Gordon Kearney, Director and Financial Adviser
Posted in Investing, Tax Planning on 28.04.09

As we know, last year proved to be an extremely difficult and volatile 12 months for investment markets and 2009 started in much the same fashion, with January experiencing the largest ever monthly drop for the MSCI World Index — down 9% in Sterling terms. While February proved equally challenging, March provided some much needed respite as markets rallied on news of unprecedented stimulus plans and coordinated efforts of the G20. Markets were further encouraged by signs that the economic data appears to at least be stabilizing, if not actually improving.

In what has clearly been a very challenging environment for all asset classes, our range of portfolios have held up relatively well. With the exception of our Adventurous Portfolio, all other portfolios outperformed their respective peers in the Investment Management Association (IMA) classification system (see table below).

Bonds had an extremely difficult first quarter with no  sector producing positive returns. Within the Fixed Income element of the portfolio our underweight position in Global Bonds was seen to be correct as the sector returned –2.35%. However, UK Index-Linked Bonds returned –2.01%, failing to justify an overweight status during the period, although we believe that decision will proved to be right over the longer-term.

Relative overweight positions in both Private Equity and Infrastructure detracted from our portfolios over the quarter. However, over the last couple of weeks both asset classes have started to produce the type of returns that begin to justify an overweight status.

Going Forward: In the Developed economies the prospect of a W-shaped recovery is still a possibility. Unemployment will continue to rise into 2010 which will put pressure upon consumer spending. Added to this there is now talk of rate rises before the end of this year to head off possible inflationary pressures.

Although initially welcomed, much uncertainty remains — especially in the US — over the likely success of the various stimulus packages with significant sums yet to be allocated or spent.

In the UK the quantitative easing process is still only half-way through and we don’t anticipate seeing results of this until the summer at the earliest. The Budget confirmed that the economic outlook remains very testing and many have cast doubt upon the Chancellor’s projections of a return to growth next year. Our own expectation is for an improvement although this does not necessarily mean positive growth but a slowing pace of decline.

The Emerging world is in much better shape and the green shoots in China are much in evidence. With the exception of eastern Europe, low levels of national, corporate and household debt mean that the emerging markets should continue to lead the way in terms of performance through 2009.

If you would like to know more about how we as Financial Advisers can help you  with your Investments then visit the Investment Management section of  our website: Investment Management or send us email at: email@fiduciawealth.co.uk

The information contained in website is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occasioned in connection with the content hereof and any such action or inaction. Professional financial advice is necessary for every case.

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Gordon Kearney, Director and Financial Adviser
Posted in Investing, Tax Planning on 28.04.09