Clients Advisers

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To all clients and partners,

I am writing to tell you of the steps that we have taken across the Harwood Wealth Management Group in relation to the unfolding Covid-19 disease pandemic.

As I’m sure you will have seen across every media, the situation is evolving hourly and new advice continues to be issued.   We have taken the view that acting early allows us to manage change in a calm and orderly manner. Since the start of the outbreak we have been assessing the potential disruption and planning accordingly in line with our established Business Continuity Plans.

From the week commencing 16th March we have begun a process of our staff working remotely.   We believe that this reduced contact between staff will minimise the risks to them, our clients and our business. We are also restricting all business travel and have asked our staff not to attend conferences or meetings unless they are absolutely essential. 

The nature of our business allows us to provide  manage investments, process documents and instructions remotely as though we were sat in our regular places of work.   We have tested out remote IT infrastructure and are confident that we can continue to deliver high levels of service.

We are confident that we have taken early, well planned and tested measures and that our business will continue to deliver the service you have come to expect from us.

We hope that you and your family stay safe and well.

Kind regards
Alan Durrant
CEO

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Wellian Weekly


  • 26th July 2021
    wellian weekly

    Investments in ESG strategies in the main were excellent in 2020. There were a number of conditions thought that made ESG look good. I would happily wager that these returns easily influenced and turned a few heads which would have inspired many investment pounds to be diverted towards the style. These returns most definitely created a great deal of column inches that claimed the investment style to be the future of investing, but how much thought was actually given to why and how these returns were achieved?

    Before I go any further, I want it to be known that unless we collectively do something positive about redressing the imbalance and about the environment, or climate change then what is the point of saving for the future or making profits as future generations will not be able to enjoy it. Doing whatever we can as an investment community to promote the health of the planet cannot be a bad thing and therefore it shouldn’t be chastised – even though there is a great deal of greenwashing out there which makes it understandable that many are annoyed – me included. But, to quote Tesco “every little helps” and we all do need to do our bit to help out, so surely investing in ESG funds is a good thing.

    To download the full report please click on the link below:


    wellian weekly

  • 19th July 2021
    wellian weekly

    UK inflation is up again, hitting 2.5% in the year to June, as the unlocking of the UK economy continues with prices rising faster than expected. The CPI measure of inflation rose from 2.1% in May and is above the Bank of England’s 2% inflation target for a second consecutive month and is the highest rate for nearly 3 years.  This latest rise will continue to fuel the debate about whether the Bank of England need to consider increasing interest rates in order to cool the economy.

    A lot of this lies with comparisons with prices that were falling a year ago at the height of the lockdown. Bottlenecks in supply are also driving prices up. For instance, car manufacturers cannot find microchips, so cannot build enough new cars, so used car prices went up 4.4% in a month. During the pandemic, the microchip market switched its supply to electronics amid a slump in car sales. Some of the increase is from temporary effects, such as rising fuel prices which continue to increase inflation, while food from shops, eating and drinking out and clothing and footwear, usually cheaper at this time of year, went up in price instead as prices are recovering from the lows earlier in the pandemic.

    To download the full report please click on the link below:


    wellian weekly

  • 12th July 2021
    wellian weekly

    Many column inches have been written over the last couple of years relating to sustainability and investments. Many arguments – on both sides of the fence - have been put forward with regards to how it should be measured and the taxonomy surrounding this incredibly important topic and yet here we are, years later and still no agreement.  In reality, it isn’t as if this approach to investing is new – there have been unit trusts specialising in this space going back many decades.

    We have long argued that there is not, and will not be, a one-size-fits-all approach to sustainability. The fact that there isn’t a simple adopted measure really provides lots of scope for wiggling out and for greenwashing to occur. Even the broad “ESG” moniker doesn’t really work as a catch all as stocks can be (and are) included in portfolios and index because they pass one measure of ESG and fail miserably on the other two for instance.

    To download the full report please click on the link below:


    wellian weekly

  • 5th July 2021
    wellian weekly

    As we move into the second half of the year, we can look back and see that all things considered, it has been a positive half year for capital markets despite the ongoing inflation concerns in the background led by a shortage of workers and the disruption to some supply chains because of the absence of raw materials. Nevertheless, the Central Banks in both the US and the UK are maintaining that there will be a further spike, but it will only be temporary. This takes away the need for the banks to taper their ongoing monetary support or the need to raise interest rates. In the background we have had an enormous amount of stimulus in the US with President Biden introducing a multi trillion US$ stimulus package, while in the UK we have the absolute support to drive any economic recovery. The issuing of vaccines across developed markets has gone well, although more needs to be done across emerging markets, and we have seen strong growth in many regions as economies recover post lockdown. The prospect for consumers is good as they have excess savings ready to be spent on non-essential purchases and experiences. Developed markets were also supported by decent results from various companies, and we saw a welcome return of dividends from many blue-chip companies, especially in the financial sector. 

     

    To download the full report please click on the link below:


    wellian weekly

  • 29th June 2021
    wellian weekly

    Before I start this piece, I am going to state that I have no knowledge that this will happen, no insight into the numbers (with no intent to look for them) and very happy to be shot down in flames suggesting my theory is wrong.

    As a fund selector, over the last couple of years I have spent a lot of time with “traditional” fund managers putting an ESG spin to their existing portfolios. I’ve met with lots of managers who manage “sustainable” portfolios and I’ve been in the company of countless analysts, strategists, economists, geopolitical commentators and other experts that reliably inform me that to get to net zero, or to meet the Paris Agreement goals then the shift to electric and renewably generated energy is one of the major ways we can save our planet and get to 1.5 degrees.  I am not a believer in all the big political conspiracy theories and I’m siding with the scientists on this one. From a personal perspective, I’m doing my part too – we’ve had solar panels on our roof for almost a decade, I drive a hybrid car which we have owned for a couple of years, the electricity and gas in the house only comes from green sources and so on.

     

    To download the full report please click on the link below:


    wellian weekly

  • 21st June 2021
    wellian weekly

    We’ve written here a number of times over the last few months about the likelihood of seeing higher inflation numbers in the coming months ahead following the easing of lockdowns and the likely impacts it would have on capital markets. And with CPI data being released in the last week, those higher numbers are starting to come through.

    In the UK, data from the Office for National Statistics showed that the inflation rate for May rose from 1.5% in April to 2.1%, the highest rate for almost two years. The inflation rate is also now above the Bank of England’s 2% target and was well above most economists’ forecasts for an increase of about 1.8%. This was seen as a bigger than expected rise and we could see the inflation rate rise faster and higher over the coming months than previously thought. The rise was driven by the rising cost of fuel and clothing as the easing of lockdown sparked a rise in consumer spending.

     

    To download the full report please click on the link below:


    wellian weekly

  • 7th June 2021
    wellian weekly

    The headline of this article should be obvious. If you don’t know what you are buying, how could you possibly know what to expect from your purchase? This is a fact of life, not just investing. A friend recently bought their first puppy. Having never had a dog before, they thought they knew what they wanted, but after conversations with a couple of breeders they realised they didn’t! Different dogs have different needs from their owners; what you ideally want from a dog and what breed of dog is ideal for you might not be compatible. After changing their mind on which breed, it transpired that they were pointed towards a pup from a litter of 7, and were recommended “one of the middle ones” because usually the first born is the alpha and even though the pup is only with their mother for a matter of months before becoming part of a new family it will have a number of characteristics or traits that will stay with it for life.

     

    To download the full report please click on the link below:


    wellian weekly

  • 24th May 2021
    wellian weekly

    As you may have noticed, markets are starting to get nervous. Having started the year strongly and finally passed the 7,000 mark back in mid-April, the FTSE 100 has bounced around the 7,000 level ever since. Similar returns have been seen in the S&P 500 and the main European stockmarkets. In theory, markets should be more confident now, and not less confident. Despite the arrival of new Covid-19 variants, existing vaccines appear to be proving effective, and economies are gradually reopening. Here in the UK, we can now go on holiday again, visit friends and relatives, and go to our local pubs and restaurants where we can now eat and drink inside. 

     

    To download the full report please click on the link below:


    wellian weekly

  • 17th May 2021
    wellian weekly

    One of the best (and most infuriating) things about being an investment manager is having an inbox that is very large. I receive hundreds of emails per week from scores of different investment management companies, economists and strategists for instance. I am invited to dozens of web conferences. I have lots of phone calls discussing a great deal of investment ideas and opportunities. I very rarely see absolute consensus on the attractiveness or not of a market or an investment style. There are always ways to find a different argument, or the ability to see the idea from a different angle and this ultimately means there is no room for complacency. It also means that there is plenty of opportunity to get things right and wrong. Although you can’t argue with numbers, there is a great deal of subjectivity around those numbers, and that’s why for instance I like debates when you put fund managers together to discuss one stock.  This could be due to “Fund Manager A” having an x% weight and “Fund Manager B” having a y% weight. It could be the difference between one manager owning the stock and the other not. It could be one owning a small weight and the other owning a large weight and understanding why.

    To download the full report please click on the link below:


    wellian weekly

  • 10th May 2021
    wellian weekly

    One of the few positives from the last year is that during lockdown, household savings balances have gone through the roof. Having been more or less flat for years, dipping only in periods of economic stress such as recessions, 2020 and 2021 saw them rise to levels previously unseen. Forced saving has bolstered many people’s bank accounts by an amount that is reckoned to be around £180bn.

    Back in June 2020, the evidence was clear from the Bank of England’s monthly money and credit statistical releases that something remarkable had been underway ever since lockdown began at the end of March.

    To download the full report please click on the link below:


    wellian weekly

  • 26th April 2021
    wellian weekly

    I have recently been asked by one of our IFA clients to undertake a project relating to ESG.  Always one to relish challenges and learn from the process, I thought it made sense to share some of the findings.

    The client asked if we could construct a portfolio of global funds that only contained managers that scored 4 or 5 globes using the Morningstar Sustainability Rating screen. There was one request though – they wanted 5-10 funds and they wanted a diversified portfolio. My initial thought was – absolutely sure. We had no other constraints – nothing about an income level; nothing about minimum fund size or track record. Nothing relating to Morningstar analyst ratings or limits relating to fees. As long as the fund was GBP priced and in Unit Trust / OEIC format, we were good to go.

     

    To download the full report please click on the link below:


    wellian weekly

  • 19th April 2021
    wellian weekly

    The stock market’s response to Covid-19 was breath-taking in its speed. On 17 January 2020, the FTSE 100 closed at 7,674. We didn’t know it then, but that was to be its high point for the entire year. By 23 March 2020, it closed at 4,993. And while we didn’t know it then, that was to be its low point for the entire year. Investors should give serious thought to the speed at which the markets reacted, declining at high speed, and going from peak to trough in a matter of weeks. Compare this to the events of the financial crisis which saw stock markets go from their highs in June 2007 to its lowest point in March 2009, a period of almost 20 months. Now while the two events are of course completely different, the financial crash of 2007-2008 now seems to have been almost pedestrian in its reaction when compared to a global pandemic.

     

    To download the full report please click on the link below:


    wellian weekly

  • 12th April 2021
    wellian weekly

    Before anybody has a go at me suggesting I’m all for active investing and anti-passive, this is not the case. Passive investing has done wonders for the financial planning and the investing profession. It has helped force prices lower; it has introduced lots of people to the benefits of investing. It has simplified investment understanding. Investors in passive funds should see their returns closely aligned to the returns of the index the passive fund is replicating because there is no need to explain why or how the active fund out- or underperformed.

     

    To download the full report please click on the link below:


    wellian weekly

  • 22nd March 2021
    wellian weekly

    Since the start of the year, global bond markets have been getting nervous. Bond yields have been steadily rising upwards (and bond prices have been falling) indicating a fixed income sell-off is underway. And in the last few weeks, that nervousness turned into a rout, as the yield on United States 10-year treasuries jumped from 1.48% to 1.62% on fears of significantly higher levels of inflation. Here in the UK, 10-year gilts also spiked sharply higher too.

     

    To download the full report please click on the link below:


    wellian weekly

  • 15th March 2021
    wellian weekly

    Many property funds have been suspended for approaching a year. One of the largest (M&G) has been shuttered for even longer and this is not good for the property sector, and also, in reality, the whole of the fund management industry.

    This piece is not about whether a daily traded vehicle is the correct structure (enough has been written about this already) and the regulator is presently reading through the responses to its recent paper CP20/15 surrounding the illiquid nature of the asset incorporated into a liquid structure (UT / PAIF).

     

    To download the full report please click on the link below:


    wellian weekly

  • 8th March 2021
    wellian weekly

    I am a big fan of Exchange Traded Funds. In my view they are the modern-day unit trust.  I have previously written about Unit Trusts being over 90 years old and although they have come a long way, they have not progressed as fast as they need to, and they need to step aside as a collective medium for investment.  Step up, step forward the ETF – the rightful heir.

    There are thousands of ETFs covering all sorts of investment propositions, and many operate with underlying instruments that you just cannot get in unit trust form due to legislative constraints. There is even scope to access levered products for instance. In the last decade, how many new UTs have been launched versus the number of ETFs?  That alone should tell you that ETFs are the future.

    To download the full report please click on the link below:


    wellian weekly

  • 1st March 2021
    wellian weekly

    We have all seen first-hand how the coronavirus crisis has reduced dividend payouts from our investment portfolios. According to the latest Global Dividend Index data from Janus Henderson, global dividends were down 12% in 2020 to $1.26trn. Although a worrying fall, this was far better than expected thanks to a less severe fall in Q4 payouts than what had been expected. While cuts and cancellations totalled $220bn between April and December 2020, companies still paid their shareholders $965bn, far outweighing the reductions. Janus Henderson noted “one company in eight cancelled its payout altogether and one in five made a cut, but two thirds increased their dividends or held them steady.”

     

    To download the full report please click on the link below:


    wellian weekly

  • 22nd February 2021
    wellian weekly

    There seems to be a big hatred for high fund management fees, and this is something I both can and can’t get my head around. I put the word high in speech marks in the title because a high fee is, in my view, entirely subjective and as we all know, cheap doesn’t necessarily mean good, and good doesn’t necessarily mean cheap. “High” fees are subjective.

    It is true that fund management has the ability to make healthy margins and profits, but then again, I don’t understand why profit is frowned upon.  Google is allegedly free, but that business is massively profitable. Why is there not outrage that Microsoft made over $15bn profit last year – an increase of 1/3 over the last 12 months. Why aren’t these companies being pressured to reduce their charges? Why aren’t customers choosing alternative spread sheet or word processing documents in their droves?

     

    To download the full report please click on the link below:


    wellian weekly

  • 15th February 2021
    wellian weekly

    Inflation has been the source of much debate this year. Recently, we’ve seen more speculation that the huge economic stimulus packages from governments and central banks around the world could kick start inflation again. It would be the first time we’ve seen meaningful levels of inflation in the UK since early 2019, and a sustained period of inflation has been almost non-existent since 2011.

    What we have seen is that at the start of the pandemic, Year on Year inflation fell to almost zero. Since then, it has gradually been rising from a very low base, with the headline level of inflation expected to peak in the middle of 2021, when Year on Year inflation will then be positive once we have passed through the spike. Sectors such as energy will be big a contributor to these numbers as we have seen the oil price rise significantly from the lows seen last year.

    To download the full report please click on the link below:


    wellian weekly

  • 8th February 2021
    wellian weekly

    The year we have just been through will be remembered for a long time. I spent most of the year working from my home office (a single room not much bigger than a cell, although at times it did feel like one).  My commute was cut from 60 minutes to 6 seconds – which was great.  I got to spend more time with my wife and children – which was great (for me at least). Allegedly I saved money by not using the train (although my bank balance wouldn’t agree).

    From an investment perspective, I think most will look back on 2020 as the year of Zoom and Tesla.  A year where NASDAQ left most in its wake. A year of unprecedented central bank intervention and stimulus. A year that witnessed the quickest fall and bounce back from many metrics surrounding stock markets and economic statistics. A year which saw China – where the Coronavirus was first identified and became an epidemic which then spread globally to become a pandemic – saw its economy shut, then open and by the end of the year seemingly operate as if nothing happened (if only the rest of the world could say the same…). A year that politically saw a change in the White House and the UK and Europe part ways. Bitcoin probably deserves a mention, but would that be from an investment perspective, a speculative perspective or just an interesting aside?

    To download the full report please click on the link below:


    wellian weekly

  • 1st February 2021
    wellian weekly

    As we have entered the start of the new year, the US stock market has continued to climb to record heights. The market is, in some ways, highly rated and the most expensive if we compare it to its history. And while there is a fair amount of excitement around some companies and sectors at the moment, that doesn’t necessarily mean we are in a bubble.

    Instead, the decline in interest rates since the 1980s, together with the low inflation that we have seen for a while, could both explain and justify the market’s higher rating. And this could also be part of the reason the US market has performed so well since the Financial Crisis.

     

    To download the full report please click on the link below:


    wellian weekly

  • 25th January 2021
    wellian weekly

    An inauguration is usually a fairly mundane affair, but 40 million people tuned in to witness Joe Biden officially become US President. A day of high emotion and high security presence, many outside the US were watching too, if only to make sure his predecessor had definitely left the building. In the first few days since taking office, President Biden has signed 30 executive orders, marking the start of his presidency and a clean-up operation to address some of his predecessor’s more questionable actions.  

    Despite a career rich with foreign policy experience, the less than united America Biden has inherited will keep him busy at home this year as he redresses the management of the Covid crisis, with an extra 10 million Americans out of work and the shocking number of citizens who have lost their lives. Surveys in Europe indicated America’s reputation had been weakened by its handling of Covid with a lack of global leadership coming from Washington. Overseas relations will need to be repaired, but they may have to wait until the US domestic environment has stabilised. 

    To download the full report please click on the link below:


    wellian weekly

  • 18th January 2021
    wellian weekly

    There has been a lot of press recently relating to Bitcoin – especially considering the regulator recently suggested that clients should be prepared to lose their entire investment – fresh off the heels of their paper in October where they banned the sale of crypto-derivatives to retail consumers.  The reason why there has been a lot of press is probably due to the stratospheric price rise seen in the cryptocurrency with it hitting $40,000 already this year.

    This year is only a couple of weeks old and has seen the press highlight the investment company Ruffer profit to the tune of over £300m for their investment in Bitcoin – from an investment made not long before the end of the 2020. There are potentially huge gains out there, but does that make it a good investment?

     

    To download the full report please click on the link below:


    wellian weekly

  • 11th January 2021
    wellian weekly

    2020 will go down as a year of incalculable cost in human terms, yet a time of great innovation and hope too. In market terms, 2020 will probably be remembered as a year in which shares absorbed everything bad that was thrown at them and came back stronger to deliver another good year for many investors. That, however, would be to contradict a very difficult intervening period for investors, which saw share prices down by about a quarter at one point during the year.

    Following the introduction of travel restrictions and the closing of non-essential businesses, a short, sharp bear market for stock markets in February and March threatened to set the tone for the entire year. At the time, fears ran high that the Covid-19 pandemic might have long term structural implications for the world’s economies and markets, as opposed to the deep but short recession that actually transpired.

     

    To download the full report please click on the link below:


    wellian weekly

  • 14th December 2020
    wellian weekly

    “We have incurred net losses in each year since inception, and we may not be able to achieve profitability…. Our revenue growth rate has slowed, and we expect it to continue to slow in the future." These words, taken from the IPO filing, seemed to do little to dampen the enthusiasm in Airbnb, which last week concluded its first day as a public company with a valuation of $100bn. The Nasdaq listing raised £2.6bn for the company, which has struggled this year with travel among the worst sectors affected by Covid. 

    Investor demand for US technology led companies has been staggering with Airbnb’s listing one of three in a matter of days. Doordash, a food delivery platform, and C3.ai, an AI software manufacturer also watched their share prices soar, mirroring the IPO of Snowflake, another software business, which listed in September. In this as in so many other ways, 2020 has eclipsed 2019, which offered up IPOs from Uber and Lyft. Before 2020 takes its final bow, the $167bn companies have raised on the US stock exchanges will have been further boosted by the listing of Wish, an e-commerce platform, while Roblox, a video game maker looks set to delay its IPO until next year. Coronavirus has been a boon to tech firms, condensing years of expected growth into a matter of months as consumers were forced to embrace online providers for shopping, entertainment, work and the weekly supermarket shop.  

     

    To download the full report please click on the link below:


    wellian weekly

  • 7th December 2020
    wellian weekly

    Investing is easy – buy an asset for less than you sell it for. Same could be said for football. Score more goals than your opponent in the allotted time.  But we all know that there are lots of rules associated with both investing and football which makes it a little more complicated. Explaining the offside rule for one; games that go to extra time and penalties in cup games but not in league matches; VAR; handball. From an investment angle - understanding risk; portfolio construction; requirements for income; compounding; price volatility; time horizons real returns and so on. What initially seems simple actually isn’t.

    To make outsized investing, it is often said that you have to be ahead of the market – for instance, buying into online retailers at the expense of high street retailers, or buying into renewable energy at the expense of fossil fuels, and this is sound, logical advice. But this might not meet with your objectives – such as income, time horizon, or a lower tolerance for risk (depending of course what you are defining as risk for instance) and so on.

     

    To download the full report please click on the link below:


    wellian weekly

  • 30th November 2020
    wellian weekly

    It has been a bleak year for income investors, particularly those backing UK funds which have been among the biggest losers following the widespread dividend cuts in response to Covid-19. UK dividend payments had hit record levels for three years on the spin (2017, 2018 and 2019), with pay-outs last year coming in at £110.5 billion. For 2020, the latest figures from Link Group, which monitors UK dividend payments, expects UK dividends, excluding special dividends, to fall to around £60 billion.

    It has been widely said by many fund managers that Covid-19 has accelerated certain pre-existing trends and has created both winners and losers. The standout winners, following millions of people shifting to work from home, have been technology businesses. Among the losers have been sectors and industries that prior to Covid-19 looked structurally challenged and now appear in terminal decline, such as bricks-and-mortar retailers that do not possess an online presence.

     

    To download the full report please click on the link below:


    wellian weekly

  • 23rd November 2020
    wellian weekly

    It was only a few weeks ago that the UK put the clocks back and entered a second period of lockdown, accepting both the physical and metaphorical darkness that accompanies those actions. Since then we have seen some light in the form of the US elections and Covid developments, leading to some interesting reactions in equity markets. 

    As the UK government finalises its Covid guidance for the festive season, other nations are also taking stock of their situations. In France, where restrictions have been tight for a number of weeks, the number of new cases is falling and it looks like restrictions will be relaxed, much to the relief of beleaguered retailers who have been lobbying the French government on the issue. The World Health Organisation has expressed some anxiety about the prospect of loosening restrictions in Europe, stating that this should not happen unless the number of cases is consistently low. It’s easy to understand the WHO’s concerns: After getting the first wave of Covid under control, Europe didn’t have the necessary infrastructure ready in the summer to head off a second wave. Without adequate test and trace infrastructure, Europe could be facing a third wave next year. A valid point, but one that seems likely to be overlooked since the WHO’s credibility is low and no government wants to be remembered for, quite literally, cancelling Christmas. Conversely, in Asia, South Korea is warning of possible tighter restrictions to help tackle a small but persistent increase in cases.

    To download the full report please click on the link below:


    wellian weekly

  • 16th November 2020
    wellian weekly

    The UK as an equity market has been overlooked for a number of years and over the last decade or so its importance in the global equity index is rapidly becoming an afterthought.  We have previously written about the UK (as a market) having an allocation less than Apple (as a company). As recently as 2015, the UK accounted for approximately 8% of the World Index; today this number is closer to 4.00%. Over the same time frame, the US is over 2/3 of the index, up from 57%.

    Maybe the weight of the UK market has fallen due to the component parts – the UK has a large exposure to “old” economy businesses – banks and oils – which are under lots of pressure when it comes to profits and lacks high growth (read “tech”) stocks. Maybe it has fallen due to political issues. Maybe the fall is down to other factors, such as a bias to stocks that pay dividends which might be out of favour. It could be down to uncertainty surrounding Brexit. Alternatively, it might be that c80% of earnings of the largest companies in the UK Index are from overseas sources and the weakness of Sterling has dampened profits too. I would imagine that there are a whole host of other factors, but it’s not surprising the UK has suffered.

    To download the full report please click on the link below:


    wellian weekly

  • 9th November 2020
    wellian weekly

    With the US election heading down the final straight the short-term outlook is still one of uncertainty. With the election being held last Tuesday and a few states yet to declare a final result, President-elect Joe Biden took victory over the weekend, although Donald Trump is yet to concede, meaning there is also a growing likelihood of a legal fight lasting several weeks afterwards to decide who is formally going to be elected President.

    Judging by their speeches to supporters, both Trump and Biden are claiming victory even though millions of votes are still uncounted. Trump’s claim rests on being ahead in votes physically cast in ballot boxes on the day in the critical states like Pennsylvania, while Biden’s is on being ahead once postal votes are counted in the coming days.

     

    To download the full report please click on the link below:


    wellian weekly

  • 2nd November 2020
    wellian weekly

    As we head towards another lockdown of sorts in England, following Wales and other parts of Europe with tighter restrictions on people and businesses, we reflect on a year of extraordinary change for retail and the uncertainty that lies ahead. 

    2020 has been an undeniably fraught year for business but it has also been a Petri dish for new trends, with ramifications that will be felt for many years to come. For ecommerce enthusiasts, this is the year that delivered not so much a gentle nudge, as a kick to the consumer’s backside. Globally, 4 billion people (over ¾ of the world’s adults) have the internet in their pocket thanks to their phones and with the closure of shops, consumers were forced to change their behaviour. Online was the only option available, accelerating a trend towards ecommerce and providing an environment for other trends to emerge, which otherwise may not have got off the ground. Zoom increased its daily users from 10m to 200m as many workers got a taste of their first work video call. But will it last? How much of this new behaviour will stick after Covid?

     

    To download the full report please click on the link below:


    wellian weekly

  • 26th October 2020
    wellian weekly

    In previous notes we discussed a global equity index with Part 1 showing how the top 10 stocks had changed – both in terms of their numbers, but also their weights. Part 2 discussed how the industries and sector weights altered, as well as how the index underwent a major change a couple of years ago.

    This piece looks a bit deeper to the country allocations and how they have changed over the last couple of years. This part, as well as the previous two, have been written to alert the reader to a number of risks. The three-part series is not to promote active management or passive management; it is an education piece. If portfolios are constructed using investment managers that adopt an active or passive approach, the least you can do – as a fund selector – is know what has been bought.

     

    To download the full report please click on the link below:


    wellian weekly

  • 19th October 2020
    wellian weekly

    As the government prepares to impose tougher local lockdown rules, the UK unemployment rate has surged to its highest level in over three years as the pandemic continues to hit jobs as many businesses are forced to close. In the three months between June and August, an estimated 1.5 million people were unemployed as the unemployment rate grew to 4.5% compared with 4.1% in the previous quarter, while redundancies rose to their highest level since 2009.

    Since the pandemic began there has been a sharp increase in those out of work and overall employment is down by about half a million, with young people aged 16-24 in particular who seem to have been the most affected group as they represent around 60% of those now out of work, with a large number of redundancies had been focused on sectors such as hospitality, travel and recruitment. Meanwhile, the number claiming work related benefits hit 2.7 million in September, an increase of 1.5 million since the beginning of the crisis in March.

     

    To download the full report please click on the link below:


    wellian weekly

  • 12th October 2020
    wellian weekly

    Last week brought a slew of announcements from businesses, underlining the pressure the economy is under as a result of the coronavirus crisis. The second postponement of the new James Bond film was the last straw for Cineworld, which will completely shut its cinemas for months, sending a ripple of anguish through leisure parks, where restaurant visits are reliant on filmgoers.  Easyjet has announced it will lose money for the first time in its 25-year history in 2020 and while the headlines focused on the size of the loss (the airline expects to notch up a loss of over £800m) management expects to be operating at 25% capacity in 2021, reaffirming that this will be the biggest challenge to the travel industry that we have seen. Pub operator Greene King has announced job losses and clothing retailer Edinburgh Woollen Mill has called in the administrators. For all these businesses the covid crisis has fundamentally challenged revenue generation and it’s not surprising that companies in these sectors are among the first casualties. The concern is that what were otherwise healthy businesses will struggle to survive this crisis even with government support - after all, we are far from the end of this crisis. The risk here is not solely within equity markets but penetrates all asset classes in some way. For example, in alternatives half of the businesses owned by private equity are estimated to have been affected by covid, with 10% seriously impacted. Going forward the industry expects higher deal prices and low interest rates will be a headwind to generating strong returns. 

     

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    wellian weekly

  • 5th October 2020
    wellian weekly

    We recently wrote a piece relating to a global index where we looked back at six years’ worth of monthly data and focused predominantly on the top 10 stocks. In looking at this data, we noted how on a monthly basis they have changed, and how, being as the index is a market capitalisation weighted one the allocations to these top ten has also been affected. The point of the article was to note how the index of today is not the index of six years ago and there are risks associated.  It is very easy to buy an index thinking you’ve got one thing, when in fact, as time progresses, what you have is actually very different.

     

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    wellian weekly

  • 28th September 2020
    wellian weekly

    The total amount of UK debt has now passed £2 trillion for the first time in history after the UK government borrowed a further £35.9bn in August, as tackling the economic fallout of the pandemic has taken its toll on the public finances, official figures from the Office for National Statistics (ONS) have shown. The figure, the difference between spending and tax income, was £30.5bn more than it borrowed in August last year and has taken the total amount of borrowing between April and August to £173.7bn, also a record, and £249.5bn more than the same time in 2019.

     

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    wellian weekly

  • 21st September 2020
    wellian weekly

    2020 for all its very many negatives, has given us a glimpse of how the environment can show signs of recovery when human activities are curtailed. Memorable footage of fish swimming in Venice’s turquoise canals symbolised nature’s ability to bounce back, taking advantage of lockdown to reclaim space usually overrun with people. As governments attempt to reignite economic activity, we have seen foot on the floor acceleration in the shape of vast fiscal stimulus, but with short term restrictions to manage rising covid risks akin to hitting the breaks. With the devastating loss of economic activity this year, has come a small positive in the form of lower CO2 emissions.

     

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    wellian weekly

  • 14th September 2020
    wellian weekly

    This profession of ours never stops fascinating me. I absolutely learn something new every day and I am eternally grateful to be able to get access to some of the finest investment minds in the world. As investment analysts and managers using third-party funds to construct our models and portfolios, we have the ability to talk with analysts, strategists, economists, fund managers and specialists. We also benefit from reading their latest thoughts and attending (albeit virtually at the moment) investment conferences to keep us all up to date with the comings and goings of the capital markets.

     

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    wellian weekly

  • 7th September 2020
    wellian weekly

    Japanese prime minister Shinzo Abe has stepped down, his term cut short by illness, drawing to a close a period as one of Japan’s longest serving leaders. Abe brought with him hope of marked changes when he first launched “Abenomics”, aiming to re-anchor inflation at 2%, boost potential growth and reassert Japan’s standing in Asia. The moves by the Bank of Japan were radical at the start, and have been very aggressive overall, but they have had a marked impact on the Japanese stock market.

    Back in September 2013, he rang the bell for the start of trading at the New York Stock Exchange and exhorted investors to “buy my Abenomics”, referring to the package of reflationary measures that he had introduced at the start of that year.

     

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    wellian weekly

  • 24th August 2020
    wellian weekly

    The UK Direct Property sector hasn’t been open to investors for five months now, and you would be forgiven for thinking there may not be much to report back during this time, but property managers’ efforts are now beginning to bear fruit. 

    As the summer has progressed, we have seen growing signs of the property market opening up again, with property deals beginning to come through. This is a welcome development for the UK commercial property sector as a growing body of transactions is what is needed to underpin the valuations attached to individual properties and give greater confidence in the pricing on property funds. The entire sector suspended (with the FCA’s blessing) in March when the impact of the coronavirus restrictions hampered the functioning of the market, with property valuers unable to assign values to properties with the usual level of confidence. Since then we have seen some property deals complete, mostly in those sectors least affected by the virus, and a gradual reopening as the ‘material uncertainty clause’ has been removed on a sector by sector basis. 

     

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    wellian weekly

  • 17th August 2020
    wellian weekly

    In the last couple of weeks, the regulator has released the snappily titled, although aptly titled consultation paper “CP20/15 – Liquidity mismatch in authorised open-ended property funds.”

     

    As is the case with all FCA papers I’ve read, there is generally a lot to read and digest and this one is no different. In the 70 odd pages of text within CP20/15 there are a lot of open-ended questions. I also felt there were contradictory points and parts of the system seemed to be completely overlooked which would have added value to the whole process.  Although not a critique (I would not want to write a paper such as this as there is SO much to consider) here are some of my thoughts relating to property funds.

     

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    wellian weekly

  • 10th August 2020
    wellian weekly

    Economies and stock markets across the globe have seen a major shake-up this year, and the UK was no exception. The coronavirus crisis has impacted all parts of our daily lives – from the way we work to the way we communicate with friends. However, the impact on UK businesses was profound, with most unable to operate over the period.

     

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    wellian weekly

  • 3rd August 2020
    wellian weekly

    As Donald Trump turned his attention to the November elections and his own bid for re-election, on Friday he vowed to ban TikTok in an announcement that asserted the Republican party’s line on the US’s relationship with China. Rounding off a week which had been a diplomatic disaster, as a Chinese consulate closed in the US and vice versa in Chengdu, hostilities between the US and China look set to run until at least the end of the year.  

     

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    wellian weekly

  • 27th July 2020
    wellian weekly

    In a previous article I wrote about how frustrating it is and long it takes for a fund of funds manager with an outsourced ACD to get an account set up and ultimately be able to trade in collective investments. On the other hand, if I wanted to buy an Investment Trust or ETF then this deal can be completed as soon as the deal ticket was completed and sent and this is a major risk for the unit trust / OEIC industry.  I’m sure we’ve all seen the charts showing that “x” years ago the average investor stayed invested in the same fund for “x” years, whereas today the average investor stays invested for “x” months. If it is difficult to get access in the first place due to admin backlogs, why keep trying?

     

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    wellian weekly

  • 20th July 2020
    wellian weekly

    The coronavirus outbreak has sent a shockwave through the finances of millions of people in the UK. The effect has not been universal, nor has it been equal. Your age, your job, where you live, and the pre-virus state of your finances will all make a difference to how well you can cope. For a start, there has been the effect on income. For those who work, the amount of money coming in depends mostly on their wages.

     

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    wellian weekly

  • 13th July 2020
    wellian weekly

    As the UK began to ease back on its lockdown restrictions, the date that seemed to attract most interest was the day on which pubs would once again open their doors. A milestone on the long road of “getting back to normal”, the day was symbolic as much as a reflection of the nation’s love of food and drink. One week on from “Super Saturday”, figures suggest the public were not knocking down the doors of their local eateries and sales were half the pre-covid levels over the opening weekend. 

     

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    wellian weekly

  • 6th July 2020
    wellian weekly

    The very first unit trust was launched by M&G in 1931. At approaching 90 years old, they have a history to be proud of. As a portfolio manager that builds models using collective investments, unit trusts are pretty central to our business and there is hardly a day goes by when we do not interview a unit trust manager. Discounting income and accumulation shares, and different classes due to charging structures, there are over 3,000 / Open Ended Investment Companies on offer which collectively have in excess of £1.3 trillion of assets under management. Unit trusts are still being launched, so they are still obviously considered a suitable home for capital and relevant for investors and fund managers alike – after all, in the world we live in today, if they weren’t considered appropriate, why would they pass scrutiny from a product committee, compliance department, marketing and sales teams?

     

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    wellian weekly

  • 29th June 2020
    wellian weekly

    Inflation in the UK fell to a four-year low last month. Year-on-year prices as measured by the Consumer Prices Index rose by just 0.5%. Sounds like inflation is something we don’t need to worry about right now.  However, a study that came out the other week that suggests it could end up being a much bigger problem that we might expect.

     

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    wellian weekly

  • 22nd June 2020
    wellian weekly

    Since the shock of the coronavirus crisis brought markets to their bottom in March, equities have risen sharply, with global equities up 30%, prompting some commentators to query if markets had run ahead of themselves. Most countries are just reopening after lockdown, yet stock markets are around / above levels recorded at the start of the year, when the world was a very different place. Has optimism overshot reality? Is this just a reflection of the tsunami of liquidity that has been unleashed by governments and central banks in the western world?  

     

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    wellian weekly

  • 15th June 2020
    wellian weekly

    Investing is not easy. No matter what anybody says. One of the main reasons is there is not one measure of success. The goal posts constantly change.  For instance, if my portfolio has achieved 10% (let’s say the portfolio is constructed of UK large cap stocks) and the benchmark index (a very relevant FTSE 100) has achieved 5% then you could argue that my portfolio has done well. But, if my 10% was achieved with 20% volatility and the index only achieved 10% volatility, have I done as well?  What if my 10% was achieved with 8% capital and 2% income, whereas the benchmark was 1% capital and 4% income and I was an income seeking investor (selling capital gains and using them as income aside).  There are so many “what ifs” when you use more than one measure of success.  Measuring David Beckham for his abilities as a footballing midfielder in reference to pinpoint accuracy on crosses or free kicks, or rallying the team as a captain is one thing. Measuring him for defending, tackling, kicking the ball with his left foot or heading the ball is another. So, overall, is he good or bad?

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    wellian weekly

  • 8th June 2020
    wellian weekly

    Three months ago, investment firm Janus Henderson published its usual quarterly global dividend review and judged 2020 looked set to deliver a fifth consecutive year of record dividends, with global payouts totalling $1.48 trillion expected, some 3.9% higher than 2019. But that was then.

    Three months on, the more sober assessment of 2020 contained in the firm’s latest global dividend review is a great deal more downbeat. Its best case scenario sees a decline in global dividends of 15% this year to $1.21 trillion, a drop of $213bn. Its worst case scenario sees a decline of 35%, $933bn.

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    wellian weekly

  • 1st June 2020
    wellian weekly

    The years since the global financial crisis did not see the return of strong global trade and economic growth rates of the early noughties, but with Donald Trump’s election as US president, protectionist rhetoric evolved into a full trade war with China. Although equity markets were optimistic about the signing of a Phase One deal in January, Covid-19 has given rise to practical and political issues that make the outlook for global trade look questionable. Lockdowns have led to dramatic falls in demand and brought the travel and leisure industry to a stop, clipping the wings of an industry that had been a bright spot for growth. The WTO has warned that it expects a significant rise in costs associated with extra border checks and extra time in transit as a result of travel restrictions that have been put in place. 

    To read the full article please click on the link below:


    wellian weekly

  • 18th May 2020
    wellian weekly

    As a multi asset manager, I have the privilege to spend lots of time talking to lots of fund managers about lots of different asset classes. I also have the ability to talk to economists and strategists about the macro environment.  Many managers I talk with are specialists, many are generalists. Investment styles and philosophies are discussed, as are portfolio construction techniques and many other conversations are held.  It’s not surprising that I write a lot of notes when talking to managers as the amount of information and data that is sent my way is massive.  On top of that, markets are constantly changing, the investment landscape is always reacting to different stimulus and the same stimulus can affect one industry completely differently to another.

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    wellian weekly

  • 11th May 2020
    wellian weekly

    The Bank of England has warned that the UK economy is heading towards its deepest recession on record as the impact of the coronavirus has meant the economy would shrink by 14% this year, based on the lockdown being relaxed in June. Scenarios drawn up by the Bank to illustrate the economic impact said Covid-19 was dramatically reducing jobs and incomes in the UK.

    Bank of England governor Andrew Bailey has said there would be no quick return to normality and described the downturn as unprecedented and that consumers would likely remain cautious of their own choice even when lockdown restrictions are lifted, suggesting that it wouldn’t be until next summer that activity comes fully back.

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    wellian weekly

  • 4th May 2020
    wellian weekly

    The magnitude of the threat to the economy that covid-19 represented was unforeseen in financial markets. Emerging first in December 2019, reports of covid-19's spread in Wuhan appeared in the press in January. The speed at which both the health crisis and the resultant economic and financial market crises have unfolded was at a far greater pace than we have seen before. Starting in mid-February, markets entered a month of intense pressure with both equity and bond markets falling, in a sell-off that affected all irrespective of geography, asset class and market capitalisation. As the size of the problem became evident, governments were prompted to respond very quickly, and on a larger scale than during the 2008 global financial crisis. Markets have reacted favourably to government measures and volatility levels have fallen from peak levels but remain elevated. During times of extreme stress assets can become very correlated to each other and March was no exception.

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    wellian weekly

  • 27th April 2020
    wellian weekly

    Having worked from home now for several weeks, I have been considering what the world will look like and act like when we are released from our self-isolation. I fear this might last a couple of months and our outlook on investments, the economy, the way we interact with our companies and many other factors will change. Potentially forever.

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    wellian weekly

  • 20th April 2020
    wellian weekly

    For income investors it’s been a torrid time; the ‘perfect storm’ doesn’t even begin to describe the situation we are going through. Across the board, dividends are being cancelled – with some yanked just days before payment. As you’d expect, the FTSE 100 is doing slightly better than the UK-focused FTSE 250, but only slightly.

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    wellian weekly

  • 6th April 2020
    wellian weekly

    In the last few weeks equity markets have stolen the headlines with some dramatic movements in share prices that have rivalled those of the GFC. Also, in common with that period, we have again seen the suspension of property funds - although this time around managers are at pains to point out that it’s not for want of liquidity. 

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    wellian weekly

  • 30th March 2020
    wellian weekly

    Exhibit A – Daily performance of the L&G UK Mid Cap Index Fund year to “date” (with “date” being 26 March 2018).

    Exhibit B – Daily performance of the L&G UK Mid Cap Index Fund year to “date” (with “date” being 26 March 2019).

    Exhibit C – Daily performance of the L&G UK Mid Cap Index Fund year to “date” (with “date” being 26 March 2020).

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    wellian weekly

  • 23rd March 2020
    wellian weekly

    Last week a long-term client got in touch after reading the last piece we put out (https://www.wellian-is.com/53/572/wellian-weekly-16032020) questioning whether it was maybe a bit complacent in relation to what has been happening in the capital markets over the last couple of weeks.

    My initial response was “no, I didn’t think we were”. After all, we had written about the Coronavirus for the past two weeks - here (https://www.wellian-is.com/53/318/wellian-weekly-09-03-2020) and here (https://www.wellian-is.com/53/568/wellian-weekly-02032020) but maybe, in retrospect, we should have written again. So, for the third week in four, here goes.

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    wellian weekly

  • 16th March 2020
    wellian weekly

    I am a full believer in the cases put forward by climate scientists in relation to carbon emissions, global warming, climate change and the potential devastating effects that will befall our planet if we don’t do something and do it quickly.  I’m doing my bit – solar panels have been on our roof for almost a decade; we drive a hybrid car; we recycle; we compost; our red meat intake has been curtailed massively; I walk lots of places; the use of public transport over taxis is the default option and so on, every little helps.  But, wouldn’t it be great if these 2050 targets were achieved BEFORE 2050? it feels a little like when I was at school – rapidly rushing my homework on a Sunday night for handing in on the Monday morning…  although 30 years away, this time will fly by. It is often said that the best time to make this change was 20 years ago; with the second best time being today.

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    wellian weekly

  • 2nd March 2020
    wellian weekly

    In a meeting with an emerging market equity manager a few weeks ago, the manager took some time to carefully explain all the shares he had not been buying since news of the spreading coronavirus had begun to unfold in the media. The manager was eyeing some consumer discretionary names, but had not seen valuations reach a point that reflected the impact that coronavirus would have on businesses. After the last ten days, we suspect that he will be taking another look at some of the names on his wish list.

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    wellian weekly

  • 24th February 2020
    wellian weekly

    We have previously discussed the returns from 2019 along the lines of which asset classes performed well, which surprised and so on, but this article is to take those numbers for the main asset classes and try and put them into a different context.

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    wellian weekly