News on the financial markets and current affairs to help you get the most from your assets.
Our October newsletter is available on our website to download. It is packed with articles, ideas and information to help you improve your financial well-being
Our October issue contains the following articles:
- Affects of COVID19 on retirement plans
- The importance of Life Cover for carers
- Spreading the risk
In order to read the articles in full, please click the link below:
If you would like to speak to us surrounding any of the content or any other area of your Financial Planning needs, please do not hesitate to contact us using our contact page below
With less than a month to go until the ballot opens, investor attention is increasingly focused on the US presidential election.
With two very different characters running for the White House, and with US politics deeply divided along political lines, interest in the outcome is understandable. However, we suspect that – for the most part – voting on 3rd November will have much greater significance politically and socially than it will from an investment perspective.
While there is much to differentiate the policies of Republican Donald Trump and Joe Biden, his Democratic challenger, there are
also a number of similarities. From a cold-hearted investor’s perspective, one particularly important common agenda is the intention of both candidates to unleash additional government spending to support the US economy. True, the scale and shape of this support differs – Trump’s plans emphasise business-friendly tax cuts while Biden’s focus on social security – but the objectives are the same: to cement and accelerate the economy’s recovery from its Covid-induced recession.
Undoubtedly, of course, there is devil in the detail. Four more years under President Trump, with his low tax agenda and antiregulatory instincts, would likely be welcomed by Wall Street. Furthermore, though his first term has been marked by unpredictability and opportunism, a second term for Trump nonetheless represents continuity, a condition investors tend to
prefer over change. On the other hand, while the scale of Biden’s proposed economic stimulus should be welcomed by stock market investors, the prospect of tighter regulatory standards and higher corporate taxes may mean a Democratic victory is initially met with a degree of wariness.
Beneath the headlines, the election outcome may have a material impact on specific sectors of the economy. As ever, healthcare
is set to be a key battleground. While Trump wishes to dismantle the Affordable Care Act – a cornerstone of Barack Obama’s legacy – Biden supports its expansion. The fortunes of healthcare providers, insurers and drug manufacturers are heavily dependent on which approach wins out. The same might also be said of industrial sectors, particularly car manufacturers.
To read the full update please click here:
If this does raise any questions, please do not hesitate to contact us: https://vincentthrop.co.uk/contact-us/
It has recently been reported by HM Treasury that the Autumn Budget scheduled for November this year has been cancelled due to the prolonged restrictions caused by the coronavirus pandemic.
This means that it is highly likely that any tax changes that might have been introduced to ease the financial burden of the coronavirus support packages will now be delayed until a potential March 2021 Budget.
This means the current personal tax allowances* and reliefs are likely to remain unchanged until next year (at the earliest). Please get in touch to take advantage of this.
Further information on the current allowances can be viewed in the documents below. There are two versions one of which is specifically for Scottish clients.
If you would like to discuss any aspect of the cancellation of the Autumn Budget with our financial adviser please get in touch:
Brexit – The Outlook for UK Investors
- Brinksmanship certainly appears to be part of Boris Johnson and Dominic Cummings’ negotiating strategy. Just eight months after
signing the terms of the UK’s withdrawal from the EU, this week saw the prime minister risk breaching international law to renege
on that agreement. Though the true motive for this latest twist in the Brexit saga is debatable, one line of thought is that the UK
government is aiming to increase the stakes to force some last minute concessions from the EU.
Indeed, a similar strategy was deployed in October, resulting in some small compromises from the EU and enabling Johnson to
claim a victory and sign the withdrawal treaty. This week’s events could be part of an attempt to repeat the trick. If so, success
would likely be a continuation of trade arrangements that look broadly similar to current arrrangements.
However, the UK government’s overhaul of an agreement it signed only eight months ago has not been well-received in Europe. It
is possible that it could cause negotiations – which were already strained – to break down completely. This would point to a
“hard” Brexit, with existing trading arrangements between the UK and Europe effectively abandoned. As trade with Europe
accounts for c.12% of the UK’s annual economic output, this would undoubtedly be a significant shock to the system.
While there can be little certainty over how the negotiations will end, it appears to us that recent events have increased the
chances of a hard Brexit. Indeed, this view seems to have shaped moves in currency markets. The sterling-euro exchange rate has
been a reliable barometer of expectations throughout this saga and, at the end of last week, the pound bought as few euros as it
has done at any time since the 2016 referendum.
To read the remainder of the document please click on the link below:
Please find attached update entitled Summer Statement. This includes information from Rishi Sunak and the four key measures which will be put in place following his recent announcement:
▪ A payment of £1,000 per furloughed employee that is brought back to work and retained until January 2021;
▪ A “kick-starter” initiative designed to encourage the creation of jobs for workers aged between 16 and 25;
▪ The elimination of stamp duty on house purchases under £500,000 until the end of March 2021;
▪ A reduction in VAT for the hospitality and entertainment industries and an innovative government funded discount to encourage people to visit newly re-opened restaurants.
From an economic perspective, there is much to like in the Chancellor’s plans. The focus on the creation and preservation of jobs is welcome at a time when the labour market faces its greatest challenge in decades. As ‘entry level’ jobs are highly concentrated in the hospitality and construction industries, efforts to support these areas appears sensible. And, while the bonus for rehiring furloughed workers may only delay a wave of redundancies, it is possible that the economic recovery may be sufficiently advanced by January to ensure these jobs are permanent.
Against these positives, a number of challenges are identifiable. There is little the government can do to discern between furloughed workers rehired because of the £1,000 bonus and those that would have been rehired without it: a portion of the bonus scheme is therefore likely to be a gift from the government to the corporate sector. It is also unclear whether the prospect of £1,000 in January is sufficient to convince companies to accept the cashflow implications of rehiring workers in the interim.
Please click the link below to access the full Summer Statement update:
if you do have any questions please do not hesitate to contact us – our contact details can be found by clicking the link below:
Understandably, individuals, companies, governments and investors have, for several weeks, been focused almost entirely on the Covid-19 pandemic and its implications. Having seen the introduction of unprecedented social restrictions in an attempt to contain the virus’ spread, large parts of the world have recently begun to take tentative steps towards easing these restrictions and building back towards more ‘normal’ social and economic conditions beyond covid-19.
Each country’s experience of the pandemic has been unique. The steps necessary to return to normality are therefore different for each nation. Similarly, the pace and success of the recovery will differ. While New Zealand, for example, appears well-placed to continue easing restrictions, evidence that infection rates in South Korea are increasing once more reminds us that the threat
posed by the coronavirus has not yet passed. Nonetheless, where safe to do so, the relaxation of social distancing measures has been welcomed by all, including investors. International stock markets have, in recent weeks, continued their relatively serene progress from the lows of late March.
Lockdown in the UK has, for many people, been made more bearable by unseasonably beautiful weather. With the guidelines set to permit small, socially distanced gatherings in gardens from next week, the temptation is to dust down the barbecue and enjoy some hard-won rest and recuperation.
Alas – for investors at least – it seldom pays to take your eye of the ball entirely. As illustrated by South Korea, the threat of a second wave of infection remains real. And, as if that were not enough, there are myriad other issues that will undoubtedly influence financial markets over the coming months and years. As ever, whether this influence is positive or negative is not predetermined: the impact on asset prices will depend on whether the outcomes are perceived to be better or worse than currently
To continue reading the Omnis article Beyond Covid-19, please do so by clicking the link below.
You can also find this and other useful articles on the Omnis Website
If this raises any questions or you would like to just get in touch with us please feel free to do so. Our contact details can be found by clicking the following link :https://vincentthrop.co.uk/contact-us/
Investment Update – Disappearing Dividends Should Return:
The Prime Minister recently announced the gradual easing of lockdown restrictions nearly two months after they were imposed. The restrictions have been largely successful in containing the spread of the coronavirus new cases have steadily declined since early April and the number of deaths is falling too.
However, the slowdown of economic activity has taken a heavy toll on growth. The Bank of England thinks the economy could shrink by 14% this year, although it also forecasts a strong recovery in 2021.
The impact on the global stock markets has been well documented, both by the Omnis investment team and the media. After a sharp fall in February, shares have recovered, mainly thanks to the unprecedented support and measures launched by governments and central banks.
The markets remain sensitive to new developments, as demonstrated by last week’s pause, and should continue to fluctuate as we gradually return to normality.
Periods of market turbulence like we have recently experienced are to be expected when you invest in shares. As long as you avoid any knee jerk reactions, then you should be rewarded for holding your investment over the long term. However, another consequence of the coronavirus crisis that may cause concern, particularly for those who rely on their portfolio to generate an income, is the number of companies that have stopped paying dividends.
When you invest in a share, you buy a small piece of the underlying company. Generally, you hope to receive a return if the price of the share has risen once you sell. In some cases, your ownership stake also entitles you to a portion of the profits earned by the company. It distributes these profits by issuing a payment known as a dividend.
Please click on the link below to continue reading the remainder of our Investment Update – ‘Disappearing Dividends Should Return’. We hope that you find this informative.
If you do have any questions surrounding this article or any other area of your financial planning needs please do not hesitate to contact us:
Omnis May Investor Update – A fortnight ago we noted that, in spite of continuing lockdown measures and a raft of dire economic data, global
stock markets had made a welcome – if partial – recovery from their late-March lows.
Happily, this recovery has since continued almost uninterrupted. Having suffered a fall of historic scale and speed, the US stock market (as measured by the Russell 1000 index) ended April down ‘only’ 10% for the year to date. Remarkably, had you invested in the US stock market at the start of October
2019, the value of that investment would be almost unchanged.
Source: Financial Express Analytics, 1st October 2019 to 30th April 2020, total returns in local currencies.
As the chart makes clear, the UK stock market has been a laggard throughout this period. This serves as a reminder
that, while Covid-19 is at the forefront of all our minds, it is not the only thing we need to keep an eye on. Firstly,
though negotiations have been understandably delayed as politicians focus on the matter at hand, Boris Johnson’s
government has thus far refused to countenance a delay to the UK’s withdrawal from the EU. This increases the risk
of a hard Brexit at the end of the year – an outcome investors have long viewed as negative for UK assets. Secondly,
the UK stock market has a relatively large exposure to the energy sector which has struggled as oil prices have fallen
to multi-year lows.
Please be sure to read the remainder of the Omnis Investor Update which you can do by clicking on the link or photo below.
If you do have any questions surrounding the content of this update or for any other area of your financial planning needs.
Please do not hesitate to contact us – https://vincentthrop.co.uk/contact-us/
MARKET TURBULENCE KEEPS THE OMNIS FUND MANAGERS BUSY
As we explained in this recent article, the Omnis Investment Team strongly believes active investing is more effective than passive investing because active managers can add and remove holdings in response to opportunities or threats they spot in the markets. Today’s article is ‘market turbulence keeps the Omnis fund managers busy’.
This is especially the case during periods of market turbulence, and the managers of the Omnis equity range of funds have been busy over the last few weeks, ensuring their portfolios can withstand the current market conditions and benefit from the expected economic recovery once it starts.
Before we dive into how each manager has positioned their portfolio, it is worth highlighting several recurring
themes which came up in our recent conversations:
• All managers emphasised the importance of holding financially strong, high quality companies that should still be around when the crisis fades;
• Recognising that the pace and scale of the crisis has fundamentally changed the outlook for a number of industries, our managers have shown nimbleness and humility in cutting their losses where necessary;
• The consensus among managers is the market turbulence has presented compelling investment
opportunities for long-term investors across different styles and sectors
UK All Companies Fund
The manager focused on making sure the portfolio holds financially strong companies. They bought cruise line Carnival at the start of the year as it looked set to benefit from the robust global economy, but they sold it as the travel industry came to a practical standstill due to the lockdown. They took this opportunity to invest in companies which the team has been monitoring for a while, but which had previously been considered too expensive. An example is bakery chain Greggs, a well-managed company in a good position to prosper when growth starts again.
The manager believes the crisis has unearthed some attractive long-term investment opportunities in various sectors.
To read the full update and how each manager has positioned their portfolio please click the link below:
If you would like to discuss our Omnis Update – Market Turbulence Keeps the Omnis Fund Managers Busy, please do not hesitate to contact us, we would be more than happy to speak with you: