February 2020 Mid Monthly Update

My Grandad died at the age of 21!

How is that possible?!

Well he was born on the 29th of February and as that was a leap year, he only had 21 birthdays in his 84 years.  This year is also a leap year and to many investors, investing now is something of a leap of faith given where interest rates are and some large cap stock valuations in what has become a mature economic cycle which has benefited many.

Of course, market timing is not to be recommended – the right time to get in and out – its tricky to get two decisions right, one can be hard enough.  Better to be a frequent investor over a period of time and the annual ISA allowance helps savers do just that.  The allowance is currently £20,000 per annum in an any financial year and while that may change in the forthcoming budget on the 11th of March, £20,000 is a decent sum of money.

ISA stands for Individual Savings Account and from now until the end of the tax year in early April, you’ll probably be bombarded by various companies reminding you to remind your investors to utilise their ISA allowance.  ISA is one of those acronyms whose frequency of use has overwhelmed the words behind it.  For us at TBAM, we see ISAs as standing for Investment Solution Acquisition.  Not exactly catchy but important because as an investment provider, we need to be conscious of what we can offer those looking for investment solutions.

The T. Bailey Dynamic Fund was conceived to deliver an understandable, comprehensive multi-asset solution, importantly, with a meaningful outcome – not an index or a sector or peer group but UK inflation plus 3% over rolling three-year periods.  We hope you’ll excuse us promoting the Dynamic Fund but we believe it is has grown in popularity because it has:

  • No conflicts of interest
  • No liquidity issues
  • No sales commission incentives
  • No Woodford
  • No looking over the shoulder to see what everyone else is doing.

But it does have:

  • Transparency
  • An alignment of interest
  • Built-in asset allocation
  • A meaningful outcome
  • Daily dealing
  • Consistent objective delivery

After all, the biggest fear for investors, is to undershoot inflation and see the real value of your fund fall.

The Dynamic Fund has performed well against its official objective of UK inflation (Consumer Price Index) plus 3%.  Here is the performance report over rolling three-year periods as required by the regulator, the Financial Conduct Authority (FCA).




Source: FE & T. Bailey          All figures quoted are after fees

In short, the Dynamic has maintained savers’ wealth in real terms, above inflation.  We believe it is worthy of consideration for ISAs, Junior ISAs and as part of a general investment account.  There are few multi-asset offerings with an inflation plus objective, it’s a head-scratcher to understand why there are so few and highlights the general industry disconnect with investors.

Going Viral

A few words on the Coronavirus or COVID-19 to give it its new name.  Personally, I prefer ‘Kung Flu’ which a group of campaigners petitioned to have it called.  While that alternative name made me smile, this virus isn’t a laughing matter.  Today we found out the Chinese had been underreporting the cases and deaths.  While not a complete surprise as Chinese economic statistics generally come with a health warning (no pun intended), it did provide nervousness across financial markets.  What we do know is COVID-19 will shave a chunk off this quarter’s economic output in the world’s second largest economy and that will impact on global economic growth too.  Bonds have become more expensive while equity markets oscillate on the latest virus headlines.  One cohort probably worth following and a statistically relevant sample size, is the inhabitants of the Diamond Princess cruise ship, moored/quarantined in Yokohama, Japan.  Of its 3,711 passengers and crew, 221 have been infected but with no fatalities to date.  Many think the ship is being used as a floating petri-dish. Worth monitoring.

It’s All Greek to Me

Photo: Petros Giannakouris, AP
For those who don’t recognise the above image, it is the iconic Greek image that is the 500BC Parthenon in Athens.  While current market turbulence is the result of a different problem, many investors will remember the Greek crises (tragedies?) of the past decade now overshadowed by subsequent events.  Well, you may be surprised to learn that Greek ten-year Government bond yields set a new record low this week, they fell below 1% to yield 0.96% at the time of writing.  Who would have thought that was possible?!

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