Its Not Harry

Comment and opinion for retail investors in the UK

Monthly commentary

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 – 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 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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Deep Dive – May 2024

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Out of this world

This month I am going to address a subject that no-one really likes talking about but which I think I have a responsibility to address because I and my subscribers are all getting that little bit older.

As the Pink Floyd lyric goes ‘another day older, another day closer to death’, which is just a truism, but as we get into our 60s and 70s and beyond (and most of my subscribers are in that age group), the number of days is not so many as it was. 

All is going swimmingly, until it isn’t….

I know from you, my readers, that one of the principal concerns people have when they start running their own portfolios is that, although it is not so difficult when you have some training and have accumulated a bit of experience, it is unlikely (although not so in every case, I know) that a surviving partner would be comfortable taking over at short notice, especially as this would be an added responsibility during a period of grief and when other practical tasks of some complexity may need attention.

So, what would you want to happen to your portfolio management if you are still in charge when you die, or if you lose your mental capacity, which could be a slow and let’s face it, hard to accept or even recognise process?

Can we (I count myself in on this problem, naturally) do something now to prepare and make the situation easier for our loved ones? 

Most of my subscribers are couples and one partner (male or female) is ‘running the money’.  A small number of you are single, but there is still a problem that has to be resolved by someone else when you depart the scene.  Older age may imply that the problem will arise sooner rather than later, but experience has shown me that even the relatively young can be hit by serious or even fatal health issues.

I believe we ought to at least do some logical thinking about this real issue and this article is an attempt to get you started.  As always, I am happy to respond to feedback and suggestions and pass on good ideas and advice anonymously.

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