A few weeks ago when we were partway through the roadmap to lockdown restrictions being lifted and with the prospect of international travel being allowed from 17th May, I took the plunge and decided to book some flights to visit Portugal in June.
Whilst the thoughts were initially prompted from a business perspective, because I have a couple of reasons to be there, it’s also been a while since we have taken a meaningful holiday and therefore, we thought that it would be good to spend an early summer week in Portugal. As she always does, Chris had a good look round to find accommodation and we were able to book flights with EasyJet on the basis that if we needed to change because of Covid, we could do so without any charges and we secured a villa that we had 100% cancellation rights on up until 29th May.
Imagine how smug I felt when the green list of countries was announced and Portugal was there! We had beaten the rush, both in terms of getting the flights we wanted and a reasonable property, all at a sensible price before things started to rocket skywards.
I would imagine you are ahead of me already – whilst looking forward to a week in the sun and anticipating that last Thursday, other countries would be announced for the green list, we then had the disappointing news that Portugal had been downgraded to the amber list! The major cost of our trip is the villa rental and of course, by the time the amber list announcement comes through, we’ve passed the cancellation date and although our first reaction was to think we can’t go, when I really thought about it, what it means is that the self-isolation on our return can easily be accommodated by working from home for that time and so I started to look into all of the testing requirements to see what we would need to do.
As a green list country, travelling to Portugal meant taking a PCR test within 3 days before travelling out and then to facilitate our return to the UK, we had booked a video on-line test for 3 days prior to return with a further PCR test on arrival at Gatwick. The full cost of these tests would have been £210 each, but with a promotional code from EasyJet, we managed to secure a reduced price of £170 each.
With the amber list news, this then brings in further considerations. Not only do we need a Day 2 test on our return, but we also need a Day 8 test – that’s another £85 each. However, that would mean self-isolation for 10 days, whereas there is a rapid release test that you can volunteer for after 5 days. The cost of that is £95 each and I thought well that’s worth the extra tenner, we’ll go for that! Oh, foolish me – the rapid release test is in addition to the Day 8 test, but again, we secured a discount code and therefore, the net cost of these additional tests came down to £144. So that’s a total of £314 each to have 4 PCR tests and a video on-line lateral flow test.
Now that all of this is in place, the actual cost of testing has cost just about double the air fare, which puts it into perspective somewhat!
Just when I thought we were done and dusted, I then had a message from Easyjet to say our return flight had been cancelled – oh joy. Whilst we are returning the same day, it is later in the day and so I had to change the time of our PCR test on arrival at Gatwick. That was when I discovered that the 24 hour service advertised by the testing company actually translated to them closing at 18.00, some 4 hours before we are due to land so now we have to return to Gatwick the following day, but thankfully that it is all booked now.
The nearest place that we can get the PCR test on a drive through basis, is Gatwick airport and therefore, that will necessitate 6 trips to the airport, 4 to get the tests and 2 for the flights out and back.
Along the way, Chris raised the question why are we bothering – but I’m afraid to say that part of my nature is that the more difficult something gets, or the more somebody tells me that I can’t do it, the more determined I am to see it through! When Easyjet cancelled though, I was on a wobble for a minute or two!
Although now that it’s all set up and perhaps it all looks fairly straightforward, I cannot begin to tell you the length of time it took on-line and trying to decipher everything that needed to be done, both in terms of booking the tests, but also completing pre-arrival paperwork for the Portuguese authorities and then we’ll have to do the same again for the UK authorities coming back. I have to say, I was starting to question my own sanity towards the end, but nonetheless, our trip would appear to be on, that is of course, unless the Portuguese decide to pull the shutters down between now and Saturday – I guess we should expect the unexpected!
I will let you know in the next News & Views how things worked out.
Turning now to investment markets, I have talked in the past about the increasing emphasis that is being played on ESG – environmental, social and governance issues, both at corporate level and in the collective investment funds that we are familiar with.
There is even more stringent legislation within Europe demanding that ESG considerations are taken into account and discussed as part of an overall investment strategy and more and more existing funds are looking to convert to ESG complaint/friendly and that is where I came across, for the first time, the phrase green washing!
In broad terms, this is where corporations or indeed, in some cases, funds, are trying to create the impression that they are ESG friendly, whilst in fact, it is more smoke and mirrors and façade than reality.
This is going to be an area that gains in momentum and ESG will in due course, replace the traditional ethical and socially responsible investing emphasis and the good news is that ESG considerations will become the norm over time.
In the interim, part of the job that we and the investment partners that we work with must do, is to ensure that our due diligence identifies where green washing could be in evidence and is avoided.
It was during the same presentation I referred to just now that the subject of risk washing was also mooted and this really is best described as being where collective investment funds have a description that says they are balanced or medium risk, with the implication that they fall in line with what is generally accepted as balanced or medium risk.
The actual risk level in funds is often determined by the level of exposure that they have to Stock Markets, which in investment management terms are referred to as equities. To my mind, a balanced or medium risk fund should have a medium position with equity exposure of around 50% in normal times with the ability for this to be decreased to say, 35%, or increase to 65% depending on short term market trends. The counterbalance to the equity holdings would be lower risk investments in Government debt, property or commodities for example.
What has become evident, particularly over the last 12 months, is that funds bearing the same risk implication by labelling themselves as balanced or medium, can have a very different equity exposure – some could be as low as 35% whilst others could be 75% or more. Why I say the last 12 months is particularly relevant is because since the dark days of March 2020, at the bottom of markets following the Covid-19 concerns, we have seen a significant bounce back in Stock Markets and the so called balanced or medium risk funds with higher equity exposure may well appear to be outperforming. In the short term, this may be true, but in the long term, the risk that is associated with them, is such that when corrections or downturns come, they will suffer disproportionately badly, which will show they were neither balanced nor medium risk at all!
This is another area where our due diligence is such, that we need to look carefully at the definitions that are being used when we are matching investment solutions with clients attitudes and appetites for investment risk.
I thought that might be of interest to you to know a little bit about some of the things that go on behind the scenes and what we are taking into account as part of our on-going review process and the investment solutions we recommend.
Enough from me for now, so let me close by saying stay safe and we will keep in touch.
Best wishes.
Richard, Chris and Lesley