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In The Midst of Every Crisis Lies Opportunity

In the midst of every crisis lies opportunity

I’ve cut and pasted this input from an email received from the Jupiter European Growth fund management team yesterday (31/03/2020):

The pandemic has obliged many people to make significant changes to their daily habits. We can even expect an acceleration in some secular growth trends as a consequence of the crisis. We highlight three areas which could benefit over the longer term.

Clinical diagnostics: Expect an acceleration in some secular growth trends as a consequence of the crisis. In the diagnostic testing space, lab equipment companies such as Diasorin, Tecan and bioMerieux are all seeing a short-term increase in demand for their instruments. However, in our view, the real benefit is likely to come in the future as a consequence of their much larger installed base of customers and the greater revenues from the consumable reagents they will be selling to labs, once we get beyond the crisis. Our growth thesis on these companies has hinged on the cost-benefit to national health systems of being able to have faster, more encompassing diagnostic testing services. The coronavirus crisis clearly highlights the need for more investment into this area.

The industrialisation of the food supply chain: Governments will deem it critical to maintain food and farming industries during the worldwide battle against the Covid-19 pandemic. Before the coronavirus, China had already seen African Swine Fever (ASF) wipe out 50% of the country’s pig herd. Here, Genus, the global leader in providing porcine and bovine genetics could be a long-term beneficiary; it receives royalties for each commercial pig weaned. That’s not to say the company hasn’t had short-term problems. In February, owing to transport restrictions within the supply chain, it did not sell a single pig in China. Nevertheless, we have actually become more positive about the outlook for the business. Following the ASF and coronavirus crises we are likely to see a rapid and more professional rebuilding of the highly-fragmented domestic pork supply through the creation of large-scale integrated pork producers. This is a key priority for the Chinese government and should drive significant demand for the company’s products as they will improve productivity in food production.

The Digital World: Following the crisis, we will all migrate back to the physical world. But the current lockdowns are likely to introduce vast swathes of populations to the opportunities in the digital world, such as accelerating the adopting of online shopping, home delivery and other digital produce such as gaming. One of the attractions of Ubisoft Entertainment, a French gaming company, is the growth and superior economics of its digital offering (very low distribution costs, broadband getting even faster) over the sale of physical discs, which are more expensive to produce and distribute. We expect the rate of digitalisation to see a material step up and bring forwards the benefits we had previously anticipated for the business over the next few years.

As the Jupiter European Growth fund management team have outlined above even in the face of this adversity opportunity arises. The fast thinking entrepreneurs of the world will lead, and we could see a new generation of businesses and business leaders coming to the fore.

Steve Speed


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Weekly update from Brewin Dolphin

Weekly update from Brewin Dolphin

Further comment and update below from Brewin Dolphin below as this pandemic continues and the world adjusts to the coronavirus:

As we enter week two of lockdown in the UK (is that all its’s been?!) the UK government has given the clearest indication yet that measures could be extended beyond the current three-week period. Deputy Chief Medical Officer, Dr Catherine Calderwood, has suggested restrictions on movement may be necessary for at least 13 weeks whilst the UK deputy chief, Dr Jenny Harries, has warned resumption of normal life may be six months away, stressing the importance of phasing out restrictions over time to avoid a second peak down the line. For the NHS, meanwhile, the return of 20,000 staff to the workforce should prove a welcome boost as they come under pressure with up to a quarter of staff off work in some wards as doctors and nurses affected by the virus, either directly or indirectly, self-isolate.

In the US, Donald Trump conceded the US would not be open for business as usual by Easter after all, extending the current social distancing measures until the end of April amidst warnings from a leading infectious disease expert that 200,000 Americans could die. The US now has the most cases of any nation and the President’s handling of this crisis could well become a key determinant in his bid for re-election in November.

Meanwhile, as China looks to re-emerge from lockdown, their central bank unexpectedly cut the rate by 20 basis points, the largest in nearly five years, in a bid to relieve pressure on their economy as they pick up the pieces post-pandemic.

Finishing on a hopeful note, the chart below put together by Pantheon shows that case growth is slowing in some of the most impacted countries, perhaps an indication that the social distancing and lockdown measures in place are beginning to bear fruit though some are further down the curve than others.

Dollar Outlook

The dollar is the world’s major funding currency. Earlier this month, as the coronavirus crisis intensified, companies began to get worried about a sharp drop in revenues and a seizing up in funding markets – both of which would impact their access to dollars.  As a result, companies started to max out their dollar credit lines, which pushed the dollar sharply higher earlier this month. Last week, we saw the dollar pull back.  There are a couple things causing this: –

First, the Fed stepped in by offering swap lines to the world’s central banks, which has eased dollar funding concerns.

Second, risk assets bounced in the middle of last week.  As the chart shows, the dollar has been moving inversely with stock prices, as it did during the Global Financial Crisis, as the chart on the right shows.

It’s too soon to say the dollar rally is over, but on a 12m view, even after the sharp decline of the last few days, the dollar probably has more downside, for three main reasons: –

  1. Although the economic pain will be severe and this crisis will leave scars, the current consensus suggests the global economy is most likely going to snap back strongly in Q3, possibly Q4, this year.  This backdrop, combined with ultra-accommodative monetary policy and currently depressed risk appetite suggests investors spend most of the next 12m in risk on mode, which benefits higher risk currencies.
  2. The second reason to expect downside in the dollar is interest rate differentials.  The 2-year rate spread in the UK, Eurozone, Japan and China have all moved sharply against the dollar.  This didn’t matter when markets were tanking, but it should matter more once the volatility stabilizes and the pound, euro, yen and RMB all appear to have upside versus the dollar based on the historical correlation with interest rate spreads, which are unlikely to move much over the next 12 months.
  3. Commodity prices are depressed now, but should move higher over the next 12 months as the economy starts to pick up.  It’s true that the US has higher commodity exposure now given the rise in shale, and UK, Euro area, China and Japan have very little commodity exposure. But the rise in commodity prices should give much more of a boost to the Russia’s, South Africa’s, Brazils, Norway’s, Canada’s and Australia’s of the world.

In addition to these 3 drivers, the dollar is also expensive, market sentiment on the dollar is bullish, which has negative implications from a contrarian perspective, and its already massive current account and budget deficits are set to balloon even further.

Markets in a Minute

– The oil price plunged further over the weekend to its lowest level since 2002 with West Texas Intermediate falling as low as $19.92 a barrel due to vanishing demand and a continuation of the Russia-Saudi price war, heaping pressure on high cost producers such as US shale.

– Businesses are rising to the challenge of creating the tens of thousands of ventilators required to help those most at risk patients with Airbus, BAE, Ford, Rolls Royce and Siemens forming the “VentilatorChallengeUK” Consortium to help meet the demand.

– easyJet has grounded their entire fleet and given no indication when they can restart commercial flights.  Virgin Atlantic, meanwhile, look set to request a government bailout with other carriers likely to join the queue. Grounded crew meanwhile have been asked to help staff field hospitals.

Thanks to Brewin Dolphin for the input above emailed to me yesterday afternoon (30/03/2020). If this needs a little interpretation for you or you would just like to catch up, please phone me on 0151 546 1969.

Lines could be busy, but we are fully operational to date with all other staff working remotely as I ‘isolate’ in the office.

Steve Speed


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Thoughts from Global Expert Investors

Thoughts from Global Expert Investors

As I’m sure everyone is aware, volatility in investments markets is currently at an extreme high and we have been helping our clients understand the implications that this level of volatility is having on their portfolios.

This blog is aimed to help investors understand how some of the most successful investors from around the world operate in trying market conditions and take the opportunity to invest as assets are lowly priced. It also aims to try and help reassure investors why now is not a time to panic, but to maintain the status quo or to take advantage of the low asset prices.

What the experts say

These quotes from some of the most successful investors illustrate how investing in stock markets can be a challenging yet rewarding venture, requiring strong research skills, a rational, dispassionate mindset, a long-term horizon and patience in equal measure.


As can be seen from the quotes above which are from some of the most successful investors from around the world, adverse market conditions should not be seen as a moment to run and hide, but as an opportunistic time to be invested and to make additional investments.

We are confident that fund managers in the market are already looking ahead and looking to purchase investments that might have looked too expensive to buy a couple of weeks ago.

To be invested in real growth assets, means you are willing to take a level of risk with your invested capital in order to have the potential to achieve greater levels of capital appreciation over the medium to long term than would otherwise be available by remaining in pure cash assets.

Time and patience are an investors friend at the moment, and it’s important that investors remain invested in order to reap the rewards of the eventual market recovery that will come, it’s just a matter of time.

If you would like to discuss the impact on your investment further, or perhaps want to invest additional capital, please do not hesitate to contact us.

Please keep safe and healthy.


Carl Mitchell – DipPFS



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Tatton Coronavirus Investor Q&A – 25 March 2020

Useful input from Tatton below.  Although they talk about their investment proposition you can view a lot of this material generically. 

Coronavirus investor Q&A – 25 March 2020

As your investment manager, we want to provide you with up-to-date information about your investments. With so many changes happening – both to us as a society and to the stock markets on a daily basis – we can all suffer from information overload. The purpose of this Q&A is to give you some context on what is happening and to share our thoughts on the outlook for your investment portfolio and the global economy.

I received a letter about my investments falling in value. What should my response be?

In 2018, the Financial Conduct Authority (FCA) introduced regulations that required investment managers to report falls of 10% or more in the value of investment portfolios in a ‘reporting period’ (three months) to investors as soon as they occur. The rules are intended to protect investors’ interests so that they are told ‘bad news’ about their portfolios as well as the ‘good news’.

The FCA requires us to send an additional notification each time the value of the portfolio falls a further 10%. Each notification must be sent within 24 hours of the fall taking place. Tatton’s quarterly reporting periods align with the calendar year. This means we begin our first reporting period on 1 January each year, the second quarter on 1 April, and so on.

We manage your investments through investment platforms. Because they hold your investments, they may also write to you under the same rules. However, investment platforms can use reporting periods based on the specific date you first invested, which means that they may notify you of a fall before or after we do.

All of these notifications are for information only and there is no need or requirement for you to do anything. If you are concerned, please talk to your Financial Adviser. They receive the same notifications about your investment from us, so they can discuss the best course of action with you.

Why have investment markets fallen so far, so quickly? 

The financial impact of COVID-19 has spread across the world as fast as the virus, showing just how connected we all are in both human and economic terms. Severe limitations on movement, as well as concerns about providing adequate healthcare, have created severe disruption to daily life and the global economy.

After COVID-19 was recognised as a global pandemic and the impact on global trade became clear, investment markets sold off heavily. The fall in investment markets was also worsened by a dramatic fall in the oil price when Saudi Arabia and Russia disagreed about oil production volumes, adding more pressure to an already nervous environment.

What is happening right now in investment markets?

The suspension of all but essential activities across Europe (and increasingly also the United States) has caused investment analysts to change their outlook on the global economy from positive to extremely negative. This has created panic in investment markets and forced governments to respond to try and restore confidence. The measures introduced by central banks and governments are extremely large, coordinated and designed to inject money into economies and to support business continuity. Even so, these messages have at times failed to bring back confidence within investment markets. As a result, global stock markets have fallen some 35% since their February highs. Even traditional ‘safe haven’ assets, like government bonds and gold, have fallen in value.

Will stock markets keep falling?

It is impossible to predict the future. Stock markets remain very volatile and there is the potential for further swings over the coming weeks and months. If the actions of central banks and governments bring stability to their economies, this should be reflected in investment markets, but we do not know when this will happen. The information available to us tells us that the number of people infected by the virus will decline and the pandemic will end, but we don’t know when.

Are we entering a global recession?

Yes, a recession (defined as two consecutive quarters of negative growth) is inevitable. But it’s important to consider the distinctions between previous global recessions and what we’re currently experiencing.

For example, the Global Financial Crisis of 2008 was sparked by failures in the banking sector that led to a general loss of trust in the entire global financial system. This created an internal shock to economies and investment markets. Today, the shock to investment markets is an external health crisis, rather than internal disfunction. When the ‘shock’ of the COVID-19 pandemic diminishes, the economic recovery will not be linked to the strength of the banking sector, but on the effectiveness of the combined US$3 trillion that governments are allocating to support their economies during the enforced shutdown.

How has this affected Tatton portfolios?

Tatton portfolios are diversified across different types of investments (assets) and geographic regions. However, as you would expect, portfolios with a greater allocation towards equities have been hardest hit during this crisis. Our Active and Global Equity portfolios, both of which hold equities in greater amounts, have fallen more than 20%.

Recent stock market falls have been so prominent that even our most Cautious portfolios have fallen more than 10%. This means that, since the beginning of 2020, all positive gains made since the beginning of 2019 have been wiped away. However, over the medium and longer term, our lower-risk strategies have not yet suffered losses in absolute terms.

From the minimum investment time horizon perspective of five years, all Tatton risk profiles and their aligned portfolio strategies remain robustly positive, with returns of between 10 and 15%.

Should I be thinking about selling my investments? 

In times of heightened – even unprecedented – levels of uncertainty, everybody feels the collective instinct to ‘do something’ to try to take control of events. Panic buying, against best advice from the government and supermarkets, is testimony to this very human notion. But whether we’re talking about toilet paper or investments, acting rashly can have poor long-term consequences.

As investment managers, we face the same pressure to sell during times of extreme volatility. However, it’s our job to resist such pressure and to persist with our long-held investment beliefs. For example, we know that holding well-diversified portfolios helps to cushion the impact of market falls, especially when compared against holding equities directly. We also know that it’s important to have our portfolios positioned in ways that will allow us to act swiftly and decisively when good buying opportunities present themselves.

Is now the right time to buy?

Normally, a sharp drop of 30% in the valuation of stock markets would present significant buying opportunities. However, this is not a normal time. It’s worth remembering that we are still in the early stages of this downturn. It is quite likely that we will – even if just temporarily – see further lows over the coming weeks. With markets acting unpredictably and in disorderly fashion, we favour a cautious approach at present. As responsible guardians of your money, we still take the view that ‘timing the market’ is a high-risk gamble and that ‘time in the market’ is the best way to build long-term investment returns.

What is Tatton doing to preserve the value of my investments? 

Every day, we review the relative weightings across portfolios and consider the latest market developments to continuously assess whether our positioning is appropriate.

With such unpredictability in markets, and given our existing allocations to cash, bonds and equities, we will not currently be making any portfolio adjustments. We believe our current positioning is appropriate for the current environment. We want to keep our portfolios invested at levels that will allow them to participate and benefit fully when investor sentiment turns.

While we continue to monitor our portfolios as a whole, we are constantly reviewing their individual component parts. It’s our job to ensure that the underlying funds that make up our portfolios perform as anticipated through the prevailing market environment. We expect our active managers to be taking advantage of the recent volatility in markets, but we want to ensure they remain committed to the philosophies for which we selected them in the first place.

How can I keep up to date on my investments?

We will keep sending out portfolio statements as usual and will continue to send updates on market developments. All our market updates are available to view on our website. Your Financial Adviser and your investment platform will be able to provide you with daily valuations should you need them.

If you have any questions at all about your investment, talk to your Financial Adviser first. They are familiar with your personal circumstances and will be best placed to discuss your investment with you.

Important Information

This material has been written by Tatton and is for information purposes only and must not be considered as financial advice.

We always recommend that you seek financial advice before making any financial decisions.

The value of your investments can go down as well as up and you may get back less than you originally invested.

Please note: All calls to and from our landlines and mobiles are recorded to meet regulatory requirements.


As I stated earlier, although these are Tatton’s views and some of the input is about their portfolios you can look at quite a lot of the input in a wider context about markets generally and views on investing.


Steve Speed


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Janus Henderson investment Trusts

Investment Trusts are not for the faint hearted as they can be more volatile than your average investment.  However, Neil Hermon has given a balanced view on the current markets and his thoughts on the economics, their portfolio, what they are doing and buying and things to be positive about:

Investment Trusts can be extremely volatile, shares can be bought at a premium or discount and they can use ‘gearing’ to enhance potential returns (or losses).  For the right client they are fine but please seek advice if you are considering buying Investment Trusts.

From my point of view this article from Neil Hermon further reinforces the consensus view in the market.  The UK Government is doing the right thing, it looks like markets are very oversold currently and for Fund Managers there are opportunities to buy quality stocks at the right price.





Steve Speed




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Investment Update for the AIM market

I have cut and pasted the following from an update received from one of the larger AIM Fund Managers in the UK, Octopus.  For those investing in AIM stocks you will know these are more volatile than most investments.

3:08pm 20 Mar 2020 – Written by Richard Power, Head of Smaller Companies

Below is a further update on how coronavirus is impacting the Octopus AIM Inheritance Tax Service.

Our investment processes while working remotely

Our investment processes while working remotely

We thought we would update you on our investment processes following this change in working environment. The important thing is that it’s business as usual for us and the management of the portfolios continues, albeit more remotely.  In place of the face to face meetings that we usually have with management teams of portfolio companies, we are speaking to them regularly via conference calls with a set up that allows for our usual team-wide involvement. We continue to have access to all of the analysts on the companies in our portfolios and, of course, the research they are producing.

We have been managing AIM portfolios for 15 years. The team have managed this product through the 2008 financial crisis, giving us confidence in the approach we are taking today. 

We have diverse portfolios of 25 to 30 established and profitable companies. However, share prices of all companies quoted on the stock market are being impacted and have fallen steeply. This is a typical reaction to a shock in the market. The eye of the storm is yet to pass, but it will, and as the number of new coronavirus cases slows, we expect sentiment to shift very rapidly leading to share price recovery, just as we have seen so far in China. 

Our investment approach during this period

We became increasingly concerned about the impact of the virus in mid-February. Our concern at that time was limited to China and the impact to the supply chain for UK companies. Share prices have fallen very steeply in response to the uncertainty, but we expect to see more rational pricing of companies in the future, connected to the level of business interruption.

We take a long-term view and still expect many companies in the portfolio to be able to double revenues over the next five years. It is a discretionary portfolio service so we will be making the decision on when to invest. The portfolios we manage will remain fully invested, in order to qualify for Business Property Relief. Rest assured, we are taking significant care prior to committing client cash into the market.

We are responding by buying ‘half a holding’ in companies we consider to be oversold, and are taking a longer term view – not always easy to do in the face of extreme short term uncertainty. We think it is important to be participating, as the correction is likely to happen quite quickly once investors can see through the worst of the crisis.

Recent performance of the portfolios

The portfolios have fared slightly better than the wider small and mid-cap indices because they have no exposure to some of the worst affected sectors such as Travel, Banks and Oil & Gas. They also have very limited exposure to the Retail and Leisure sectors. 

When selecting companies for these portfolios, we look for certain characteristics that we think compliment the investment objective of the product. As a result, we tend to be overweight in sectors such as Business Services and Technology, which benefit from high levels of recurring revenue.

The more management teams that we speak to, the more confident we become in the long term opportunity for the companies in the portfolio. 


It could still be a very bumpy ride but Octopus’ view is in line with market consensus.  Good quality stocks are still good quality.  Active stock picking adds value.  We just need to be patient and ride out the extreme volatility.


Steve Speed


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PruFund Range of Funds Blog

To our Prudential customers, as you may be aware, on Tuesday (17/03) Prudential announced and applied a downward Unit Price Adjustment (UPA) on some of their PruFund range of funds. We have just been listening to Prudential’s Treasury and Investment Office’s (T&IO) technical feedback and outlook regarding this recent action and I have summarised below some of the key outputs from this update:

  • Prudential have stated that some areas of the investment market have been ‘indiscriminately affected’ and they see buying opportunities in the market
  • Unusually high volatility – Prudential stated that we are not far from ‘the darkest hour, before dawn’. Effectively, this means that they believe that the high levels of market volatility we are currently seeing, are likely to continue for perhaps another couple of months before returning to more normal markets
  • There is nothing else quite like PruFund – please see below past performance of PruFund Growth vs Multi-Asset benchmarks over the last 5 years:

Past Performance over last 5 Years

Source: FE Analytics

We have also seen this data tested against some of the PruFund peers too and it was evident that there was nothing else quite like PruFunds.

  • PruFund recap: One of PruFund’s key characteristics is the ‘smoothing’ mechanism to their investment returns and this is reflected in changes in the value of the fund’s underlying unit holdings
    • One point to remember is that the PruFund is designed to lag a rapidly rising market and the same is true in a decreasing market. Please also bear in mind that the PruFund range of funds cannot defy gravity and in turbulent times (like we are experiencing now) they will also reduce fund values


Prudential’s T&IO views are that high levels of volatility are expected for the next few months before we see more normal levels of investment volatility returning. Now is a buying opportunity ahead of the future market recovery. It is important to keep calm and carry on (stay invested).

Should you have any queries please, please do not hesitate to contact us.


Carl Mitchell – IFA/Paraplanner



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T&IO Market Updates

Please see the input received today (19/03/2020) by email below from Prudential’s Distribution Team with a market update from their Treasury & Investment Office:

T&IO Market Updates

March 2020 Investment Summary

Having been hit by the double whammy of reduced demand due to the virus, travel/production restrictions and the spat between Russia and Saudi Arabia; where Russia refused to yield to the kingdoms’ request to cut output, even the speed of last weeks’ moves were jaw dropping by any standard. Crude oil collapsed 30% intraday on Monday, losing almost 50% year to date. The fallout for energy companies, especially US shale producers led to two temporary circuit breakers kicking in for the US stock market, where it dropped 7% with indiscriminate selling both on Monday and Thursday. US 10 year yields fell to a record 31 basis points on safe haven flows whilst the Vix spiked north of 60, which is the highest reading since the global financial crisis. Market participants and authorities are now coming to the realisation that the virus and reactions to it could cause a rapid slowdown to growth globally. Authorities are reacting by providing co-ordinated responses; central banks by providing liquidity where they can, the BoE cut 50 basis points last week and increased lending facilities to small companies.

The Chancellor unveiled a £30bn spending plan, abolishing business rates/extending sick pay for small companies and giving the NHS unlimited resources to deal with the crisis. The markets still deem the action inadequate in dealing with a crisis of this nature and await/hope for further policy responses. The ECB also underwhelmed markets by leaving rates unchanged, but including measures targeted to provide cheaper funding to banks and companies, although how much more this can stimulate company investment from an already low borrowing rate is under question.

The fear in markets is two-fold, one that the potential containment measures executed by authorities damage economic activity and cause profits to get significantly marked down, second the knock on consequences in credit markets, where credit spreads have blown out to levels not seen since 2012, potentially causing funding stresses for companies that need to rollover maturing debt. The former can’t be solved by central bank action, as the real economy will need time to heal and hopefully a rebound in activity through pent up demand can make up some of the lost output. The latter is something that could potentially be stemmed by providing lending facilities similar to the previous crisis and programmes such as these should be relatively easy to restart.

In terms of data releases last week, Q4 2019 finalised Japanese quarterly GDP came in at -1.8% which was in line with expectations and German/Italian industrial production number surprised to the upside at 3.0%/3.7% month on month respectively for January. UK quarter on quarter GDP disappointed at 0.0% for January, however markets are fixated with numbers that will come out for February onwards, as this will show the impact from the virus slowdown. Some countries such as Germany were already weak coming into this, others like the US were relatively strong and the intensity of the virus grip on the population will determine measures deployed to overcome it. Hence the starting point of the economy and containment measures introduced will keenly be watched by the market.


In terms of the virus outlook, with cases only beginning to register in some European countries and the USA, it does seem to us that the illness itself and the reactions to it might become stronger over the coming days. The key question is whether the knock on impact on global growth has already been priced into markets (or not). Equity markets are now back to similar levels to Q4 2018. At that time there was a fear that central banks would continue to tighten interest rates in the face of softening growth. Valuations do look very attractive compared to the market levels before the sell off began. However, we will watch what happens to the virus and the reaction to it from here, and we reserve judgement about whether the market should be higher or lower in the short term.

As per the note last week, GDP growth for the world economy has been lowered by many agencies, with the Organisation for Economic Co-operation and Development (OECD) lowering growth by 0.5% with further forecasted cuts likely. While the portfolio management team went into this market sell off with low levels of absolute risk, we are effectively now neutral for fund ranges where we deploy tactical asset allocation (excluding PruFund). Where we have corporate bonds in the SAA (Strategic Asset Allocation) we remain underweight versus cash. We take this approach with a view to put capital to work when the opportunity presents itself, through dislocations in valuations or when data starts to exhibit positive signs. We are of the view that the shock will largely be temporary in nature and growth will likely get worse before getting better.

Prudential’s Treasury & Investment Office (T & IO) manage over £175 billion in assets.  They are the team responsible for the PruFund range of funds amongst others.  The T & IO have access to over 800 investment professionals around the world.

Prudential’s T & IO have 10 actuaries and investment strategists responsible for the complex in-house modelling that underpins all strategic asset allocation.

This is a very well resourced multi asset investment team.  T & IO financial data as at 30/06/2019.

Steve Speed


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Why aren’t you doing something?

Please see Lothar’s input below re Tatton’s thoughts on managing invested assets in this heightened volatility: 

Why aren’t you doing something? 

During times of such unprecedented uncertainty, some of our investors will be asking themselves what active investment management means under the circumstances and what we, as your appointed investment manager, may be doing to manage the impact capital markets are having on portfolio values. So, just as we all want to know what the Government is doing, we would like to answer your questions as to what we are doing. By the way, our operations and investment team remain fully functional with most of the team now working from home. To put our management into context, in times of heightened if not unprecedented levels of uncertainty everybody has a significant urge to ‘do something’ – it is human nature to want to fix something if it goes ‘wrong’. 
The toilet paper and now general panic buying, against best advice from the government and the supply chain managers, are testimony to this very human notion. 
Investment managers and portfolio managers in particular face the same pressure when markets and asset classes embark on a wild yo-yo-like pattern of daily movements. However,  even if it runs against the human desire to intervene, ‘doing nothing’  is widely accepted as the best approach to a) preserve the volatility reducing characteristics of diversified portfolios vs. direct stock holdings and b) to have portfolios in a position to act at the point when the wild market swings calm and the biggest buying opportunities arise. 
This does not mean that Tatton’s investment team has been sitting idle. Nothing could be further from the truth. Every day we review the relative weightings across portfolios and reflect against the market developments whether the portfolios’ individual component parts have drifted to a positioning – driven by differing asset class returns – that we deem adequate and appropriate. 
While we continue to monitor the portfolio as a whole, we are constantly reviewing those individual component parts. Ensuring that the underlying funds which make up our portfolios perform as we would expect through the prevailing market environment. We would expect the active managers to be taking advantage of the recent volatility in markets, but we want to ensure they remain committed to the philosophies we selected them for in the first place. 

At the moment, our investment committee made the decision that not rebalancing portfolio weights back to previous target weights is the most suitable investment strategy to deal with the current capital market environment – until current uncertainty levels reduce. 
This approach means that equity exposure across all (bar Global Equity) portfolios has drifted to an underweight position versus the risk profile target weight. Given the heightened levels of uncertainty and resulting volatility this seems reasonable to both lower the relative impact of volatility, but also to keep portfolios invested at levels which mean that when the market sentiment turns, they will fully participate to their previous allocation levels. 
With a reduction of stock market valuations of over 30% since their February highs, there are arguably buying opportunities appearing in the equity markets. However, we need to understand and accept that uncertainty over the extent and timing of an economic rebound remains exceedingly high and we are only four weeks into this downturn. It is quite likely that we will – even if just temporarily – see lower lows over the coming weeks. 
Trying to ‘time- the-market’ and trade on short term swings is the reserve of the very highest risk seekers amongst investors. Those with a capacity for risk to lose significant amounts of their capital or miss any short-sharp recoveries that long-term investors will capture when they misjudge the sudden turns of disorderly markets and guess wrong. As long term investors, we will not be drawn into ‘gambling’ with client savings entrusted to our investment management as we firmly believe that ‘time in the markets’ will once again prevail, just as it has done during all previous ‘apocalyptic’ looking global crises. 

Best wishes 
Lothar Mentel 
CEO Tatton Investment Management Limited 
CIO Tatton Asset Management 


This is how Tatton manage their Managed Portfolio Services, in reality it is similar to other Fund Managers.  Once again the key message and way to minimise risk is to remain invested, you can’t time the markets. 


Steve Speed 


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Advice in volatile markets

Over the last few weeks volatility has increased quite significantly with the backdrop of the coronavirus pandemic.  Even less volatile investments are now starting to see fund value reductions.

In the circumstances I thought it would be a good idea to outline some basic thoughts about investments:

  • Rule number 1 is you need to remain invested. It is virtually impossible to time markets, so you just remain invested
  • If you are in growth mode and not drawing income, we just wait for the markets to recover. This will happen given time
  • Drawing income from your pension or investment funds is more complicated. My advice in this case is as follows:
  1. If possible, stop drawing income from your investments and draw on your cash deposits – emergency funds. This is what the emergency funds are for
  2. Should you not have any cash assets to draw on reduce your income from your investments or pension funds to the minimum you can manage on. You are trying to protect your invested funds for the long term
  3. When markets recover switch your pension or investment income back on
  4. Replenish your cash deposits (your emergency funds) with capital from your Stocks & Shares or Investment ISAs after the market has fully recovered

This is the ‘three pot’ approach we talk about and advise our clients on all the time.  It might be a while before markets recover, please just be patient and stick with the strategy outlined above.

The key point about this approach is that we are trying to sustain and protect your capital for the long term.  It’s a simple and effective plan.

If you have any questions on your own personal situation, please don’t hesitate to contact me.  In the current environment I’m spending more time in the office.

I know it’s a well-used phrase at the moment, but it really is a time to ‘Keep calm and carry on’.


Steve Speed