June 2024
- “Higher for longer” is the chorus and the price of commodities is one of the causes of elevated prices.
- No change from last month there is still far too much attention and far too much money being invested in the “magnificent stocks”, these make up 30% of the S&P 500. There are many more opportunities around if only investors would widen their gaze. We have, and our client portfolios are balanced across growth and fixed interest including Japan and Europe.
- Last month I mentioned property prices were on the slide, that direction of travel seems to have changed, however, the political consensus seems to have emerged “to make life as difficult as possible for individual landlords” as reported by Mark Robinson in the Investors’ Chronicle this week.
- Our metal and mining funds continue to do well, so we are obviously pleased we stayed faithful to this exposure.
- China is doing its best to stimulate its economy (which bodes for well for Europe) but is flooding the US with cheap EV’s and the US is not pleased.
- The fixed interest market is offering good opportunities for investors and this year has the potential to make up for some of the lost ground over the last two years.
- Oil prices are steadying now but are still volatile as the market absorbs the supply issues caused by the war in Gaza.
- What are we getting right:
- Staying away from direct investments in China.
- Selling low and buying low.
- Getting into Japan early (at least a year ago the rest are only just catching up).
- Getting into Europe early (see above).
- Invested in Tech and staying with the US in general.
- Not selling off our Fixed Interest exposure and watching their value return.
- Watching out for cash accounts and short-dated bonds ceasing to offer attractive levels of return and what to do when this happens.
- What did we get wrong:
- Investments in Infrastructure and we took too long to move away from Agriculture, however, these areas are being corrected
- Our portfolios are holding up well because:
- Investing in underlying assets directly i.e., government gilts and high-quality corporate bonds.
- We continue to look out for structured products to place in our portfolios because by doing so introduces a certainty ingredient. However, they are not offering the risk-free returns they were.
- Our portfolios use fixed interest and fixed interest investments suffer when interest rates are high and there is more supply – this affects their value negatively. It should be remembered however, with fixed interest, you get your money back at maturity (which is not the case with other investments), so it’s a matter of holding these investments until interest rates start to come down or the investment matures.
Please note that:
- This information in isolation is not financial advice.
- Past Performance of investments is not to be relied on and the value and the income from investments can go up as well as down.
- It is advisable to regularly review your investments.
