*June’s Vlog*
In this month’s Vlog, as usual Director Matthew Smith provides updates on the market and the performance of the Buckingham Gate Portfolios. Matthew also explains some changes that have been made to the Buckingham Gate Portfolios recently and lastly he addresses the speculation in the news surrounding pension tax relief potentially being reduced. We hope you enjoy!
I read an interesting article the other day that mentioned that retail (i.e. personal) investors now own over 35% of US stocks and account for more than 1/5th of all trading activity.
Financial planning is an industry that tries to make the complicated more simple but I always tend to find that it fails to do that in the realm of investing sustainably. In writing this article I had to consider what to put in my title: green, ethical, sustainable, responsible, socially responsible, ESG, impact, thematic… the list goes on! How then can we go about breaking down the differences to make it easier for everyone to understand and more importantly: to provide solutions in line with people’s views.
Topics Discussed:
– Market Update
– Buckingham Gate Portfolio Performance
– Budget Outcomes
– Tax Day Outcomes
The Chancellor has just finished presenting his budget speech to the house. The Buckingham Gate team is now busy analysing the budget document in detail and searching for any devil in the details. We will report back on any significant findings that become clear in the coming days, however, as expected, today’s budget was rather benign from a personal financial planning point of view.
Topics Discussed
– Market Update
– Budget/Tax Changes Looking Likely
– Budget/Tax Changes Looking Unlikely
– Tax Consultations
– ‘In The News’
As budget day approaches, the volume of rumour, speculation and mistruth is stepping up in traditional fashion.
Of course, there are the old favourites (you know, the things that the media report ‘might’ happen in the budget every single year, but never seem to actually occur) such as the removal of the 25% tax-free cash on pensions and restrictions to pension tax relief (for what it’s worth, I don’t believe we are likely to see either at this coming budget).
It can’t be underestimated how important good data is. In the age of fake news, social media feeds and media speculation, it can be hard to know what to believe, but good, accurate data, can make it easier to see through the noise.
You will have to excuse the rather tenuous link here, but two things this week have made me reflect on the importance of data.
I had planned to write a somewhat jubilant update today as stock markets around the world have recovered, in many cases to now show positive gains during 2020. Some markets have set new all time highs in the past few days! When you consider what the world has been through over the past few months, that really is quite extraordinary.
We wanted to provide a further update on the Coronavirus and how this is impacting on portfolios.
The global stock markets have been incredibly volatile over the past few weeks as investors digest the minute-by-minute updates on the virus and how it is impacting on companies.
In the past 5 working days, we have seen some of the largest ever falls on some stock markets, followed almost immediately by some record breaking gains – volatility reins supreme.
At times like these it is important to remind ourselves of two of the timeless lessons of stock-market investing.
1. You can’t predict the market – trying to do so in the current climate seems even more futile than usual. The virus presents a new and uncharted challenge and it’s path is near impossible to predict. Markets are moving strongly in reaction to each new data point released.
2. If you miss the best few days in the markets, you often permanently damage your long-term returns. Fidelity wrote last year about the impact of missing just the best 10 days in the market out of the past 15 years. You can download and read their previous article on this here.
Given the extreme moves we have seen over the past week, there is a very high chance that at least one (perhaps two or three) day(s) will feature in the ‘best days’ table when we look back 10 years from now and thus, despite the media storm, this period could be one of the most important for your long-term financial success.
We took the opportunity on Monday to re balance portfolios given the significant divergence we have seen between bond and equity markets. Although an over-simplification, in essence this means that we sold bonds which had increased in price (and thus were making up a larger than desired part of the portfolio) and bought equities which had fallen in price.
Given the fairly sizeable recovery in equity markets over the past few days, this move seems to have been well timed and has assisted in the recovery of the portfolios this week.
We will of course continue to monitor the situation carefully over the coming weeks and months and we will write again with any significant updates to the portfolios.
As always, if you have any questions, please do not hesitate to contact a member of the Buckingham Gate team.
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