February 2021 update

There is much comparison in the media between pre-Covid market highs and post-Covid market highs, this is a pointless comparison for one astonishing reason... 35% of all US Dollars ever printed were printed in 2020 (Investment Watch). Governments are set on inflating their way out of debt. This will benefit those who own assets, but those with cash will go backwards. 

This approach to ensure economic stability/recovery combined with low interest rates has fuelled asset appreciation and attracted further leverage. Loose monetary policy is likely to remain, however as the Lord giveth, he will also taketh away, and we can expect higher taxation on these ill-gotten gains.   

Whilst there is some obvious over exuberance in areas of the market (particularly US tech stocks) there is still value to be had and this is the area where we are focusing our guns. In the developed world, Japan has traded at a discount since the 90s, yet it is a leader in technology and has a number of interesting companies that dominate globally. Additionally, under the previous Abe-led government, Japan has pursued a much-needed corporate governance and reform agenda to the benefit of company shareholders.  The Japanese Yen has also proved itself to be a diversifier in bouts of market volatility.

Another unloved country trading at a discount is the UK, where politics and, in particular, the Brexit withdrawal agreement, have dampened both international and domestic appetite for UK equities.  While the full ramifications of the withdrawal agreement may take a while to become apparent, the UK market has enjoyed a bounce since the start of 2021.  What is appealing about the UK market (beneath the FTSE 100) is the diversity of small and mid-cap companies that are financially robust and give exposure to the long-term demand themes we seek – healthcare, technology and cybersecurity for example.

Since the beginning of the year, we have been reducing some of our invested tech exposure which did so well for us in 2020, and increasing investment with other themes where value is seemingly more available.

JP Morgan Global Macro Opportunities 

Our team of financial advisors and wealth managers have been following this investment fund’s fortunes for a number of years, we noticed that a change of investment manager has resulted in a more conservative approach. The investment fund is subsequently more likely to deliver a consistent path of positive returns in differing market conditions through its access to varying asset classes.

Bailie Gifford Health Innovation 

A conviction investment portfolio of around 35 stocks seeking to benefit from the transition from a one size fits all approach to healthcare, to a data driven, personalised methodology based on the understanding of genomics to improve treatment and prevention. The investment fund also incorporates the technology improvements in healthcare.

TT Environmental Solutions 

While energy transition and its associated strategies have had a spectacular return profile over the past twelve months, as financial advisors and wealth managers we believe we are at the foothills of the investment journey for the green energy, climate change theme. This wealth management fund aims to invest in companies that are delivering solutions to problems of climate change and ecosystem interference. Although many offerings purport to address this theme, it is not easy to find a pure play among asset gathering businesses often guilty of some element of ‘greenwashing’.