eventual results.
At the present time, the UK political situation seems to be having little impact on the markets, which during the month of July, have shown much more positivity in most areas. Volatility remains though and it likely to continue for somewhile and therefore, I think it’s too early to predict that we’ve actually seen the bottom, although I do believe we must be close to it.
I know it’s dangerous to quote from any specific publications, but I did read an article on 9th July that appeared in the Daily Telegraph that had the headline ‘It hurts now, but battle against inflation has already been won’ and this was a headline that grabbed my attention, as I thought it was quite bold to say the least!
With average family costs continuing to climb and major concerns over energy and heating bills later this year and in the winter, it prompted me to dig deeper into the article to see what the arguments were.
The thoughts that were being expressed were the fact that commodity prices, such as wheat and copper and most of oil, are coming down sharply as demand shrinks and supplies increase, whilst at the same time, despite the industrial action that’s underway at present, there is no sign of a wage price spiralling increase, which combined to suggest that the higher inflation will not be sustainable.
As he had referred to 3 specific indexes, I thought I would have a look one month on from the data he was looking at previously and the trend has indeed continued to see a fall in those prices.
I would say that one month is far too short a period to draw any conclusions, and simply by looking at 3 commodities, it would be dangerous to read too much into it, but this was an interesting argument and certainly one that I will watch going forward to see how this works out.
There are of course, exceptions to the argument and the supply of gas throughout Europe has to be one of those that we need to remain mindful of.
As always with this time of year, with schools out and summer holidays in full swing, trading levels tend to be relatively thin in most markets and we probably need to wait for September/October to see how things will shape up for the remainder of 2022. Without a doubt though, the first 6 months has been probably one of the worst on record for most sectors being in hugely negative territory.
For now, let’s enjoy the long summer evenings and hopefully, some continued warm weather to go with them!
Best wishes from all at ABC
They say that a week is a long time in politics, and I think this has never been more evident over the last week with the shambolic events unfolding in the UK!
As I am sure you know by now, I try to avoid making any strong political comments, but I do wonder if Boris Johnson is coming to the end of the road and although he has a history of defying the norm, it’s very difficult to see how his Premiership is going to survive the current turmoil.
With the speed that things are moving, by the time I finish writing this article, he may indeed, have gone, or he could remain ensconced for some time to come – we shall see!
When I thought of the heading for this News Letter, I actually had in mind investment markets and I will revert to that shortly, but it occurred to me that it’s also a very apt heading for the UK political situation.
The current actions and reactions within the Conservative Cabinet and the wider party do seem to suggest that time for Boris is up and that they have indeed, reached a turning point. We have to then remember that these are politicians that we’re talking about, who as we know, can be very slippery in their activities and will undoubtedly each have self-interest at heart. I think the main concern seem to be that Boris Johnson, once a vote winner, will be a vote loser.
The trouble is, when you look across Parliament, it can be very difficult to pick out the genuine hardworking politicians, although one has to believe that there are plenty of them, but perhaps those that do n to habitually capture the headlines – or is that just wishful thinking, I wonder!
With a degree of scrutiny and speculation that’s ongoing at the present though, clearly there are few places left for BoJo to hide.
Turning now to the financial markets, and my main thoughts with regard to how things may be changing and that perhaps, we’re starting to see the first indications that the recent volatility will start to subside, and we will see some recovery in values.
Over the decades, there has typically been an inverse correlation between Stock Markets and Government debt (gilts and US Treasuries and other Government Bonds), such that when equity markets are under pressure, a safe haven has been the Bond market and the reverse having been true.
However, for the last decade, this inverse correlation has not been in evidence, which has given Fund Managers serious problems when considering how to hedge against equities and to find safer havens. This has typically been resolved in recent months and years by moving towards commodities, such as gold, silver and other precious metals and absolute return funds, that are not reliant simply on one aspect.
One of the reasons why the Government debt instruments like gilts and US treasuries have been under pressure, is because their underlying yields have been increasing. The yield is the rate of return or interest that is paid on these Bonds and as those yields have been rising, so the capital values have been reducing.
From the investment commentaries that I read; I am starting to pick up …
Starting to see that this trend may now be reversing with yields dropping once more over the last 3 weeks on some Bonds.
My comment about nowhere to hide simply refers to the fact that on a year to date basis, we’ve seen major Stock Markets down by 20% - 30%, at the same time as the Government Bond markets have been down by a similar amount. Ironically, one market that has bucked the trend this year has been the FTSE 100 Share Index, where Companies in there are predominantly benefitting from the rise in energy costs etc, but this is a trend that will reverse at some point.
Without the traditional reassurance of the Bond market being available and alternative investments having to be sought, it has been a very challenging time in the investment portfolio management world.
Talking to one Fund Manager last week, he was of the opinion that the volatility is likely to continue during the short term and actually, during the summer months, the volumes of trading in the Stock Market, tend to be much lower and therefore, smaller volumes can have bigger impact on market prices. His view tough, is that this is likely to continue through the summer, potentially until September before we can start to see anything settling down.
In the last 2 days, I am starting to read articles from people talking about the current trend of increasing interest rates from Central Banks being transient and already they’re speculating that in 203, interest rates in the US, will not only peak, but start to reduce once more.
With these thoughts in mind, we’re starting to see some signs of the technology/growth Companies that have suffered so badly in the last 6 months, starting to respond to this type of news.
A further article I was reading a few days ago, was looking specifically at the S&P Index in the US and comparing years where the first 6 months of the year had seen dreadful performance, much the same as we have seen over the first half of this year, and what then happened in the second half of those years. Almost without exception, there was a very strong bounce back, such that by the end of those particular years, the S&P had pretty much recovered its starting point.
Of course, although history does repeat itself, we can’t rely on that being the case this year and we should also remember that the S&P is focussed on the US market, which tends to be more reactive in any way, but nonetheless, these are further indicators as to where we may be heading.
In general terms though, many commentators are recognising that certain areas of the market have been oversold, which means that prices are depressed beyond where they reasonably should be and there’s a certain element of throwing the baby out with the bathwater.
I give you one recent example here, where a comparison was made by one Fund Manager between Curry’s and Dunelm. The actual price earnings ratio for each of those Companies is almost identical at present, and yet, the Fund Manager said he would in no way be tempted to invest in Curry’s whilst he felt that Dunelm by contrast, looked particularly undervalued at this level and would make an excellent investment.
As we have said previously, markets tend to be cyclical and one of the other Fund Managers I was speaking to last week, expressed the view that when markets turn, they will turn quickly. In these circumstances, it is often the early phase of recovery where the more dramatic growth is witnessed and missing that initial spurt can have disastrous effects, which is why the advice is always to remain invested.
One final thought on this subject is that there has been a huge amount of stockpiling of cash in pension funds and investment funds, all of which needs to find a home somewhere, and when that re-enters the market, as in previous cycles, this is likely to fuel the recovery further.
It’s not yet a time for celebrating, but I genuinely think this is a turning point that is starting to unfold.
AS always, only time will tell.
Stay safe and best wishes.
Best wishes from all at ABC
I am delighted to be able to confirm that the planned restructuring of the business has at last been completed and this is my first email to clients from my new email address.
We have formed a new group company which is Alexander Bates Campbell Holdings Limited and the shareholders are myself and Chris (my wife), Martyn Bates and Lynne Campbell.
We have three trading companies in the group which are as follows:
Alexander Bates Campbell Financial Planning Limited – formerly RA Financial Planning.
Alexander Bates Campbell Limited – formerly Bates Campbell Limited
Alexander Bates Campbell Services Limited – formerly Bates Campbell Services Limited
Clients will continue to receive the same level of service from the appropriate Company in the group and apart from the name change, there will be no other changes. As we consolidate the integration of the businesses, we are aiming for a number of improvements and an increasing use of technology which is aimed at improving our efficiency, but most importantly, ensuring that we continue to provide the best possible service to you as our clients.
All existing Client Agreements will remain valid, as there is no change in the services being provided apart from the change of name. We will however, update these with you going forward as and when we meet up or perhaps embark on any new work for you.
The email and phone number contacts you have been using will remain open for some time, but we now have a new domain and therefore a new email address. The format is the same for everyone – mine being email@example.com We also have a new website which you can visit at www.abc-ifa.com
At the time of writing, I am in the process of visiting clients in Spain and Portugal and without exception, it has been wonderful to meet up again, after what in many cases, has been a 3 year gap. Many things have been on hold during the Covid years, but much has changed as well and the construction industry is once again booming on the Costa del Sol as evidenced by the number of cranes along the skyline.
We were also reminded of the need to have contact information for close family or friends, when we had an appointment to visit one elderly client and could not get any response at the door or on the phone. Fortunately, a neighbour was able to inform us that there had been activity at the house and so we left a note and were then contacted by a carer. It was only good fortune that the neighbour was at home and without them we would have been left without any options. We will therefore, try to update our records to ensure we have a contact number or email for friends or family, particularly for our elderly clients and if you would like to send us contact information, please do so and we will keep the details on file.
As some of you will remember, Chris is a volunteer for the Kent, Surry & Sussex Air Ambulance (KSSAA) and is on their newsletter circulation. Recently they included some information that we thought could be useful to pass on.
The critical importance of CPR and defibrillation
A sudden cardiac arrest could happen to anyone, at any time and in these situations, every second counts. There are around 60,000 cases of suspected cardiac arrest every year, but fewer than 1 in 10 people survive an out of hospital cardiac arrest*.
Here are some useful resources that I urge you all to take time to look at:
• Watch powerful interactive videos from The Resuscitation Council UK which show staged scenarios of people experiencing a cardiac arrest and challenge you on what to do next
• Learn first aid for someone who is unresponsive and not breathing, from The British Red Cross
• By using an Automated External Defibrillator (AED) before an ambulance arrives, you can significantly increase someone’s chance of survival. St John Ambulance have great advice on how to use one.
• AEDs don't Save Lives - People with AEDs do. The GoodSAM community has mapped thousands of Public Access AEDs. Download the GoodSAM responder app via the App Store or Google Play.
Please don't ever be afraid to use an AED. It will talk you through every step of what you need to do, including where on the patient you need to place the pads.
David Welch – Chief Executive KSSAA
Turning now to the financial markets, these continue to be extremely volatile, and I will continue the theme of inviting some of the Fund Managers we work with to give us the benefit of their current views.
Before doing so, I also wanted to “borrow” a quote which I saw as a headline in “The Portugal News” which is a free English ex-pat newspaper and this is a quote from Warren Buffet, who you may recall I have quoted before:
“Today, people who hold cash equivalents feel comfortable. They shouldn’t! They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”
In this newsletter, we hear from David Sylvester, Senior Investment Director at Investec:
This year has been an extremely difficult period for investors. What is it that markets are fretting about? In a word: inflation, which continues to hit new highs for this cycle in most countries and is at the highest levels we have seen for several decades. Markets were expecting a higher level of inflation as we exited the pandemic restrictions, but this has been exaggerated by continuing logistical supply side problems with Asia continuing a zero tolerance policy to Covid with further lockdowns and the sanctions imposed following Russia’s invasion of Ukraine. Markets are equally concerned about central banks’ response to that inflation and the effect on global growth and the potential for a policy error. The central bank response is being delivered in two forms: higher interest rates initially, to be followed by a reduction in quantitative easing, reducing asset purchases, which have supported assets during the pandemic. The main actor in this is the US Federal Reserve Bank (Fed), which has become increasingly hawkish in its pronouncements. At the beginning of the year, the market was expecting US interest rates to be sitting at around 0.75% by the end of 2022. Now it is forecasting almost 3%. That is a massive shift in expectations, especially in such a short period. As for the UK, at the start of the year the market was expecting the base rate to be around 1.2% by December; now it is forecasting 2.25%.
The ratchetting up of interest rates expectations to combat inflation and the concerns on global growth, have led to heightened volatility in markets with sharp declines in both bond and equity prices.
The Nasdaq is down 24.5%, S&P 500 15.5%, EuroStoxx 50 and the FTSE 100 down 14.3%, with only the resource laden FTSE 100 showing a slight positive return on the year. Bond prices are down over 10% with the correlation between the two virtually unprecedented. There have been very few places to hide with even cash offering negative real returns.
We downgraded our asset allocation to risk assets in the 4th quarter of last year on valuation concerns and again in March of this year as inflation expectations heightened increasing the risk of a policy error. We increased our weighting to alternative assets including hedge funds and infrastructure funds that would preserve value or give positive returns in the current environment. Hedge funds as they are able to go short as well as long and infrastructure investment trusts that are invested in real assets with inflation linked contracts. Although this has protected portfolios a little bit, our central thesis to invest in growth, as this will give a better return over the medium to long term, has seen our portfolio returns suffer as the market has rotated into value sectors like energy and commodities as investors looked for demand increasing as we emerged from the pandemic even before supply was curtailed with the sanctions imposed following the Russian/Ukraine conflict. Our investment thesis is to invest in long term themes and companies that grow and compound value over a long period of time. This has stood us in good stead for a long time now and will continue to do so in the future and we do not look to sell good holdings to try and trade short term changes and fluctuations. This can lead to longer term under performance given our past experience as you generally never get your timing right. As our Chief Investment Officer said in his latest piece, ‘Our last tactical asset allocation recommendation was to reduce the equity risk weighting in portfolios. In hindsight, when markets have fallen, it never feels as though one has done enough. However, we remind ourselves constantly that we are long-term investors and that trying to time markets too cutely in the short term tends to weigh on longer-term performance.’
Our current thoughts.
We have seen both bond and equity prices adjust sharply lower to factor in inflation rates hitting highs not seen for several decades. While central banks are adjusting policy to counteract the inflationary threat, we believe we see the extreme volatility continuing in the short term. This is likely to end when the market has a sense that inflation numbers are peaking. Economic numbers are beginning to suggest that consumers are reigning in discretionary spending as they see their energy and food bills spike and the latest worry is that we are heading for a recession. We are not in the recession camp (and certainly do not believe it will be a deep one if it does happen), and believe inflation is likely to peak in the next few months. Global equities are now trading at 15.6-times forward earnings, and only 12.6-times outside the US. Valuations are discounting much of the bad news, and we feel the forces that have pushed down stock prices are starting to abate. The war in Ukraine is approaching a stalemate, with Russian troops unable to progress, or seriously threaten neighbours. A European embargo on Russian oil is likely to be watered down significantly before it is implemented. The Chinese have announced that they will beginning reopening Covid restrictive areas soon, as the number of new Covid cases in China have fallen by half. This suggests we should be beginning to look for opportunities to increase risk (equity weightings) but valuations are not yet especially attractive, and we think there is still some margin risk to corporate profitability, and so we are prepared to bide our time for a bit longer before adjusting our current stance and reweighting towards risk assets.
History shows that markets are cyclical and there have been many periods when current events and fears have impacted performance, only to see markets go on to recover. Although Warren Buffet makes a very good point about holding cash for the longer term, it is prudent to always keep an emergency reserve in easily accessible accounts in case it is needed quickly.
As always, do let us know if we can help in any way and in the meantime, stay safe and we will keep in touch.
Best wishes from all at ABC
One of the first things you will probably notice as you read this e-mail is that we have not changed the livery of the business as yet, and that is because the restructuring that we had hoped would be completed at the beginning of April, has in fact been delayed a little as we get all of the legal and regulatory details finalised. I am hopeful however, that this will complete before the end of the month and that in my next News Letter, I will be able to confirm this to you.
Behind the scenes, I have been preparing all of the compliance documentation in the new Company style and also, we have been working on a new website, which again, we are hoping can go live within the next couple of weeks and I will let you have those details as soon as the site is ready to view.
I suppose I shouldn’t really be surprised by the complexities of getting of all of our ducks in a row – as always, the devil is in the detail!
With the Easter weekend upon us, I think this is just about as late in the year as it can be and for once, it looks as though the English weather is going to give us a fairly decent Bank holiday weekend – mind you, having voiced that opinion now, let’s hope that I haven’t jinxed it!
As the problems continue in Ukraine and Russia refocuses its efforts on the east of the country, our thoughts and prayers go out once again to the local residents and all those affected by the conflict. The stoicism of the Ukrainian people and their determination to defend their country has been phenomenal and I just hope that matters can be resolved diplomatically, although sadly, this does not look likely in the near future.
Whilst it’s fair to say, the conflict is still having some impact on markets globally, the influence has been nowhere near as great as that arising from Covid 2 years ago and in fact, over the course of the least month, we have seen markets starting to show signs of recovery.
Over the last 3 months, many people will have been receiving 10% warning letters from their Investment Managers, confirming where fund values have dropped by 10% or more since the last valuation point. This in itself, is a regulatory requirement and to my mind, it’s not particularly helpful because it will make people potentially more nervous, when in fact, it’s part of the cyclical nature of market movements.
We have of course, seen a bit more extreme movement in the last 2 years, with the impact of both Covid and the Ukrainian situation, but nonetheless, markets do respond to these things and then have a habit of bouncing back in due course. This is their cyclical nature at work.
Ironically, the Regulator does not insist that letters are sent out to tell people when their investments have gone up by more than 10% since the last valuation, but then that’s the nature of regulation I guess!
As always, we are taking the medium and longer term view and therefore, the short-term volatility and reduced market values is not something to be majorly concerned about and as mentioned above, the cyclical nature will ensure that over time, funds do recover.
Apart from the impact of Covid and the Ukrainian situation, the effects of inflation are not going to disappear anytime soon, and this is exacerbated by the supply chain issues that are manifesting, not the least of which, in the fuel sector at the present time.
The bigger picture though still suggests that there is growth and capital recovery ahead and therefore we just need to weather the short term turbulence in markets and as one of the Investment Managers we work with commented this week, ‘The mood music in Stock Markets is turning increasingly pejorative when it comes to the prospect of economic growth in the next 12 months.’ He goes on to comment that this is against the backdrop of a cost of living crisis and the Central Banks becoming more aggressive in their desire to control inflation and as always, it just a matter of time and timing, so perhaps I’ll close this with a quote from Winston Churchill, who said ‘Success is not final, failure is not fatal; it’s the courage to continue that counts.’
As I look out the window, the sun is shining, the evenings are getting longer and the woods are full of bluebells, so best wishes for Easter and we will keep in touch.
Best wishes from all at RAFP