UK tax boost and healthy investments

PJM&Co has had good news lately on several investments
So we’re told the Chancellor had £31billion more in tax receipts in January than he expected. So much for forecasts… who’d like to forecast how many forecasters predicted that? It may be very controversial to say so, but Liz Truss and Kwazi Kwarteng were the closest but that’s another story (and their problem was awful delivery and timing)!  

Still, it may mean that Mr Hunt can be a little more generous than he had predicted and perhaps leaving Corporation Tax rates unchanged and a further cut in energy bills whilst the high prices still work their way through and out – especially as businesses are suffering enough with high energy costs and inflationary rises generally, let alone the public. We shall see what happens in this month’s budget!

We are also told that the UK’s stock of housing has hit a ‘value’ of £8.7trillion… a highly artificial figure and boding badly for the long-term future I suggest, especially as the average home represents nine times the average salary, a multiple last seen in 1876. (The long-term average was nearer three times). The real difficulty would be what a price collapse would do to the UK economy which is so dependent upon home-owning consumers’ confidence in the ‘price’ of their homes (note I didn’t say ‘value’) however, I have been saying it for ages but such excesses remain unsustainable.

However, aside from the box in which we need to live… there are so many fantastically-valued other investments out there to acquire instead and without the same degree of significant inherent risk which any over-valued asset presents so it is an easy decision regardless! Conversely, there are plenty of very attractively-priced commercial property REITs on the market at deep discounts to their underlying asset value, chunky dividends from dependable rents from their tenants and great upside opportunity when the economy stabilises as it will. Oh yes, these are infinitely easier to manage and far better tax-wise in terms of how you can deal with them too, especially as Capital Gains Tax on real assets is becoming even more swingeing from 5 April. Yes, we have several of these for clients.



Congratulations are in order for Mr Felix Milton. He has been elected to the Company’s Board of Directors! It is a delight to have him join in a more senior role and he will also have some supervisory oversight now on specific activities within the Firm. He has now been with us for nearly ten years though enjoying work experience with us previously.
I think his ambition is to achieve more professional qualifications than his Dad and in 2016 he was the youngest qualified financial adviser in the Country! He has always enjoyed working with clients and looks forward to supporting the management team and enhancing the quality of service the Firm provides to all its clients and to ensure the onerous regulatory protections are observed at all times, for the protection of clients and Firm alike.


More good news  

Pleasing last week to note a possible bid for one of our long-held but smaller stocks – John D Wood Group Plc so the shares jumped a third and also double last autumn’s price.

Not every client will have these of course (and for many it is simply a ‘recovery’) as that is not the way we spread our clients’ risks but a ‘value’ remit tends not only to see recovery potential in companies but also where a corporate predator can see significant value in buying ‘the whole company’ if the market is not prepared to revalue its prospects for itself.

On the same morning Rolls Royce (much bigger at 0.77% of total client assets) at last reported better results than expected and their shares jumped a quarter too and then another 7% the next day. That’s more than doubling since last September. We had a few fortunate clients then for whom we acquired some at only 70p! Still, some investors bought them at 39p in only October 2020… patience rewards in the end though of course not always universally and the usual caveats have to apply!

On top of that, long-held ME Group Plc and Man Group have also presented great results and bigger dividends to investors today and yes, we hold these too, now at multiyear or an all-time high. It all helps and as I have said many times in the past – investment is about being in ‘things’ like this at all as opposed to not and then the icing on the cake is about having a few that do really well and not so many that bring shocks. It has been pleasing to us and thus our clients that we have had far more with the good news these last few years than the bad news, the latter all taken in the stride of the overall positive outcomes (as the bottom line results attest) as much as we hate any bad outcomes for our clients.

And for balance, yes, stocks like these can disappoint too though fortunately we have rather fewer of those. One such long-term disappointment is De La Rue (0.35% of total assets) but we hold in there, not out of superstition but at some point something is going to happen and that is suggested too to be corporate predation. Diversified Crystal Amber (1.22% of our total assets) still has a chunky stake in it and it would be good if that was able to orchestrate something before it finally closes-down as an investment fund.

I remind clients that primarily we buy funds from the leading investment opportunities and funds as we see them but we do add direct stocks to strategies which are chosen to have them, as opportunity for some icing on that cake and with negligible individual risk as we spread the capital so widely. Our biggest fund is presently just over 2% of our clients’ total assets and our biggest individual equity exposures are typically half that. That large fund is a collective fund of other funds so extremely well-spread! I should add too, as with this one it is big for us not because we have put most money into it but because it has done well (and steadily) over the time we have had it and we have taken an active decision to run with an ‘over-weight’ exposure. We do often trim-down such over-weights depending on what they now hold and their prospects etc. We have just trimmed numbers two and three for example!


Vanguard’s financial planning  

Vanguard, renowned for its no-frills, cheap index tracking funds, has decided to close its financial planning arm in the UK. This is quite curious – why can’t such a big firm as that make it robust – and pay?
A spokesman has said: “After careful consideration, we have concluded that our clients are looking for other, more adaptable forms of financial planning from Vanguard.” So at the end of May, its 480,000 clients on the relevant platform can either self-manage or transfer to another adviser.


Crypto again  

Oh dear – another crypto-currency get-rich-quick scheme seems to have disappeared – Phoenix Community. The ex-leader is in the Philippines and once hosted parliamentary conversations here and lobbying to curry favour. Please – the lesson is simple – don’t use unregulated firms and don’t be tempted to buy stuff like this which doesn’t exist…    

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