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.

Reeves Independent's Monthly Portfolio Report!

We have now had our new portfolio’s up & running for a month and we are starting to see nice gains for our clients. Despite the drop in the markets last week due to all the uncertainty surrounding the Greek debt and US debt, the monthly gains have been promising.

The changes we made to our Aggressive portfolio have paid off with over half of our funds showing gains of over 4% and all 16 funds presenting positive returns. Our “Henderson Global Technology A” fund has produced the biggest returns with an extremely healthy 9.34% gain in just a month.

Our Balanced portfolio which was also revamped in June has struggled this week due to the factors mentioned above. However over the month it still showed an average return of 2.51% with all but two of our funds showing positive returns.

As is expected our Cautious portfolio showed the smallest gains as they are invested the least volatile funds. The monthly average return from the 10 funds we invest in was still at 0.8%.
 

If you would like to review your investment portfolio or you would like the opportunity to possibly make returns like those mentioned above then contact us on 0871 271 1280 or e-mail info@reevesifa.com

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Case Study - Taking Control of your Investments to achieve your Objectives!

Last month I received a referral from one of our professional connections based in Leeds, who had a client whose specific request was for someone to manage his Investment Portfolio.

This particular client was a 53 year old male from Nottingham with a well paid job within the IT industry. Mr B as he will be known had over 200k from all his investments and his OBJECTIVE was to retire at 60.

He wanted to do this by maximising returns from the before mentioned investments.

An initial fact find meeting with Mr B established he had 6 different pension funds totalling closer to 250k. These were roughly split with 50% in with profits funds & 50% in UK Equities.

After filling in an in-depth risk profiler questionnaires we had the following conclusions about Mr B;

• He was prepared to invest in overseas & specialist markets to maximize returns.
• He wanted to take an active role in the decision making about buying & selling of different investments in response to market changes.

What were Mr B Options?

Following some research it was clear to me that there was at least 100k that was inappropriately invested, which was not contributing towards his objective. In addition to this Mr B was paying a high amount of monthly fees due to this multi-policy arrangement. Mr B's had the following options;

• Switch into a lower charged pension arrangement, which offered reduced costs & greater fund options & significantly easier administration to assist in his investment programme

         or

• Bundle all 6 pensions into one that would provide the maximum range of investment opportunities & efficient ongoing portfolio management

Mr B choose the latter option, which whilst occurring higher initial costs would provide the opportunities to grow his pension fund over the next 7 years through Reeves Independent's Portfolio Management Service.

Does the above case sound similar to you? Here at Reeves Independent we would work closely with you to give you the best opportunity of maximising your investment returns. We would give you the strategies, help you make the right decisions & give you the tools to allow you reach your investment goals.

Contact us now on 0191 281 9862 or e-mail info@reevesifa.com NOW for a FREE initial consultation!

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Can you afford NOT to work your Investments?

A recent meeting with a prospective client has added further weight to the argument that if you want more money when you retire you have to really make your investments work.

Mr X was 50 years of age and had accumulated a value of 120k in his pension pot. He was planning to retire at 65 years of age.

What were Mr X's options?

• Pay more money into his pension - which was ruled out as this was not affordable      
• Make his investments work by being proactive - as this could really change the quality of his retirement

What could be achieved?

The table below shows what Mr X's investments could return in 15 years time at varying interest rates




*Projection source from Aegon Scottish Equitable for a Flexible Personal Pension 


As you can see even 2% interest rate intervals can have a MASSIVE impact on your pension fund & your income after you retire. Which result would you prefer? The left hand column or the right hand column? If it the right then you need to take action NOW!


How can you achieve this?

• You need to sit down a devise a strategy & a plan of how you are going to manage your investments
• Regularly review your investments to ensure the above mentioned strategy & plan are working
• Have a tool in place that gives you the following;
• Unlimited fund choice - to give you exposure to specialist sectors & investments
• Opportunity to move into & out of investments at the right time
• Control of what you have got 24/7 at the touch of a button
• Receive support from an expert, experienced & personable advisor

Here at Reeves Independent we would work closely with you to give you the best opportunity of maximising your investment returns. We would give you the strategies, help you make the right decisions & give you the tools to allow you reach your investment goals.

Increase your chances of having more income when you retire by working your investments! 

Contact us on 0871 271 1280 or e-mail info@reevesifa.com for a FREE no obligation appointment!

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Reeves Independent Weekly Investment Report - 01/07/11 - 07/07/11

Here at Reeves Independent we changed our portfolios this week to our new & hopefully improved version 7. The new portfolio’s experienced a fantastic maiden week; with ALL 35 of our funds showing positive results & therefore all 3 of our portfolio’s producing returns for our clients.

Our Japanese fund, which has seen double figure gains since the earthquake hit at the beginning of the year, continued to recover with a one week return of over 4%. This contributed to our Aggressive funds averaging a 3% return in just a week. It was also helped by our “Junior Oils Trust” fund which saw over 7% gains in the last 7 days.

The average return for our balanced portfolio for this week is 2.3% with our best fund being the “Gartmore US Growth” hitting over the 4% mark in the 7 days.

The portfolio with the lowest gains was our Cautious portfolio but even this showed an average of 1.4% return with our "Jupiter North American" fund surpassing 3% for the week.

If you would like to have a review of your investment portfolio or you would like to possibly make returns like those mentioned above then contact us on 0871 271 1280 or e-mail info@reevesifa.com


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Pension Reforms 2012 - What are the implications on Employers?

This week I have had a lengthy chat with a fellow professional about the much talked about Pension Reforms. As we know the Government is proposing to bring in new laws from 2012 that will have a significant impact on every employer in the UK.

What are the key points?

The framework for these new laws is already in place in the shape of the Pensions Act 2008.

• Employers will, for the first time, be required to automatically enrol eligible employees into a pension scheme.
• Employers will, for the first time, be required to pay pension contributions for any employees who join and stay in the pension scheme.
• The Pensions Regulator will police and enforce these new laws.
• Even if you have an existing workplace pension scheme, you may have to make changes so that it complies with the new laws.
• Employers can either use their own pension scheme to comply with these new laws or rely on a Government built scheme - the National Employment Savings Trust (NEST) scheme.

What did we conclude?

• 80% of all pension schemes in the UK are not fit for the new legislation in their current format
• That any employer should at least get initial advice even if they plan to do nothing in the short term
• In many cases time is not on the employers side
• Its so important for employers to be aware of their position and plan for any future action, as these will have may huge implications on budgetting & staffing
• There are large concerns that the industry will not have the capacity to deal w
  ith the huge rush to get schemes set up, therefore being ahead of the game would ensure you would met the legislative requirements in time.  

How can Reeves Independent Help?

Reeves Independent has set up & administered a large number of group schemes of varrying sizes throughout the last 20 years and therefore fully understands the challenges that businesses face.

We can:

• Help you review your existing workplace pension scheme to make sure it will comply with, or exceed, the new requirements

          or

• If you haven’t got a pension scheme yet, we can help you put one in place.
• And we can help with arrangements such as salary exchange that can save you money and offset the impact that these new laws will have on your business.

Here at Reeves Independent we would urge any employer to get some FREE initial advice! Contact the office NOW on 0191 281 9862 or e-mail info@reevesifa.com

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Reeves Independent Weekly Investment Report! - 25/06/11 - 02/07/11

This week has been a big week for the markets, specifically for Greece & Europe with the austerity package vote taking place on Wednesday. As your aware Athens erupted with riots from the proposed implications on the Greek Citizens.

In the lead up to the vote, due to economists speculating about the outcome, the European Funds in our three portfolios produced good returns. These helped our Balanced portfolio to an average gain of 1.46% across its 8 funds.

Our Aggressive portfolio also did well, with 75% of them showing gains. The Japanese fund that we invest in grew a further 1.35% in the last week meaning it has returned an impressive 3.8% in the last month.

Finally our Cautious portfolio also showed gains albeit not as much as the other 2, which however is to be expected. The portfolio averaged 0.24%, helped by our 6 Income funds*, which between them averaged a 1% return in just a week. Incredibly the Artemis Income Fund had a rise of 2.18% in just one week, over 4 times the average return of money invested in the bank annually.

If you would like to have a review of your investment portfolio or you would like to possibly make returns like those mentioned above then contact us on 0871 271 1280 or e-mail info@reevesifa.com


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* Definition of an income fund http://www.investorwords.com/2404/income_fund.html