Here you can read periodic updates on stock markets and investment news. The contents of this page is intended for clients only.
16th April 2020
Events surrounding Coronavirus in the recent weeks have stunned the world. The shut-down of entire countries while residents are confined to their homes in an effort to curtail the spread of this virus has had a remarkable impact on people’s lives. This has been coupled with businesses everywhere having little choice but to deplete their scarce resources and cash reserves while in hibernation leading almost inevitably to a perfect storm.
From an investment perspective, the sell-off in stock markets has been dramatic and indiscriminate with no single asset class being left unaffected.
KMA Client Portfolios
One of the pillars of our strategy has always been – and remains – sustainable growth over the longer term. Spreading risk across multiple asset classes, sectors, currencies and geographies has served to soften the impact of recent events. Likewise, by holding unit trusts and investment trusts (collectively known as ‘funds’) in our portfolios, we are in turn gaining exposure to hundreds if not thousands of underlying companies, each with their own respective strengths and ambitions.
These companies need to have a proven track record and robust future prospects in order to make the cut in the first place. Not only do we seek to select best-in-class funds, but we also take comfort in knowing that the Fund Managers themselves are experts in their respective fields and have been taking action on behalf of clients – building cash reserves and redeploying assets wisely to seize new opportunities.
The usual team at Montgomery Associates have been working remotely since mid-March and the business remains fully operational. As a precaution, written and telephone authority from clients will be required when processing transactions in/out and withdrawals will only be made to client bank accounts already registered with us.
Companies of all kinds have sent their staff home to work remotely as you will be aware. This, together with the promise of government financial support and generous grants, has already proven to be a breeding ground for fraudsters. We therefore ask that you remain even more vigilant than usual – please be wary of any company making unusual requests, check the sender’s email address and never give out personal or financial information if you are not absolutely sure. If you receive an unsolicited call, always ask for the caller’s name, number and company and suggest you call them back at another time.
Do not hesitate to contact us if you feel exposed to a potentially fraudulent request.
The true impact of this virus on daily life and the global economy will take time to emerge, however there is a silver lining. The sense of community spirit that has taken root has been exceptional and never before have we seen such levels of financial stimulus coupled with coordinated support from central banks all around the world. We are not out of the woods yet but our portfolios are well-positioned and the Fund Managers working on our behalf are, as mentioned above, poised to seize investment opportunities as and when they arise.
Standing back from the media noise day-to-day, we are also encouraged to see that client portfolios have provided a degree of resilience particularly when viewed over the course of the last 12 months. It may well get worse before it gets better, but above all it is important that we hold our nerve and exercise patience while we ride out this storm.
We thank you for your continued support and understanding as we prepare your usual quarterly statements which will arrive with you in the coming weeks. If you are expecting an Annual Report it is possible this will be sent to you by email instead of post and in some cases may be deferred until later in the year.
Investment Income: options available to you
16th April 2020
This update is relevant to those clients drawing an income from their investment portfolios and should be read in conjunction with our Newsletter distributed in April 2020. If you have any questions about your own circumstances please do not hesitate to contact us.
You will be aware that regular investment income is derived from a blend of dividends, interest, cash and the sale of investments to take advantage of any Capital Gains Tax (CGT) allowance available. This strategy enables us to transfer a fixed sum of money into your bank account (and you to manage your finances in much the same way as a regular salary) rather than rely on a variable and unpredictable stream of dividends alone.
This has proved to work well for many years but when financial markets experience a dramatic fall in value – as they have done in the past on occasions and particularly during recent weeks – more investment units clearly need to be sold to raise the same number of pounds than when prices are higher.
In light of the above comments and if you have the means to do so, perhaps in the form of a cash reserve or a temporary reduction in expenditure during self-isolation, one positive step you could consider is to reduce or defer your regular income payments until some sense of reality returns and stock markets start to recover.
We are of course very aware that your savings are under pressure from many directions at a time like this; we therefore stress that when considering an amendment to your income payments you should bear in mind that this is purely a suggestion with any decision taken only after you have looked carefully at your own personal financial situation.
If you do wish to take action, please can you contact us with your selection from the following options:
Option 1: Cancel income permanently.
Option 2: Cancel income for this quarter only.
Option 3: Cancel income for the next […] quarters only.
Option 4: Reduce income by […]% for this quarter only.
Option 5: Reduce income by […]% for the next […] quarters only.
If we do not hear from you, no changes will be made and your regular income withdrawal will be processed as normal. Likewise, we can of course arrange one-off interim withdrawals on request.