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Update from Cullen Wealth

By September 29, 2022No Comments

We are beginning to feel like we have had plenty of practice and are now well versed in writing communications of this nature to our clients, after numerous significant events over recent years which have caused greater volatility in global investment markets than would ordinarily be expected.

At the time of writing, we have witnessed another period of extraordinary domestic economic and market volatility following the Government’s Mini Budget last Friday. As most of you will have heard or read, the consequence of this has been a sharp fall in value of our domestic currency, a greater likelihood of higher interest rates and, possibly, higher, and more persistent inflation than was otherwise predicted.

This is undoubtedly a bold (many say foolhardy) move by the Government who believe this is the most appropriate strategy to help our economy. Will it work? The majority suggest it’s unlikely to, we guess time will tell.

It is at times like these, where we experience greater concern about the resilience and sustainability of our investments, that our minds turn to just how much we could possibly afford to lose and how low might the value of our portfolios go.  It is important to say that the investment journey is never always comfortable, from time to time the road gets congested and uneven. In recent years, this congestion and unevenness has been more frequent.

What matters here is how we react through the periods of greater uncertainty. Historical data confirms that, unless you have a crystal ball, those who try and predict future market movements usually tend to misjudge these, and this strategy ultimately leads to a less favourable longer-term outcome. There are the lucky few who have been able to successfully pick the right times, but for the large majority this is a very difficult, and arguably impossible thing to do.

Historical data also shows us that over a 20-year period, missing just a handful of the best days in the investment markets can cost you dearly in eventual portfolio growth. These are some of the facts that we use at Cullen Wealth to help you make the most appropriate decisions with your portfolios.

What is also important to communicate, I believe, is that the recommendations we make to you are very carefully constructed, we only recommend financial companies who exhibit some of the strongest financial resources, with considerable long-term track records. Additionally, the style of investment management we favour are global unconstrained multi asset funds.

In English, this means that the fund managers we recommend to you can invest your portfolios into any recognised asset which exists around the world, and additionally in some cases they strategically change this on a real time day by day basis. This strategic management also includes deciding which currencies your portfolios should be invested into. Our fund manager partners are able to trade in currencies they feel may be more beneficial.

Therefore, all the domestic issues we are currently facing, from high inflation, rising interest rates and a weakening currency, do not necessarily have an adverse impact on your investment portfolios. Due to the careful management and global diversification, some of the more extreme market movements you have seen in recent days from our domestic investment and currency markets are not reflected in the value of your portfolios.

Finally, the plans we have devised with you are usually considered with a long-term timeframe in mind. This means that over the whole investment timeframe, your portfolio will need to withstand numerous storms. The important part here is how you react whilst in the midst of those storms. Making an ill-advised change to your portfolios in this period can prove to be more costly over the long-term, than the risks you perceive it to save.

We are closely monitoring the events and how they impact your plans and strategies.  If you need any further information or guidance, then please contact your usual consultant who will be pleased to assist.