Its Not Harry

Comment and opinion for retail investors in the UK

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Deep Dive – July 2024

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Scores on the doors

As advertised, I thought it would be useful to take a look at the first half of 2024 and, after the UK election results which are the most significant ‘macro’ event for UK investors at this time, put out some ideas about asset allocation, where to re-invest those hefty tech fund gains and in general assist readers who are undertaking regular portfolio reviews, or maybe are even still building up their asset base from cash.

The elections in France have also been the subject of much media interest, but I am not sure the result will have much impact on European markets, and as I write this article, it is not really clear how a new French government will be formed. The significance is perhaps more about confidence in the Euro, but I never forget an old, only half jesting, comment that the Euro is only the New Deutschmark!

Some data to kick off

This table covers as many asset class categorisations as I think are relevant to my subscribers and in offering benchmark return data, I have not resticted example returns to a published market index or tracker ETFs, but in many cases shown an actual fund that I know is owned by many readers and would be considered a good market example, widely owned by many retail investors.

If you are interested in only what the main global indices would have returned, your data is in fact encapsulated in a ready made mix in the Vanguard Lifestrategy fund information supplied.

I have also this time added the results from the AFI model portfolios, which are maintained by a panel of the larger IFA/wealth manager groups in conjunction with Financial Express (the company behind Trustnet), the FTSE benchmarks that discretionary fund managers ought to be supplying to clients and also my own GIA account results. I have even left space for you put in yours, which you can get from a portfolio X-Ray!

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Yap – an anything else is better election wish

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It hard not to be surprised when one sees that a drift to the right in France is seen as a big negative by investors and many City commentators are saying that a Labour Landslide in the UK would restore Britain’s ‘safe haven’ status in the world.

Will the UK equity market return to leading the EMEA region, just as we have the Paris Olympics?

In fact, it is reported that foreign money is already flowing into UK markets in anticipation of the election result. The UK may well now have returned to looking safer than the rest of Europe to US investors.

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YAP – into extra time!

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More time needed to get results

The main headline I was gifted by the efforts of the England football team last evening!

I propose to write the Deep Dive monthly commentary as an assessment of markets over the first half of the year (a brief one – I am not one to waste your time on history) and more usefully, to look forward to the rest of the year with some pointers on asset allocation and risks.

To do that, I need to have resources available that are not going to be published for a week or two yet, so I will defer publication of my article until the second or possibly third week of July.

In the meantime, here is an anecdotal snippet.

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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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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.