January 2013 Investment Review

Happy New Year!

This investment review is the first review following our change of status to that of Authorised Discretionary Manager. For those of you who did not get around to your review meeting in 2012 it is important that you take the time out to come and see us this year, so we can explain how we will work with each of our clients going forward.

In 2012, well over 95% of our clients liked how our business had developed and so we can now manage their savings more efficiently and therefore more effectively.

So what’s happened in the world since October?

There were two events which grabbed the headlines: Obama being re-elected and the return to the edge of the fiscal cliff. The graph below shows the affect both of those events had. A large sell off which I mentioned in this blog and a swift rise which I mentioned in this blog.

The satisfying result however is that investment values have moved higher this quarter. Other events occurred which improved the outlook which didn’t command as many column inches. The first was a change in power in China and the second was the continuing sterling work by Super Mario in Europe. Both of these developments were probably more important in driving market sentiment towards the end of the quarter.

So now the markets are higher are you going to sell to realise the profit?

Well we are probably going to see a few temporary set-backs. These are to be expected, but the consensus opinion is that markets will continue to rise higher from here. The next fiscal cliff in two months will be bothersome, but it is not expected to end this recent momentum. So no, currently we are not looking to reduce our share holdings.

You added Gold recently. How is that performing?

Gold has disappointed precisely because shares have done so well. Some investors have sold gold to buy more shares which reduces the price. We have only 5% in our portfolios so it is not too great a drain on overall performance. It will remain a long term hold because you can never have all your eggs in one basket.

Is anything worrying you currently?

Of course. In almost two decades of managing client funds there has never been a period without worry about one asset class or another. There is currently much talk of a Government gilts crash, which isn’t a direct risk as we don’t hold any gilts. But if gilt prices do crash other assets will probably fall too.

Still no Commercial Property funds in the portfolios?

No. The retail funds continue to be too opaque to be able to ensure charges are not too high. It seems that mostly the fund managers are making money from Commercial Property funds and not the investors.

When is the next update?

These updates are quarterly so we will write again in early April.