If there’s ever been a better example of why not to simply jump on a market rally in the last decade, I struggle to think of it. After the roaring start of January where we saw UK equities touch 5 year highs we’ve seen a significant pull back in the markets and a drop in Sterling across major currencies. Yes, it was very enjoyable to see portfolios come back with such vigor after the new year but, as always, we advised our existing clients to keep some powder dry for the market pullback, having cash in hand for a quick entry into a devalued collection of assets lowers average unit cost and can be the most effective way to create growth in the medium to long term. Hindsight is a wonderful thing but we always try to remind our clients that investing is a marathon, not a sprint and jumping in with two feet into the latest rally can be a costly move, even if it does give you a few days of busy mental arithmetic to tally up your daily, albeit temporary gains.Combine this with the bottom dropping out of sterling and for those with USD or Euros, there’s a major opportunity here. The state of our public finances has been published and far from simplifying matters, it seems that the government has tried to employ rather basic smoke and mirrors to hide the true situation. The result of this is an almost definite downgrade of our credit status from AAA. Mix this with poor retail figures and leading banking figures shorting the pound and urging it to fally further and it may look like a bit of a bloodbath. However, we see this as an ideal time to diversify holdings and go on risk, not perhaps so much in equities but in property. Anyone holding foreign currencies has a chance here to jump in on some UK based property funds or REITs. Well placed and strategic funds are now generating attractive returns, a far cry from the last few years. It could provide a welcome, non-correlated asset class as a shelter to equity volatility and an exposure to some of the fastest growing property markets in Europe without the messy or timely tie ins of actually owning a fixed, illiquid asset.
With rumours abound of new non-res laws being released in April, we’re keen for people to pay close attention to their personal tax situation and cross border assets. The UK government has once again started to bellow about targeting the politically weak yet financially strong target market of expatriates or those with assets held in different jurisdictions, now is certainly the time to sit up and pay attention so please. If you would like to discuss anything above don’t hesitate to get in touch with the team here.