Archive | September, 2014

Investment Bulletin – September 2014

30 Sep


2014 year to date has behaved more or less as expected, trading in a range with the FTSE 100 bouncing from (circa) lows of 6450 to highs of 6850 (data until 15.09.2014).


We have made good returns, especially relative to the market – so far in 2014. 2 January 2014 to 15 September 2014, the FTSE 100 Index rose 1.2% in total (and 16 September 2013 to 15 September 2014 rose 2.7%). If we keep this as a consideration of market performance – this explains my opinion.


Our forecast of challenging markets has been correct and our approach of diversity is serving us well and I expect positive relative performance for the remainder of the year and beyond. Markets change, the risks and potential outcomes of these markets will change. This will lead to our further discussions around funds selected and asset allocation – I expect that this will lead to some fund selection recommendations and changes.


Our portfolios are well diversified, but we are carrying out in-depth risk return analysis and taking into account your outlook to investment risk linked to your investment portfolio(s).


Market Outlook

Our plan is for your portfolio to combine growth stock, with income/yield generating assets and defensive assets to help protect the capital value during periods of market decline.


Our prediction based on the market so far, and our asset allocation and expectations are on track. The market will remain weak and trade within a range, we will see subdued economic growth globally, but with pockets, countries and some economies slipping into negative figures and possibility returning to recession.


I expect the remainder of the year to be beneficial from an investment perspective, leading to high hopes for 2015. So far, there has not been any unexpected fears entering the market and the optimists have not been able to lead a break or up-surge through market barriers. The UK economy continues to exhibit signs of sustained recovery, however, interest rates are now widely tipped to rise – and signs of dissent among Bank of England policymakers have fuelled speculation about the timing and scale of such an increase.

Market Round-Up

Signs of growth within the US economy has supported the idea that one of the world’s largest economies was on the path to recovery. Further ammunition was provided by the US Federal Reserve’s (Fed) statement that it would do whatever it took to be accommodative until economic data showed significant improvements.


Asian markets are becoming quite attractive, in part this is due to valuations and associated negative performance, especially in 2013. It seems reasonable to assume that many associated economies have bottomed out (key anticipated markets are possibly India, Indonesia and possibly China).  Outlooks are starting to improve – or so we believe.  In the long run, it is a common belief that these economies have better growth potential than developed economies.


When looking at sectors with the best growth potential, this seems to favour technology, small cap, commodities, Europe and healthcare. True, this is assuming that the overall economic global growth story continues, at least as strongly as predicted – now that is a big assumption.   There are vulnerabilities to the scenarios and is a key reason why we combine asset classes and consider both positive and negative associated correlation.


On the macro side, economic data remained mixed. Inflation in the eurozone

slowed further, unemployment remained constant. GDP figures showed the German economy shrinking, France’s stagnating and Italy falling back into recession. Yet, fundamentals remain constructive. Lead indicators still point to expansion in the eurozone, albeit at a slower rate. The fiscal drag in Europe has been significantly alleviated and the economic revival in some peripheral countries is still well on track. In Spain, latest total mortgage lending

figures showed a growth of 13.2% year-on-year. Corporate earnings have also improved in Quarter 2 and are set to grow in 2014, helped by a pick-up in global economic activity. Despite the latest headwinds, various economic forecasts still imply a strengthening of activity in the eurozone going into 2015.


Your portfolio is being monitored closely and should there be fundamental movements, economic date or expectations away from the planned – I will be in contact and changes where suitable recommended.

This bulletin provides information, it is not advice. Any opinions are given in good faith and may be subject to change without notice. Opinions and information included within this document does not constitute advice.

 (If you require personal advice based on your circumstances, please contact me.)