Investment Report – March 2017 – A Mixed Bag

OVERVIEW

Stock market jitters returned in April as concerns arose that the reflation promised by Donald Trump would fail to materialise. It became apparent, owing to problems around the proposed Healthcare Reform Bill, that passing legislation on just about anything significant in the US – especially if it was controversial, is nigh on impossible. This made investors question whether Trump’s programme of works and tax cuts would make it to the start line. Over the month, the US market fell around 1.0%.

In other regions of the world, things were more positive, with a pick-up in growth and corporate profits. Emerging Markets are now back in fashion with most regions enjoying strong investor flows of capital for investment. The Emerging Market index rose by nearly 4.0% over the month with a resurgent India leading the charge, after Namenda Modi won a regional election in a key province.

European markets were strong, posting gains of around 5.0%, after a centralist party won the general election in Holland. The far-right candidate was well beaten, so investors took the view that maybe a moderate tone would prevail in the forthcoming French and German elections.

Here in the UK commercial property values made modest progress with values consolidating.

Here is the chart of the FTSE 100 index for the last six months:

…and the last five years, which puts this into perspective;

FUND PERFORMANCE

Short-term Performance

Long-term Performance

(Source; Parmenion Capital Partners LLP)

PORTFOLIO REVIEW

All Portfolios

All portfolios gained modest sums in March, as markets consolidated strong gains made earlier in the year.

Income Portfolio

The Income Portfolio increased by +1.0% in-line with the benchmark (the average mixed investment (20-60% shares) fund) which also grew by +0.9%.

Balanced Portfolio

The Balanced Portfolio grew by +1.0% in March out-performing the benchmark (the average mixed investment (40-80% shares) fund) which grew by +0.9%.

Tactical Portfolio

The Tactical Portfolio grew by +1.3% in March out-performing the benchmark (the average Flexible fund) which grew by +1.0%.

No changes were made to the portfolios this month.

OUTLOOK

There has been incessant debate in the FT about the height of the US market and it is undoubtedly the case that it is expensive. As Trump has failed to reform Obamacare, his attention will now turn to tax reform and an expansion of public spending on infrastructure, all of which would be good for the markets. Once again, it remains to be seen whether he can deliver on his promises.

Elsewhere, Emerging Markets are attracting strong capital inflows as growth picks up and markets have responded with pleasing capital gains. Europe is also a favoured investment destination as the markets here are good value, and the prospect of a complete breakup of the EU has diminished after the outcome of the election in Holland.

The first quarter of 2017 was very strong. We expect some consolidation as we enjoy the Spring weather.

P.S. Don’t forget the usual risk warning for all long-term investments: “The value of units can fall as well as rise, and past performance is no guarantee of future performance. The value of income payments from investment funds is not guaranteed and can fall as well as rise”.