Happy 70 years on the throne Your Majesty!

Official logo for Queen Elizabeth's Platinum Jubilee
Happy 70th anniversary Your Majesty - Queen Elizabeth is marking her Platinum Jubilee
Before anything else, have a great Bank Holiday weekend! It is brilliant to recognise that today (Thursday, June 2) is the 69th anniversary of the Queen’s Coronation (70 years on the throne). Well done Ma’am!
Never in history has anyone been more successful in travel, communication, business and political leadership and held such role for as long as she has, nor had her image reproduced so many times. We must be grateful and thankful for her and her stoicism and for the period of stability her reign has demonstrated to the whole world.

You may recognise if you receive this as an email that the profile picture has changed. Rishi Sunak, in the Nation’s eyes, has gone from being the blue-eyed boy to ‘only’ the sixth most popular PM candidate now, according to the betting odds… how things can change so quickly and for the masses!
It reminds me of Labour PM Harold Wilson’s comments that ‘a week is a long time in politics’ (was he one of the few to choose to go without having any shoves I wonder!). Our photograph arose from an audience we had with the ‘Chancellor’ and it also showed we do indeed have the connections, influence and the ear of those who count, from time to time! Anyway, for now the image has ‘moved on’. We’ll wait for a suitable alternative later!

Prices and the markets  

The oil price has been rising inexorably. We can’t control that and it has a big bearing on imported inflation. It is near to its highs and a further small push will breach the peaks seen in 2008 before it then plummeted. It will fall again but it takes time to change the supply and routes for the fuel. The world still consumes vast quantities of it, regardless of wise green initiatives. Change can’t be overnight.

However, sustained high prices will impact the global economy and will affect things even like the (casual) holiday trade where people will feel it is too expensive to travel far. UK Natural gas prices have plummeted by nigh 70% since the winter peak but of course, big suppliers forward-buy to avoid being caught. Falls will feed through in due time however.
Maybe it’s time to buy some Aramco shares to balance your portfolio, up a third since November… we don’t plan that however, but spivvy oil exploration stocks which do strike it rich could be worth a fortune now! However, something connected to the US Shale Oil industry may be a good hedge in the short-term.


A big welcome to LISA  

I am pleased to soon welcome an addition to our team – LISA. After a long process, we are the first independent LISA manager in the area!

This is a Lifetime Savings Account   Lifetime ISA … ‘something and nothing’ to some extent, but they can have their uses. Those from 18-40 will be able to open one and save up to £4,000pa (till age 50!) and the Taxman will give them a 25% bonus on subscriptions. 
They are designed for your first home or if you don’t qualify for that, can be withdrawn from age 60 for any use. If you take funds outside that, then you lose 25% (so more tax than the bonus you enjoyed but you should have had tax-free gains on the tax rebate anyway!). The house must cost under £450,000 and with a mortgage. If you maximise a LISA, then you can only contribute £16,000 to a normal ISA that year.

Ours LISA is a Market LISA so if you have a dreadfully poor cash LISA somewhere else, you can transfer that to us to optimise return potential.  


Easy money  

The Investment Fund upon which I keep commenting has released its latest month-end value – it rose from March and stands 40% above the price at which we are buying more shares for clients. The Fund is also buying-in and cancelling its own shares so that increases the value for the remaining shareholders. This Fund, to remind you, is winding-up. This means that at some point, we shall be rewarded with that extra 40% for nothing, all other factors remaining the ‘same’, less small administrative costs.
If that is two years, that is 20%pa on top of what the portfolio itself may do (and dividends). What is there not to like… so we shall keep buying for new clients and retaining its priority for existing. We have a reportable stake now. If you are not with us, the chances of you having this fund are almost zero. It’s the sort of thing we enjoy acquiring as it all adds to clients’ bottom-lines and well, what extra risk is there? We have some in ISAs, Pensions and portfolios so wherever we have clients’ money to manage – and it is not alone in ‘story’; even if we have 2.5% of clients’ assets in it, the other 97.5% sits in other stories!

My second is a secure loan fund, a very defensive asset but one which had made several mistakes in its past, but is now winding-up and with new personnel directing proceedings. It will be suspended from dealing soon when it has just the last few assets to repay. So, the latest asset value was announced and last week yes, we were still buying shares at a 43% discount to that asset value, which is likely to be realised relatively soon now but even if it is in a year’s time, that’s fine. We had been building our stake and own 17.4% of all the shares but it’s hard buying them, as it is quite small now as most money has been repaid – from sellers who are simply impatient and want ‘out’ now.

If all goes to plan, our £1 invested last week will give us back a 75% return, simply from the final borrowers repaying their loans. Are there risks? Yes, there are risks with ‘everything’, which is why we always spread our exposures very widely, but this is all in the price. In fact, there is a possibility that actually we shall see a much higher ultimate pay-out but that’s there for free. Our strategy is simple – if we have a £20,000 portfolio for a single client and £1,500 is in that, it is low risk but if/when we realise that £1,125 profit, that’s 5.6% on the value of the whole pot, so the other £18,500 doesn’t have to do much at all! All investors need is patience and not to sell-out now as that opportunity is lost.

STOP PRESS – the word is out – drat! Since writing this, over a few days the share price has risen 53% so we shan’t be buying more (but love the gain for our investors!).

My third? It is an insurance ‘fund’. It is designed to provide uncorrelated returns from a portfolio of insurance underwriting exposures. It floated in 2020 and raised just under £1billion. As is its nature, it will have unexpected hits and also bonuses from lower pay-outs and meantime, we receive a dividend of roughly 8%pa for waiting. The company is buying-in and cancelling its own shares as the ‘fund value’ has dropped way below the Company’s per share asset position so that’s a wise move. Business is strong, premia are up markedly and losses from the Russian war very limited. We can buy more exposure at a 37% reduction from the levels at which investors valued the shares in early 2021. So, even if the price simply returns to the value at which institutions thought the shares should have traded last year, we’d enjoy an income of 8% and a capital gain of 60%. Thank you very much. With those nice income cheques, we can afford to wait.

Fourth? I have written before about this multi-billion dollar one. However, it remains exceedingly attractive. So in April 2007, this really quite boring and defensive fund came to the market. It’s done what it hoped and indeed much better than expected. No, we did not buy it then (after all, we are ‘value vultures’!). It has turned £100 into £390 but its shares haven’t kept pace and have only grown to £169. So if tomorrow the company decided to sell everything it owned and return the cash to shareholders, we’d receive a bonus of 131% on our present investment value. I don’t expect that is going to happen any time soon but I don’t care. Meantime, we sit there enjoying our 4% dividends and the company buys-in and cancels shares regularly too, increasing the return for those of us who stay. Since the end of January the share price is up 22% and we’ve enjoyed our income. As a result, it is now our second biggest holding. We keep buying!

Now to our costs. These sorts of special opportunities are prospective or real profits on top of what the ‘markets’ may make for everyone, including us. However, because of these, the extra returns from such situations can and do create more than enough extra rewards for our clients beyond all our and any other underlying fund costs which investors may pay. If you think a ‘tracker fund’ is a cheap option, think again. You’ve been cutting-off-nose-to-spite-face. In our Exclusive Club, you receive our advice with our compliments (so no extra fees) and no subscription costs to our strategies whatsoever (some like St James’s place take up to 6%!) too.


Bank of England – inflation  

Okay, so I shall comment. I do not believe that the present Governor is doing much of a job to be frank and he wasn’t effective at the FCA either. There – said it. He and his team were caught asleep at the wheel when it was obvious that external inflationary influences were building and he uses silly language which enflames the situation and yes, there are things he could have done and can still do to address the present high inflation. He is not the steady hand on the tiller to work with the Government to address present issues and to lessen their sting.
The funny thing too – usually with an explosion of created money, inflation is sure to follow. However, the measures of ‘money supply’ globally don’t reflect that but again, it is almost inevitable that an eruption follows with such an explosion in government debt so watch-out – unless Quantitative Easing gently falls at the ‘same time’ to counter that happening.

I also don’t think that the Chancellor’s latest packages to help with energy bills are best targeted either – they mainly don’t affect inflation by cutting costs and are simply handouts.


Mightily fallen
The cult of the fav fund manager has sorely come to bite quite a few investors recently. I may have plenty of respect for what they have achieved and can but so often, they and their supporters become carried-away by the hype. I’ll say something controversial now – when Neil Woodford was in the Invesco stable, for most of the time his principles and practices proved to be a great job and the idea to concentrate upon income is really rewarding just now and should continue to be so too. Eerily the descent started after an alleged affair and marital issues…

Nick Train’s Lindsell Train Investment Trust shares are now almost as low as the troughs after the Pandemic so all that gain disappeared – a dreadful comparative performance. The shares had traded at a colossal premium to the underlying asset value as idiots chased them regardless and now they trade at a discount. At least his portfolio is well-balanced unlike some of the trendies which could still fall a long way.

I am still no buyer of ‘Scottish Mortgage’ which had halved since last November and the Company is buying-in its own stock again now at a deepening discount. Will Terry Smith join the rout I wonder? He too has personal relationship issues which have hit the daily news… all I’d say is ‘why’ anyway, when there are plenty of quiet managers delivering sound results and without the hype… I hope and believe we too are great ‘fund managers;’ but I am kept humbled – constantly – by what hasn’t done as we’d have liked it to do and not basking in the sunshine of a temporary lucky play, as seems to have been the trouble with too many tech aficionados.

Still, as I repeat and as still exist in droves, if I can buy cheap ‘Value’ plays with chunky dividend income and yet where the assets could easily double in a few years (with many prospective takeover opportunities in there for free), not only are we not missing-out but we’re much better protected than ‘they’ are, come a rout.


St James’s Place  

A client with a small exposure to the firm from prior to our involvement has had a letter noting changes of investment management. He raised it as the actual ‘repositioning’ is expected to cost 2.2% (and why aren’t even one of the components acceptable to the new managers I wonder!). I assume too this doesn’t include the bid:offer spreads on the stocks sold and then acquired either. The client holds this in an ISA and the annual charge is a swingeing 1.75%pa and of course there are early withdrawal charges too (deferred ‘commission’ for the original sale or switch).

The company also notes extra annual charges for ‘managing and maintaining the fund’ for pensions and life insurance (bond) investments and offshore bonds of another 0.53% or 0.54%.
It all seems rather dear… investors can take alternative action if they have had a similar letter.. transferring to ourselves instead, for no subscription cost!  
Adviser questions SJP after client incurs 2.2% cost.    


Life insurance  

So the industry met 98% of all claims for death, ill health and income protection in 2021. That totalled a whopping £6.8billion, or £18.6million every day. As ever, I’d say, if you have dependants or personal liabilities which need covering, then look at the consequences of a nasty or terminal event happening and consider what resources you’d have and if not enough, consider insuring the gap.
Don’t over insure either and remember that on death other things such as pension values and ill-health benefits through work can be applicable too and I am afraid there are plenty of keen sales’ reps out there still selling too much insurance for big commission… when you can keep the premia for yourself instead.



Have you been greenwashed? This is where people and organisations make big fusses about being environmentally friendly but really they are only doing it for marketing and sales and well, where lots is ‘fake’ or artificial. (Carbon credit offset being one perhaps).

Well, big investment entity Morgan Stanley in the US, which oversees plenty of indices, has just been fined $1.5million for greenwashing. Well, the fine seems to be for omissions for bureaucratic failings rather than real ‘cheating’ but there we are…We know what happened to HSBC’s head of environmental strategy when he said a few home truths and plenty of statements which represent common sense rather than heresy but that is what happens when zealots for any subject start running the programme, I suppose.

Watch-out for the significant financial repercussions as plenty of well-intentioned individuals are suckered into doing the wrong things by those pursuing simple thematic profit motives for selling you stuff. Including financial products… ESG funds generally have under-performed recently as they had all the big tech… ouch. Don’t be duped, please!


Thanks again
I can’t mention everybody but thanks again for the kind comments about these missives – we do try to have variety and cover areas you may not have seen otherwise!    

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