Central Banking Support for Risk Assets
Firstly, we trust you and yours are well and healthy.
We thought it appropriate to write a short note in relation to the Federal Reserve (FED) yesterday signaling that interest rates are to remain near zero until the economy recovers and ‘near’ full employment returns, with a medium term expectation of inflation increase.
The Bank of England (BoE) maintain the current level of interest rate.
Likewise, the Bank of England (BoE) has followed a similar path of ‘Accommodation’. This is likely to provide a strong backdrop for Risk assets, equities as a specific asset class, over the medium term.
The BoE’s rate-setting Monetary Policy Committee (MPC) has kept rates on hold at 0.1% while its separate bond purchase stimulus scheme will remain at £745billion.
The BoE also revealed that the MPC had been briefed on ‘plans to explore how a negative bank rate could be implemented effectively’ – if needed!
There is likely to be volatility in the near term, as Covid-19 news develops, along with the US Election ahead of us, although the general positioning and outlook for medium to longer term investors is positive for risk assets specifically.
As always, the ‘imperative’ for investors is to ensure that the ‘nasty surprises’ that markets throw at us can be accommodated within their general financial position.
We recommend all investors/clients consider their income/expenditure and capital positions and needs at regular intervals so that changes to one’s needs can be accommodated. If you would like assistance, simply let us know.
Cash Holdings – where does this leave cash holders?
Holding surplus cash is likely to be unproductive over the medium term given the accommodation backdrop, provided by central banking policy, so investors should consider their position accordingly. Get in touch to discuss your position as we have many solutions – some with capital protection, up to £85,000 (FSCS protection level) for the more risk averse clients, with potential returns nearing 5% p.a. (simple).
Our investment clients will know that our investment performance has been extremely strong, not only for the short term but over the decades that we have provided professional investment advice. We know of no other risk adjusted (professionally constructed) portfolios that have delivered performance in the same ballpark as our portfolios – fact. We have done this by using the strongest asset managers (Independently selected with detailed Due Diligence scrutiny) over the long term, focusing on the future of the Global economy in a risk adjusted way.
Not all investment outcomes are similar – or in comparison with our performance, in the same ballpark!
Current Due Diligence Study
We are at present carrying out a review of all assets held, gathering the ‘thinking’ of each asset manager of their investment rationale moving forward, along with a number of other asset managers that we ‘like’.
We will provide an overview of this study in due course.
As always, get in touch if you have an ‘advice’ need. We are here to help.
Richard and the Best Price FS Team