Are we invested in any banks?
This is currently the most common question posed by clients. The short answer is no we are not. Our main managed portfolios have not been invested in any banking shares since 2014.
The long answer is still no we are not invested in banking shares, but I would like to explain a little more. The vogue currently is to invest passively, that is to just buy the whole index. In the case of a FTSE 100 index tracker, every investor who holds a tracker fund holds all the major bank shares. HSBC, Lloyds, Nat West, Barclays & Standard Chartered Bank. They also hold all the major insurance companies – Prudential, Legal & General and Aviva. We hold no UK listed insurance companies in our portfolios either.
Why have you also mentioned Insurance Companies?
I’ve added the insurance companies to the banks because they both exist in the Financials Sector of the FTSE 100 index. Together they made up 17.67% of the index as at 31/12/2022. That percentage will be much lower now. We hold 0% Financials. Investing directly in individual shares allows us to hopefully screen out the duds. Something that cannot be done when clients just settle for index tracking in their portfolios.
Several US banks and a major bank in Switzerland have gone bust, will more follow?
There could be more failures like those of Credit Suisse and Silicon Valley Bank and more bail-outs, a lot depends on how the central banks get a lid on inflation and how governments and multi national companies manage the pressure they are facing from employees demanding more income to cope with these inflationary rises.
Continue reading “Question Time April 2023 – The Banks”