Since we last wrote to you, so much seems to have transpired; Trump was nearly assassinated; Biden has (effectively) abdicated, propelling Kamala Harris to ‘President-in-waiting’; chaos reigns in Britain; and global markets have seen their most tumultuous times since the financial crisis.

To dissect these events is not straightforward, and we hope to allay any concerns you may have.

Markets concentrate on one thing at a time. The artificial intelligence (AI) trade has been the story of the first half of 2024. However, investor sentiment and seasonal cyclicality have taken over in the last couple of weeks. The Federal Reserve’s (Fed) infatuation with inflation has meant it has overlooked other factors, both globally and domestically, when considering monetary policy.

Stock markets do not take kindly to indecision.

US employment data was weak in July which prompted markets to question the Fed’s sclerosis. Then, overnight, the Japanese index fell 12%, and has led to drawdowns in European markets. Now the Fed appears to have woken up. There is speculation of two 50-basis point reductions in US interest rates in quick succession from the Fed. It has buoyed markets temporarily. But we do not deal in speculation or conjecture, and are keeping a keen eye on developments.

One of the outstanding performers of the last couple of years has been gold. Gold has been a historic store of value throughout periods of inflation and geopolitical instability. At (what is hopefully) the peak of these aforementioned phenomena we are reducing your gold allocation. The proceeds will be invested in global infrastructure which, unlike gold, generates an income yield of c. 6.5%. Because of the monetary backdrop, we are also able to buy assets at a 20% discount to their fair value and this feels like an opportune time to build a position in a high-yielding asset which has hitherto not been so susceptible to investor sentiment.

Please rest assured, your portfolios are carefully and strategically constructed. Downside protection is as important to us as upside participation. We have ‘skin in the game’ investing in the same funds as you do. Nothing is more important to us than ensuring your wealth is protected in times of uncertainty.

Thank you for your continued trust and confidence.
Warm regards,