Its Not Harry

Comment and opinion for retail investors in the UK

Mark Potter

YAP – bottom Dollar?

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The very recent ending of the Saudia Arabian agreement with US to prioritise oil orders placed in Dollars (signed 50 years ago when Nixon and Kissinger were the names in the news) may well generate news stories in the mainstream press in the next few weeks.

Could it be that Gold and oil won’t be priced in US Dollars?

I am not able to predict in any meaningful way out the macro-economic impact, because the ending of an agreement is not likely to have any instant impact in a world where all efforts, especially in China where they have been dumping Dollars in favour of mainly Gold, have failed to dislodge the Dollar as the world’s preferred currency.

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YAP – Axa Framlington Technology Fund

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I know some of my subscribers are quite rightly fans of Technology funds, as I am. The ever rising price of Nvidia shares continues to boost valuations in the sector, all by itself, it seems at the moment!

One of the funds that it seems did not at first pick up on the most recent surge in the valuation of the handful of leading shares likely to benefit from AI (the Mag7/Fab5) was Axa Framlington’s Technology fund which until fairly recently had delivered superb results in the hands of Jeremy Gleeson.

As a result some of us had lately preferred alternatives like funds from Guinness, Polar Capital and Blue Whale., amongst others.

I now can report that Mr Gleeson is leaving Axa Framlington ‘to pursue another opportunity’. His successor has not yet been named.

This news will be of interest to any readers who still own the Axa Framlinton fund.

Deep Dive – June 2024

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KISS – Keep It Simple, Stupid!

The heading is a reference to the mnemonic widely used in training courses, mainly sales and marketing variants, in the latter part of the last century.  Many readers will know it, I am sure, but for those who don’t, the idea is that only simple concepts are readily understood by prospective customers and so if you want them to be attracted to what you have on offer, you need to have a marketing message that conveys simple benefits, like “Persil washes whiter” or “Every little helps”.

It is true that some consumers, like myself, actually enjoy looking into detail and researching products, but I would happily admit that I am attracted to simple solutions in the investment world, knowing that complexity often allows product manufacturers to rip off consumers or permits the disguised conduct of fraudulent, or at least negligent fund management activities that go undetected, as for example happened with split capital investment trusts.

It doesn’t need to be complex – just logical

For Portfolios

Last month’s Deep Dive article listed some options for those who might want to simplify their investment affairs as advancing years make things more difficult.  Here were two of the options:

  • Move to multi-asset funds, either those built with passive index-tracker components, or managed variants.

  • Continue to retain a portfolio of funds, but much simplified, using 6 -10 funds which cover all the main global markets

This month I want to share with you some data that I researched after thinking more about how investors with slightly differing characteristics and objectives might actually go about the process.

I also wanted to do some more validation on my recent affirmation that investing in a way that meets a desire to support sustainable or general ESG objectives would not result in weaker returns and in fact might deliver better results. 

I was especially motivated to do this after reading a trade press report of an IFA who claimed that ESG investing was pointless and a scam.  When opinions about investments are polarized, one can as rule assume that the quiet but active majority (being motivated as a whole by the prime objective of making money) will come out on the winning side – that is in fact the essence of the momentum factor as a driver of investment valuations.  It seems that in Europe at least the majority prefers sustainable capitalism.

In the spirit of the heading, this article is in itself a little shorter than recent monthly missives.  Feedback on your preference for levels of detail is always welcome.

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YAP – a pinch and a punch on the first of the month

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As we used to say when I was a small boy, back in another century when politicians who slept with ‘models’ resigned and stayed out of public life. Those gentler times when Russian apologists in English public life without any democratic mandate were not credited with being important enough to make public assessments of the US Justice system just because their favorite American pop idol had been found guilty of behaviour that was totally in character.

I actually mention the date because today being June 1st means we have ended May – that May of the ‘sell in May and go away’ variety.

Is this one of those years when profits ought now to have been safely banked? Of course, we can only know with hindsight in a few months’ time, but I would draw your attention to this extract from my trade press:

This focuses on only a narrow part of global equity markets, but it is the segment where most money has been made recently.

Thus the ‘sell in May’ mantra could well be applicable to some of your assets, but others may still be very fairly valued or even cheap.

My personal modus operandi is to take good profits as soon as they arise because I need money to spend from my portfolio. You may have different objectives, but there is always the risk of a ‘reversion to mean’ and the more stretched the valuation of an asset is relative to its long term ‘fair value’ average, the more painful the ‘ping’ back will be.

As it is the start of the month, I have also prepared a Deep Dive article and that will be finally edited and posted next week.

YAP – a geographical shift?

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Readers will know that serious investors do not shift their asset allocations around and trade in and out of funds frequently just because of a change in short term factors. In my training I suggest having a high level asset allocation target for each main investment sector that is of interest and relevant to your objectives and to then monitor, using some sort of recording system, how your actual portfolio compares with the targets.

This is not a strict science, but part of the ongoing process of diversification and risk control.

Something I have noted from the mass flow of media data that I see

I remind you of this because I want to call your attention to what I see as being subtle changes in the thinking of the professional investment community on the relative value of North American versus European and UK markets.

I am not suggesting that you are likely to react by making major changes to your asset mix, but that you might find this helpful context in making those minor course corrections that keep the portfolio supertanker heading smoothly for its long term destination.

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YAP – ESG is not woke!

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I read a news items recently that a collective of mainly Republican finance directors of large investing institutions in the USA was refusing to invest with and in fact withdrawing funds from any investment management business that adopted sustainability criteria.

Some people avoid looking at the evidence when it says the wrong thing

Now it has always seemed to me that a tendency to Republicanism in the US was inversely correlated with intelligence, but I had believed that Republicans still liked making money – in fact I assumed they had a version of the Bible that omitted that bit in the gospels about ‘storing up your treasures in heaven’!

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