Market Review – Quarter 4

Hello from Reeves Independent

Here at Reeves Independent we are always striving to keep up-to-date with investment opinions to ensure our clients get the best possible returns for their portfolios! Below is what the experts are saying about the 4th Quarter Investment Outlook

General

  • Global economic growth is diverging, as the US and UK speed ahead of a struggling Eurozone while the economic performance within emerging markets is mixed
  • Ongoing geopolitical issues, uncertainty over the direction of monetary policy & global growth concerns continue to linger, resulting in a notable pick-up in volatility in financial markets as we enter the final quarter of 2014 (Smith & Williamson)
  • Equities still look better value than bonds & commodities although we are looking to put Bonds in our new Portfolios, which we are currently working on.

UK

  • The UK economy is growing well above trend, with most measures of labour underutilisation declining rapidly. Importantly, business investment is on a strong upward trend, which bodes well for longer-term potential growth. At the same time, inflation pressures remain very subdued
  • The possibility of Scottish Independence represented a significant overhang for the continued recovery of the UK economy. With uncertainty now removed the Bank of England is free to move forward with its monetary policy.
  • In terms of property the improving growth environment is expected to bolster prices in the near term, and yields remain attractive compared to other assets, suggesting strong returns over a three-year holding period.

Europe

  • The Eurozone economy continues to splutter along, with the region’s core countries, Germany, France & Italy falling further into the deflationary spiral that plagues the region.
  • It is suspected market pressure will force the arm of the European Central Bank (ECB) to commit to a full blown Quantative Easing programme to stimulate the European Economy. This is something that we will of course be keeping an eye on.

US

  • The US economy like the UK is growing well above trend (see bullet point 1 in the UK section)
  • Markets are watching the Federal Reserve (Fed) most closely of all the central banks. When will the Fed tighten its monetary policy? Jeremy Lawson (Standard Life’s Chief Economist) doesn’t believe this will take place until June 2015 & will be done in a way to ensure that the economy isn’t disrupted greatly. He therefore believes US remains a strong source of support to global growth for some time yet

Asia & Emerging Markets

  • Japan’s structural reforms remain outstanding but growing management focus on return on equity and plans to cut corporation tax are supportive, while the Bank of Japan should eventually take more action to reach its inflation target. (Standard Life – House View)
  • The Chinese economy is likely to experience a ‘bumpy ride’ over the coming months, says Catherine Yeung, an investment director at Fidelity Worldwide. But she says that a reform agenda recently put in place by the government and stimulus measures will have a positive effect
  • With respect to Emerging Markets the performance is increasingly divergent; while some countries benefit from strong domestic fundamentals, others are under pressure from politics, current account deficits and tighter monetary policy.
  • India’s new Prime Minister Narendra Modi’s budget was seen as expansive, however it will require time to see the effects on this. However it is believed over the next year or so economic growth should be supported by the recovering U.S. economy that would provide a market for Indian merchandise and service exports.

So what does this mean for our Investors & Portfolios?

  • As previously stated: clients still in cash should consider investing due to increased confidence in the economy
  • Cautious clients who don’t want full exposure to equities should think about investing in our chosen commercial property funds
  • Heavier focus in the US & maintain UK investment. It may however be the time to move out of recovery funds. An area we are currently looking at as we set up our new portfolios.
  • Potential to be brave in areas that are struggling i.e. Emerging Markets.  Opportunity to buy cheap stocks with a long term view on returns
  • Continue to invest but with caution in an uncertain Europe (not including UK) until geo-political issues are resolved & and upside in Emerging Markets returns
  • Further opportunities to invest in specialist technology funds. Although it must be stressed some technology funds have done better than others and it may be a time to review your current funds.
  • Possible diversification opportunity in China/Japan for long term growth (for the brave!)

If you would like to discuss your portfolio please contact us now on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment

Disclaimer: This email is not intended as advice and no investment decisions should be made solely on the back of this email. Past performance is no guide to the future. All investments carry the risk that you will not get back what you have put in.

Market Outlook – May 2014

Here at Reeves Independent we are always striving to keep up-to-date with investment opinions to ensure our clients get the best possible returns for their portfolios! Below is what the experts are saying about the next few months investment outlook

UK

  • Continuation of positive headlines – increased manufacturing output, jobless rate at its lowest for 5 years
  • FTSE 100 index neared its best finish since late 1999 (13/05/2014),
  • Bank of England (BoE) has upgraded its growth forecasts for next year, saying the economy “has started to head back towards normal”
  • UK interest rates have been held at the record low of 0.5% for another month by the Bank of England to continue to stimulate the economy. However “with the UK economy growing stronger than pretty much every rich country, markets expect the BoE to raise its policy rate in the first quarter of next year” (Robert Peston, BBC economics editor)
  • Commercial Property reports continue to be positive with upturn spreading through the regions due to the recovery of the UK economy

Europe

  • European Central Bank (ECB) held interest rates, whilst President Mario Draghi hinted the bank’s policymakers may act soon to reverse the Eurozone’s prolonged low inflation. This is something that as previously stated needs to be kept an eye on!
  • The gradual economic recovery remains on track, as consumer & business confidence indicators continue to be positive despite the ongoing unrest in Ukraine

US

  • Returns have been muted so far this year in comparison to 2013. US equities are now underperforming many other global markets, nevertheless US equities are still seen to be very attractive, as the economic backdrop remains very supportive
  • The US experienced an extremely cold winter & this did take a bite out of the US economic growth. However as the weather has improved, so has the economy, manufacturing performance have reaccelerated, job growth has bounced back & even retails sales have picked up
  • Furthermore a continuing healthy housing market, a much clearer Fiscal outlook & a stable but low inflation environment also provide a favourable framework for equities.

Asia & Emerging Markets

  • First quarter Chinese data showed that the economy continues to ease back again raising concerns whether growth will meet the government’s target level – therefore highlighting China may not be a short term investment option
  • Experts believe that although Japan’s economic & growth drivers have lost momentum recently, further Bank of Japan (BoJ) easing remains likely therefore driving equities higher
  • Within Emerging Markets there a continued concerns over politics, economic growth and reduced liquidity from the US tapering of Quantative Easing
  • Reduced demand from China is a further concern to emerging markets within the Pacific zone
  • India stock markets rose to record high following exit polls suggested the Bharatiya Janata Party (BJP) would be coming into Government. Will this reverse the slowdown of India’s economy?

General

  • Patrick Schowitz (JP Morgan) “we continue to look for an acceleration in global growth, led by stronger activity in the US & Europe
  • Fundamentals remain supportive of equities even though valuations are no longer attractive

So what does this mean for our Investors & Portfolios?

  • Preserve UK investment – especially as previously stated in Small Caps
  • Cautious clients should think about the continued positive reports regarding commercial property investment
  • Maintain focus in the US
  • Continue to remain cautious in Europe whilst the ongoing political issue rumbles on within Ukraine
  • Potential for the brave in Japan as expert opinion points towards attractive prices to bring positive returns
  • Unfavourable Emerging markets also give good value for high potential returns – once again for the brave

If you would like to discuss your portfolio please contact us now on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment! 

Market Outlook – April 2014

Here at Reeves Independent we are always striving to keep up-to-date with investment opinions to ensure our clients get the best possible returns for their portfolios! Below is what the experts are saying about the next few months investment outlook

UK

  • Both the domestic economy & overseas order books are continuing to show improvement
  • UK Small Caps continue to ‘trounce’ the markets biggest shares
  • All reports once again show that this year looks like being another strong one for commercial property in particular

Europe

  • European Central Bank (ECB) kept interest rates at 0.25% as the ‘deflation’ issue continues. However the ECB President Mario Draghi has indicated for the first time the possibility of Quantitive Easing being introduced – certainly something to keep an eye on!
  • Valuations are supportive & corporate competitiveness improving, but fiscal programmes & structural reforms remains constraints while the ECB has not managed to improve credit availability in many sectors
  • Europe looks most exposed to any developing problems in emerging markets
  • The continued geo-political uncertainty in Ukraine is also a worry as previously mentioned

US

  • All reports show the fundamentals in terms of consumer spending, housing & business confidence are improving
  • Fidelity quote “There is simply less to worry about in the US than elsewhere in the world and that makes it stock market a relative port in the storm”

Asia & Emerging Markets

  • Performance is increasing divergent, while some countries are benefiting from strong domestic fundamentals; others are under pressure from politics, current account deficits & tighter monetary policies
  • Although Japan has its problems “it looks fundamentally sound, reasonable value & well supported by government policy” (Fidelity). April sees the introduction of an increased consumption tax so experts are waiting to see the consequences of this on the Japanese economy. Therefore investment should be seen in a medium/long term view
  • China is undergoing a significant growth slowdown, although it is still seen by many as an attractive investment for the long term
  • India’s persistent problems with poor infrastructure & bureaucracy  continues to cloud the outlook longer term
  • The renewed recovery in the US has meant that investors increasingly see no reason to take on the higher risk of investing in developing countries

General

  • It is expected the economic cycle is to continue to be more positive for the rest of 2014 as the recovery broadens out in more countries
  • Equities still look better value than bonds & commodities
  • Increased investor enthusiasm for technology & bio-technology stocks
  • Tom Stevenson (Fidelity) “I am more convinced than ever of the need to manage a balanced portfolio at times like these, to spread ongoing investments over time to the extent that is possible in order to benefit from any short term dips in markets & to keep some powder dry in case there is a more significant downturn”

So what does this mean for our Investors & Portfolios?

  • As previously stated: clients still in cash should consider investing due to increased confidence
  • Cautious clients who don’t want full exposure to equities should think about investing in our chosen commercial property funds
  • Heavier focus in the US
  • Maintain UKinvestment: especially in UK Small Caps where all data
    is positive
  • Potential to be brave in areas that are struggling i.e. Emerging Markets. Opportunityto buy cheap stocks with a long term view on returns
  • Continue to invest but with caution in an uncertainEurope(not includingUK) until geo-political issues are resolved & and upside in Emerging Markets returns
  • Further opportunities to invest in specialist technology funds
  • Possible diversification opportunity in China/Japan for long term growth (for the brave!)

If you would like to discuss your portfolio please contact us now on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment! 

Disclaimer: This email is not intended as advice and no investment decisions should be made solely on the back of this email. Past performance is no guide to the future. All investments carry the risk that you will not get back what you have put in.

Reeves Independent’s Portfolios Fund of the Week – Standard Life UK Equity Recovery Fund!

It certainly has been a week of recovery for the markets after last week’s poor performance, which has been highlighted by the positive returns in all of the Reeves Independents portfolios. The returns could have been better but for yesterdays disappointing response from the ECB with respect to future plans for the struggling Eurozone countries. However the Fund of the Week was the Standard Life UK Equity Recovery Fund from our Balanced Portfolio, which had an incredible weekly return of 5.05%

 

Investment objectives

This Fund aims to provide long term capital growth by investing in UK equities. The fund is primarily invested in the shares of recovery large and medium sized companies listed on the UK stock market and is actively managed by our investment team who will select stocks to try to take advantage of the opportunities they have identified. The fund may also use derivatives for the purpose of efficient portfolio management.

For more information on this Fund click on the following http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=ELFT1&univ=U

If you would like to speak to someone about the Reeves Independent Portfolio Management Service please contact us NOW for FREE inital chat on 0191 281 9862 or e-mail your enquiry to info@reevesifa.com

Reeves Independent’s Portfolios Fund of the Week – Investec Global Bond!

It has been another terrible week for the markets, with very few of our funds showing any gains at all. However this weeks Fund of the Week is the Investec Global Bond from Reeves Independent’s Government Bond Portfolio, which incredibly had a weekly return of 1.13%!

Investment objectives

The Fund aims to achieve long term total return primarily through investment around the globe in highly rated corporate bonds, government and sovereign bonds and public bonds (such as bonds issued by local state and municipal authorities) which are listed or traded on Recognised Exchanges and in derivatives the underlying assets of which are highly rated corporate bonds, government and sovereign bonds and public bonds (such as bonds issued by local state and municipal authorities).

For more information on this Fund click on the following link http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=GGF01&univ=U

If you would like to speak to someone about the Reeves Independent Portfolio Management Service please contact us NOW for a FREE initial chat on 0191 281 9862 or e-mail your enquiry to info@reevesifa.com

An Update on Gold!

Here at Reeves Independent we do extensive research to ensure we can provide our clients with the full investment picture. Gold has recently slumped & as a number of our clients are invested we felt it was appropriate to reiterate what we Blogged about back in February (http://www.reevesifa.com/blog/?p=311)

It was all positive feelings at last weeks Bloomberg Link Precious Metals Conference as investors remain bullish on the yellow metal’s prospect. The average year-end 2012 estimate for gold in a survey of 14 respondents at the conference came in at $1,897 per ounce.  If the price of gold were to rebound to such a level, it would mark the yellow metal’s 12th consecutive annual advance and bring it to within 1.4% of its $1,923 all-time high – reached on September 6, 2011.

Selected comments from participants in the survey included:

Michael Pento, president of Pento Portfolio Strategies:

“The only way to protect wealth is to buy gold because it is probably the only money that is relatively indestructible”

Rachel Benepe, who helps manage $3.5 billion for the First Eagle Gold Fund:

“Gold is the ultimate downside protection. The future is uncertain, and we have no idea how we’re going to get through with this situation. That’s why we own gold”

These positive comments along with the belief that countries will continue to print more paper money, political unrest in the Middle East & higher inflation levels bodes well for the prospect of Gold for the foreseeable future, according to GT Capital Commodities.

If you would like to speak to someone about the Reeves Independent Portfolio Management Service or Gold in particular please contact us NOW for FREE initial chat on 0191 281 9862 or e-mail your enquiry to info@reevesifa.com

Reeves Independent’s Technology Portfolio!

Here at Reeves Independent we have just undergone our quarterly review of our Fund Portfolios. Over the next week we will be Blogging about the research the team have undertaken & explain the reasons behind their construction. Firstly we will talk about the Reeves Independent Technology Portfolio.

According to leading fund managers opinions, Technology stocks are set to out perform most equity markets, hence why we have constructed this as a specialist portfolio.

Technology companies are seen to have high profits, good cash flows & cash in the bank. There is demand for their products & services that is likely to continue & it’s considered that these companies can maintain growth even in times of economic uncertainty.

Access to a selection of specialist funds is available through the Reeves Technology Portfolio. This includes the funds managed through Axa Framlington & Henderson (This was our Fund of the Week last month  http://www.reevesifa.com/blog/?p=336) together with a tech tracker fund through Legal & General.

Framlington & Henderson have different feelings about where to invest within the markets. Framlington being very keen on Software & Hardware sectors with over 70% being invested in that sector & Henderson have a more diversified covering of sectors. The Legal & General Tracks an index.

The bulk of the investments within the portfolio are invested with the USA & all 3 funds have ‘Apple’ as the biggest Individual holding.

These funds are for investors looking for higher returns that can afford and are willing to experience higher levels of volatility. Advice should always be sought and this should not be seen as a general recommendation. One should always remember the .com bubble of 10 years ago & tread with caution.

Further details about how to access this portfolio, these funds and the Reeves Independent Wealth management service are available by calling 0191 281 9862 or e-mail info@reevesifa.com NOW for a FREE initial chat!

FUND OF THE MONTH – US Property Yield Fund – UP 11.56% IN LAST 3 MTHS

FUND OF THE MONTH – US Property Yield Fund – UP 11.56% IN LAST 3 MTHS

Despite regular consumer news informing us of the doom and gloom in the US Property Market, Reeves Independent has chosen the North American Real Estate Investment Trusts (NAREIT) US Property Yield Fund as our fund of the month. 

Investment objectives

This fund is an exchange traded fund (ETF) that aims to track the performance of the FTSE EPRA/NAREIT US Dividend+ Index as closely as possible. The ETF invests in physical index securities.

For more information on this Fund click on the following link http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=K6F94&univ=E

If you would like to speak to someone about the Reeves Independent Portfolio Management Service please contact us NOW for  FREE inital chat chat on 0191 281 9862 or e-mail your enquiry to info@reevesifa.com

Important Message To Our Clients

The market turmoil has triggered a wave of uncertainty across financial markets.

Like a lot of the city dealers and politicians I am currently on holiday. The events of the last week however require some urgent attention and I have spent some time sifting through a mass of market information to determine the best course of action for our clients. It would seem that there is a significant risk of losses on the world stock markets over the next few days. Whether this is a downward trend is far less clear.

The following extract / summary from an article by Tom Stevenson of Fidelity international (6th august 2011 – in perspective) would seem to be worthy of consideration.

Some conclusions from a turbulent week in the markets:

• When markets are volatile, all of them tend to be affected indiscriminately. We believe that Asian and emerging markets now look oversold versus developed markets thanks to their much stronger economies and lower debt levels.

• After such rapid and widespread market fall, this is probably not the time to sell and crystallise today’s low prices. Timing the market is notoriously difficult and investors can often bail out close to the bottom when they allow themselves to be swayed by a prevailing feeling of gloom.

• One consequence of this week’s volatility is that interest rates are likely to stay lower for longer than was predicted even recently. Cash returns, which will be eroded by inflation, will remain inadequate. Investors may be nervous about investing in markets for growth but they will still need to search for higher levels of income than cash markets can provide. Equities and corporate bonds can both provide this income.

• Indiscriminate selling creates opportunities. Despite the lacklustre economic outlook in the developed world, many companies continue to perform well, especially those with an exposure to the higher-growth markets in the emerging world. A research-driven stock-picking approach is well-placed to uncover the best investment opportunities in this kind market.

• As Anthony Bolton, portfolio manager of Fidelity China Special Situations, says: “history shows that normally extreme equity market volatility, as we are now experiencing, should be seen as a time of opportunity rather than a time to become more defensive.”

At moments like this the standard question of ‘what would you do if your investments had lost 20%’ comes to mind.The more switched on clients would normally respond with comments such as :

• What the future expectation of that investment is?

• How much further will it drop?

• What are the alternatives?

• How much of my portfolio is affected?

• Can I afford to lose more?

Generally, the standard answer for our clients that decide to invest in volatile investments is to hold the investments or to hold and buy more of he same. Generally I think we should all bear this in mind before taking any actions right now.

If we consider the issues that are raised above one may decide to look at the alternative actions:

What are the future prospects for our existing holdings: generally all world equity markets have been hit in the last week – including the emerging markets whose economies are doing well and are not exposed to high levels of debt.

Why?

The US politicians dragged their heels in a debt decision thats been known about for a number of months – this has caused loss of credibility for US markets and down grade of credit rating agency. Employment stats were more positive than expected however. There are serious concerns that a number of large investment funds will ditch US bonds due to the down grade and that us will now go back into recession. This will affect business and share prices around the world.

Eurozone instability continues with threat of Spain and Italian debt levels. Feasibility of bailing out both is being questioned and doubts about Greece seeing through the required austerity measures. Bailout can have impact on german thriving economy and the reported alternative of shrinking euro membership will have unknown impact on the world.

At centre of the debt situation is the banking sectors. Some banks are facing big losses whilst others are faced with down valued prices that can recover with time. The fund managers of the financial funds we support should be well placed to chose the best holdings that should recover valuations and avoid those banks with problems.

It seems likely that we are faced with more losses in the short term. After that remains great uncertainty in all equity areas. Big , good companies that trade in the world will continue trading – these are supported generally within our existing holdings whether UK. Euro or US based. Their earnings will be affected should we go into recession as some predict. Should things get worked out and recession avoided then prices could well recover.

In the recent recession period FTSE100 fell greatly (40% approx) as is well documented from peak to trough. Within 14 months valuations had recovered for most investors – providing a nice return for those who invested at the bottom and providing only marginal losses for those who had invested 3 years prior. The big losers were those that sold equities when they where down.

An alternative home for your investments right now are cash – but as we know with high inflation and low interest rates in real terms your money is guaranteed to lose real value.

Gold prices have been rising over past few weeks and have reached record levels. In times of trouble this is a safe haven – the risk of investing here right now is that if this the threat of recession recedes in the short term then you could see prices falling quite sharply.

If banks tighten lending again then corporate bonds could prove to be a Good place to be.

In general – most of our clients have portfolios that have exposure to equities but also include a proportion of none equities. No one should be in position of having to sell equities in depressed times unless a speculative approach had previously been established.

Most clients that are investing in equities do not require access to money in short term and should only sell if they feel tactically advantageous.

Clients that feel markets will drop significantly more may feel inclined to sell equities with view to buying again at cheaper prices.

Clients that do not want to face further losses should consider selling existing equities or a percentage of the portfolio. You risk selling at loss and missing out on recovering prices. Would you sell your home right now by choice?

Long term investors who do not wish to speculate on short term Market movements are advised to maintain portfolios. Be prepared for some immediate losses.

Clients who are wanting to be more active may wish to consider selling equities with view to buying cheaper later on. This is a speculative strategy and spotting the short term movements of the Market is historically difficult.

Clients that may have need to access equities in shorter term are well advised to check their cash position with view to considering impacts of losses from equities.

If any client needs to speak then please email me asap. If you wish to sell without discussion please email instruction to chris@reevesifa.com or send secure email to transact through your personal transact account. Remember that all collective investments are transacted at 1pm.