Shares And Indices

Dear Friend

So, how many companies are quoted on stock markets around the world? The number is just below 48,000 – which is still a pretty large number. However, how many ‘indices’ are there tracking parts of these companies’ shares? This can be a simple ‘FTSE ALLShare’ Index Tracker or something more complicated and then of course we have different providers offering the same index but through their own labelled fund.

Would you believe that for every quoted company, there are sixty times more indices tracking certain types of share than there are shares in the first place?

So yes, there are over 3million different indices which have been created to offer ‘cheap’ ‘passive’ options for investors.

In 1995 less than $2triilion was invested in these things. That is now about $43trillion. It was 4% of total assets (in active and passive funds) but now it is 42%. They include thematic options, like ‘ethical’ investing – todays’ modern equivalent being ‘ESG’.

Regular readers will know we have our concerns and that there is likely to be a passives’ bubble bursting at some point as money flows into the same big names, as these indices are mainly ‘weighted’ so the bigger a company is, the more of the index it represents. I have touched upon ESG many times too – take the ‘Clean Energy Index’ for example – it rocketed because there is so little to buy and floods of ‘woke’ money pushed component shares skywards (the best I heard was when a manager said (correctly in my view) that ‘yes, these companies will survive and thrive but people are paying the price for them which they may be in twenty years’ time’). A crash in these is likely – or inevitable.

What investors tend to forget (not a new thing) is that things change and people become too excited and pay too much for something when it is trendy. Today’s interpretation of ‘ESG’ won’t be the same tomorrow either.

In the year to March 2021, over two-thirds of ‘thematic’ funds outperformed the broader indices. Go back five years and that drops to below a third. It happened because most of this themed money was ‘ESG’ pumping-up tech share prices… Over those five years, a fifth of other types of thematic funds don’t even exist anymore… and over ten years, thematic index-trackers outperformed only 4% of the time. I reckon ‘now’ is the beginning of a lengthy period of under-achievement going forwards… primarily because the themes which investors always want are the same – at that time for their popularity anyway.

I suppose too if you think about it, investors always think they are second guessing what’s happening down the line and then they want to feel optimistic about their ideas so end-up paying too much for them – whether that is fluffy, cuddly ideas for our world or ageing populations and healthcare, gold mining or cryptocurrencies or whatever – but the whole idea of indices and passive investing really is simply to invest in ‘everything that exists’ because you may struggle to beat that by not selecting certain components.

There is one final question – if you invest ‘passively’ what are you doing about stocks which fail your personal ESG criteria, or what is the fund manager doing (who may laud ESG credentials and put big store on selling halos over its business) but which runs passive funds for other investors – rather hypocritical eh? Black Rock had a big problem with a Palm Oil producer with allegations of inappropriate behaviour only last week – it’s the biggest investor in it but it can’t sell because it owns the stock ‘passively’. I mean, do you support an ESG fund managed by the biggest owner of a very un-ESG company…?

The Cost Of Investment Management – And Access To Them

Our latest newsletter will be posted soon. If you are not on the hard database, please pop us your address. It covers many areas but most importantly the embarrassingly good recovery and gains in clients’ investments since market lows in March 2020. However, it also looks at those believing that the ‘cost’ of their advice, or their investment management are the primary important things in any relationship regarding the subscription and management of their capital. It uses the expression ‘cutting-off-noses-to-spite-faces’ because when last year’s results are reviewed and what we were able to do for clients – and did, versus what people without that actually could do or did do (most could not), we have made additional returns for our clients which will cover generations’ worth of our whole fees – and more besides.

Our best interests are our clients’ best interests. If, at the end of the day, the client has a bigger and safer pot than they’d have otherwise, then those are our objectives. The client will appreciate that and will stay with us and then, a few pennies of fees, a few pounds, every year for many years are worth a considerable sum to our business model even if we subsidise many attributes of the service and the guidance we provide. Don’t get me wrong – we can do very nicely thank you very much, for looking after our clients’ best interests. Being cynical, if we increase clients’ funds then the management fees increase too – what nicer an incentive for us to share!

On top of that, with any and every thing which we do, buy and hold for our clients we are looking constantly at ensuring we secure the optimum price. The bigger we grow then the better the terms we can negotiate too and we look to pass-on whatever savings we can achieve. It also means we can secure preferential terms for dealing and things like that and which individual investors cannot have otherwise.

We also work darned hard, even when it comes to doing transactions. None of that is reflected in the ‘cost savings’ clients enjoy compared with other advisers and managers. We communicate with clients too and when withdrawals are required, we discuss and do our utmost to manage access to funds on best terms for them, such as selling their holdings to new clients at prices no-one else on the market can secure, benefiting buyer and seller alike. Even when we undertake bigger transactions, we don’t just rush into the market with a big instruction and expect a sensible price – sometimes therefore we have to nibble away over a lengthy period to stop pushing prices against us. It’s all part of our job as we believe it to be – others don’t do that but what is that worth to our client, in percentages and pounds, shillings and pence terms in a year?

Let me give you an example. We decided it was time to sell-out of a long-term holding, Dunedin Income Growth Investment Trust. We have done very well but I could not easily sell more than say £75,000’s worth of stock on any given day without signalling too much to the market. I have also used rigid lowest limits to protect ourselves and we have now exited in full and at good levels. On one day we sold 50,000 shares at £3.11. Another vendor pushed an order through for the same size and clearly simply at ‘best’. They received £3.04 – 2.25% less. Institutions don’t seem to have dealing teams any more. They are all automated so when an instruction is received, the computer fires-it-off and that’s that. We’re different and our clients received a better price than everyone else on that day and all the other days they received good prices too. So remember when you are comparing an unmanaged ‘index tracker’ or whatever that you too don’t end up without a nose ‘cause that was clearly cheaper than taking professional, qualified, experienced advice and guidance from a firm with your best long-term interests at heart, won’t you!

Big Con

So, is Bitcoin unravelling? It has now fallen considerably (over 50% at one stage)… and many new speculators are nursing headaches. On top of that, many have been sucked-in on the basis of gearing-up their returns – something which is very easy these days and when things are going well, it’s great – you know, if something goes up 10% you make 100% or whatever but when the opposite happens… and not only that but speculating on margin (in other words having say £10,000 of exposure but only having to deposit say £500) is usually part of that, so you only receive a telephone call when your small deposit has been used-up and ‘excuse me sir but you need to send us more money now’ takes hold. It is dangerous – very dangerous.

Finally, it seems the Chinese are being the most ethical of all, leaving all the other ‘woke’ civilised countries like the UK and the US in the dust by saying it is going to do something about regulating these things. Maybe that was/is after the alleged $5million ransom paid by the US oil pipeline in Bitcoin – untraceable, criminal and facilitated by global regulators who have not yet acted and making them culpable as a consequence. This is before you realise that the Bitcoin game of ‘mining’ is consuming as much electricity as half the UK’s total consumption… and all for what – greed? Certainly it’s doing nothing for the planet.

Un-Premium Bonds

Please, if you are superstitious, look away now… apparently researchers have found that most holders have never won a single prize. 15.9million of 21.4million bonds have not won anything since the records started in 2007 and the bare fact that these owners collectively own £108billion between them too. That’s quite an indictment!  We’re happy to share our views as to how to treat these beasts and why!

Holiday Lodge Investment

Do you remember ‘Dream Lodges’? Well, finally the directors were barred from this activity but not till people had lost millions.

Why haven’t all their assets been taken away from them and why haven ‘t they been jailed for fraud?

Remember, these things and caravans and are NOT investments. There are no regulations protecting your money, big maintenance charges and whilst it may be easy to buy one, have you tried to sell? They may sound ‘lovely’ – regular holidays, letting income from other visitors and so it goes on but they are fraught with dangers and problems. If you want to hear some true life stories of the sorts of problems before you commit then please contact us but don’t ever convince yourself you are buying one because it is a ‘good investment’ – it is not and never will be.

Annual Indemnity Insurance

Well, I am pleased to say we showed a clean pair of heels to insurers on renewal again though that has not stopped the annual premium nudging up to almost six figures. What does this cover and thus what our clients have to pay to us to absorb for this invaluable protection which none of us hopes is ever necessary? Primarily it covers ‘negligent advice’ whatever that constitutes and however that is decided. A giant part of the liability vulnerability is for ‘Pension Transfer’ advice in that we are now one of the few firms left in the Country authorised to provide this service. Of the fewer than 1,000 regulated individuals with the competence and qualifications to do the job, we have three!

Unsustainable Sustainable Investments

Please don’t be scammed. You may think you are ‘doing good’ with your investments but in reality the likelihood of that is negligible and more often than not are being sold a pup. The FSCS has flagged the latest scheme where people will have been scammed out of their pensions into buying “Sustainable AgroEnergy Plc, EcoPlanet Bamboo, Merco Bonds, Forest Lakes, Global Forestry Investments and Eco-Synergies ltd.” No claims have yet been paid-out.

You may think ‘it’ is a good idea, but you could simply be the sellers’ next route to big fat profits for them and nothing whatsoever to do with your idylls of helping the planet or your fellow man. Now the ‘ESG’ industry is so ramped-up… well, it is actually unethical how they are looking to profit so much from the good intentions of their investors (or dare I say investors’ naivety in actually believing they are ‘doing some good’ when often they aren’t at all). There are other ways… and charitable giving to your preferred causes are amongst the best.

Coffee and Company

Have you been missing meeting with others? Have you been feeling lonely? Are you apprehensive about starting-up a social life again?

We have all had many things to contend with over the past year or so. Lockdown has left many of us of all ages feeling isolated and alone and now that some semblance of normality is returning, we may feel worried about going out and mixing with other people.

Hopefully we have a solution! Philip J Milton and Company Plc Charitable Foundation wants to help.

At Trimstone Manor Country House Hotel, Trimstone, near Ilfracombe, EX34 8NR we are going to host weekly “Coffee and Company” mornings every Wednesday for anyone who’d like to meet up with some others and to dip their toe into the start of a social life again.

Our first “Coffee and Company” gathering is Wednesday from 10.30-12. We would like to invite anyone who feels in need of some company and who would like to meet with others for a chat and a coffee (and probably cake!). Just drop by! You’ll be welcome!

Please be assured we’ll follow the rules to keep everyone safe. If it’s nice we’ll meet outside too!

To join us please let us know on 01271 862841 or email so we have an idea of numbers but don’t worry if you haven’t told us in advance – just turn up!

These are all free events, sponsored by us, with our pleasure.

We hope to see you there and achieving our simple aim of reaching out, bringing in and joining up!

Helen L Milton Trustee and Director

Risk Warning
Stock market investments can offer income through the payment of dividends and interest and good opportunities for capital appreciation over the longer term. By this, generally we mean periods in excess of five years, preferably much longer. However, we can never promise you particular returns, especially in the short-term. At any point in time but especially in the short term, your capital could be worth less than the original amount invested as some of the selected holdings may fall in value, regardless of expectations at the time of acquisition. We may also invest in funds that hold overseas securities. The value of these investments may increase or decrease as a result of changes in currency exchange rates. Returns achieved in the past cannot be relied upon to be repeated.

To remind you, why do I send out occasional emails? Because everyone can save money. We have no connection with any companies mentioned and you have to make your own contacts and satisfy your own enquiries. What is in it for us? If we can prove that we are knowledgeable and that our service and advice have good value, then you might contact us for professional financial planning and investment help. You don’t have to do that though and there’s no charge for emails. If simply they save you money, then accept them with our compliments! However, you’ll know where we are!

If you have any queries of any form or indeed any subjects you think I could include, please contact me. I also refer you to our website We celebrate our 35th anniversary in 2020 and have been publishing a well-respected independent column in the local Paper for most of that time and free client newsletters as well.

Do not forget however the usual caveats – this is not ‘advice’ and you are encouraged to seek that before embarking upon any financial route involving investments, etc.

My best wishes

Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers