Thank you Citywire again for the honour of being on the ‘Top 100 Financial Advisers’ list this year! We are very humbled.
Top 100 2024: See the penultimate list of fantastic firms
Whilst the photo Citywire uses still shows me with hair (!), the content is what counts – thank you everyone for the judgment and especially our loyal clients for their support in helping us achieve and retain this position. And especially, thank you to all the directors and staff team for enabling us to secure our place again and under some very challenging conditions these last few years too.
Whilst none of us is perfect and there is always more that can be done, it’s great that independent assessors recognise the high quality, care and outcomes we have always endeavoured to demonstrate to all our clients, with their best interests at the forefront of all we do. At the end of the day, these principles of integrity are our best interests too.
And well, for those who shorted Tesla prior to the US election… according to S3 Partners they’ve lost $5.2billion as the shares have rocketed close to 30% instead, to again see a valuation over $1trillion. Who would have guessed they were such a proxy for a Trump success? Probably now, as those short positions have been unwound in many instances, the euphoria has become too carried-away and so a ‘short’ is not such a bad idea to hedge excessive valuations but you need to be brave… they are still 23% lower than their high in November 2021. I mean – will Mr Musk have time to run his eponymous firm!
Budget repercussions
I am concerned that some of the Budget provisions may not have been thought-through particularly well. The employer National Insurance on top of above-inflation increases in Minimum pay is having a deleterious effect and influencing sentiment which can then lead to far more negative outcomes than even the negative reality the changes make.
Yes of course, afflicted parties whinge about any Budget change affecting them but this is different. When the supermarkets say that prices will have to rise to offset the increased costs, it is stating the obvious really so ‘workers’ and all the rest of Society will have to pay and guess what, up goes inflation and with it, mortgage rates are likely to remain higher for longer as well.
If you haven’t noticed too but unemployment is beginning to edge-up as well – after all, the public sector can’t be the Country’s only employer… I don’t like the artificiality either in things like university charges rising to ‘help increase funding to these august institutions’ but actually, the increases are simply enough to cover the increase in National Insurance and salaries from the Budget so no net gain at all. Like it or not too but several of Mr Trump’s proposals, whilst being business-friendly, are also inflationary so the Dollar’s risen as its rates for even bigger government debt are likely to stay higher for longer. That doesn’t help things here either and we import lots of inflation with things priced in Dollars.
Other sectors to retail and hospitality, like care, will be very adversely affected and other employee-reliant industries but also charities which employ people. Their donation levels don’t suddenly increase despite what might be a 15% increase in the cost of employing one person – and don’t forget the Minimum Wage rise will also attract more NI as well.
The other concern and suspicion being noted in the media is ‘value for money’ in the increases in spending proposed (that’s not ‘investment’ either). There are concerns that public sector productivity is weak already and the significant above-inflation pay increases doled-out have been made without concessions to working practices or to improve productivity. Simply throwing public money at things isn’t the solution to inert problems.
That’s not ‘investment in valuable public services’ then but simply spending and especially when we read that standard four-day working weeks (or less) are being bandied-about, holiday leave of 38 days (and Bank Holidays) and cuts in the working week to only 35 hours for train drivers, on top of a package giving them over £70,000pa. These seem to be the critical sentiments permeating Society (and not just the usual media suspects) and indeed the international investing community – which is very important.
I hope too it is not significant that the Chancellor has now changed her published CV from the one likely to have helped her secure her role, to remove reference to her three years at Halifax Building Society from ‘Bank of Scotland Economist’ effectively to a retail bank clerk where she was in a small complaints’ team managing administration processes, IT, small projects and planning apparently… After all, I don’t have the equivalent of a professorship and doctorate in economics (well, I do have many relevant and high level qualifications in the field but to say that would be disingenuous at best and a lie at worst)!
And what about the Local Government Pension Scheme review, its consequences, ramifications and indeed directions to subscribe to public, infrastructure assets rather than following independent investment management principles? Altogether the 86 schemes in England and Wales would constitute one of the biggest pension schemes in the world. Presently apparently this represents 7% of all institutional assets, paying £1.3billion in management fees and another £180million in performance fees in 2022/3. Interesting…
MIGO Opportunities Trust
As one of the founder investors in this Trust, we were delighted to be invited to its twentieth anniversary and to witness the closing bell at the London Stock Exchange.
We were pleased to be able to send representative Mr Noah Milton and his fiancée Kate to represent us and this is him with the two fund managers, Mr Nick Greenwood (who I have known for over 40 years) and Miss Charlotte Cuthbertson and the rest of the Board in attendance. We remain a reportable holder, have enjoyed the performance and continue to support the style and stance of the management!
Good news/bad news
Blackstone Loan Financing is repaying a further E61million to shareholders at the net asset value. The shares have continued to trade at a discount to the underlying asset value so we can still buy shares at say 73c, only to be paid 90c (so an uplift of 23%). They were 53c last November and we had lots – but I wish we had bought even more! Meantime the running income yield is over 13%. It’s a shame it is winding-up – once gone, the opportunities for further diversification and the income flows will be much harder to find.
We once held JP Morgan Russian Investment Trust. That doesn’t exist anymore but became its Emerging Europe, Middle East and Africa Trust. Mr Trump’s election has seen the shares of the Trust (untradeable in many respects in view of the sanction issues) rise almost fourfold since the May low at one stage, clearly as some of those ‘written-off’ assets it couldn’t dump may suddenly attract value rather than nothing. There’s a recent court report too but maybe the sentiments there have less bearing! Many managers would have simply dumped it at the time rather than left the issues to the Trust to manage. The shares are now almost five times the low, so financially it was good if you couldn’t sell at all!
Having your cake and eating it – are there any free lunches in the City? Diversified Energy Company Plc, a £600million company, has swung to being our biggest contributor for a month to the biggest detractor for the next and then back again, buoyed by Mr Trump’s success despite an ever-weakening oil price too. However, regardless of what it is, does this company represent an anomaly where you can indeed have your cake and eat it?
If you invest today, you’ll pay say £11.29 a share and the dividends are worth circa 8%. Had you invested in September, the lowest price would have been nearer £8.20 and you’ve guessed it, the dividends (the ‘rent money’), the same nominal sums so a forward yield then of 11%pa – and your capital would have risen by 38% on top. Yes, yes, all the usual caveats but yes, occasionally these anomalies do arise and are some of the most attractive ‘value’ plays in the whole market. We really like them!
Fund management
Is a funny game. With all the regulatory pressures to ‘conform’ it means many bizarre and two-dimensional judgements and decisions are made which frankly are not in ‘customers’ best interests’ but they tick the boxes of ‘review and action’. Sycophantic fund closures by groups doing their ‘fair value assessments’ take no account of the attractions of the assets or sectors in which these ‘bad’ funds may be invested at the time but more crucially, what about the cost to investors of dumping one portfolio and acquiring a new one? This can cost between 5-10% from bid:offer spreads to other costs and whilst not a reason to ‘stick’ either but is a year or two’s comparative return a worthwhile penalty to pay?
However, I was reminded of what fund management is all about on Wednesday morning in review with a fund manager… ‘fortuitously (in that the stock had bad news and fell almost a quarter) we sold x stock as its dividend payment dates didn’t match with our calendar needs’. And you thought it was all about research, fundamentals, value, momentum etc… what would the Regulator think of that, despite the practical concepts involved?
Compensation
So finally a High Court Judge has decreed that London Capital and Finance was a ‘Ponzi scheme’. It is hoped that the perpetrators of the fraud and the peddler of these bonds through the marketing agency (which took up to 25% commission) in duping innocent investors who thought they were subscribing to a nice safe bond paying a good rate of interest, will face justice to the fullest.
Administrators are seeking £177.5million damages to make up the losses but there will be little to retrieve. The company and the bonds were unregulated but already the Government has acknowledged its/regulator’s own regulatory failings by paying-out £120million to investors. 11,600 subscribers were affected.
What is really sad is that a number of independent advisers and commentators flagged grave concerns to the FCA at what was being promoted and the wholly unviable model but nothing happened. Yes, I am sure something happened but what is meant is that no action took place to stop the ongoing fraud and to nip-it-in-the-bud (as history proves).
Instead the repercussions here seem to be that now the system has gone overboard against the industry universally to avert such overt fraud but it is horses and stable doors and instead, we are told that the Chancellor even feels the approach is excessive, however well-intended but one limiting access to advisory services for millions as well as increasing costs for access to that advice. Cynics suggest it appears to be a reaction almost designed to deflect from its own failings at the time but I could not possibly comment.
Of course the Regulator has a hard job at the best of times and must protect against fraud and negligence but it must also stimulate and encourage the financial services’ industry and not end-up killing its golden goose. At the end of the day, the honest, professional industry has to pay the compensation costs of the few miscreants, whoever was or is responsible for not acting swiftly on evidence presented to it. The honest, law-abiding and upstanding operators in the community who try to do the best and honest job they can for a fair payment are the ones paying the bill.
On the same subject, claims-chasing companies face a £250 fee to lodge any complaint with the Ombudsman. This is actually a good development as so many complaints are simply ‘chancers’ and not those who have suffered a loss as a consequence of bad service or advice. If successful the cost is offset anyway so… however, we offer a Claims’ service but we review the problem and then consider and recommend the best way forwards if there’s an issue we believe is negligence. Not every upset is the fault of the other party!
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
