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Investment Committee Meeting Notes, 17 January

The latest quarterly Town Close Financial Planning Investment Committee Meeting took place on 17 January 2022.

The TCFP Model Portfolio remains unchanged, but a rebalance of all pension and ISA accounts was agreed.

Although markets have dropped off slightly from their recent peak, there is nothing in the data to suggest a large drawdown is imminent.

We are still waiting for the 10-15% equity market drop, which we can then exploit by triggering a rebalance.

In fact, we waited throughout 2021 for the drop, but it never materialised.

 

Inflation

This is and has been a growing concern to us all. The cost of goods, especially our gas and electricity bills have risen dramatically, and will continue to rise throughout 2022. However, to counter this, economic growth will also continue to be strong throughout the year.

Looking ahead to 2023, both should reduce back to more ‘normalised’ levels, therefore there’s nothing to be done, for now.

 

Bank Base Rates

In December, the Bank of England’s Monetary Policy Committee voted to increase the Bank base rate to 0.25%. They meet again in early February, and don’t be surprised if this is increased again. By the end of 2022, we anticipate rates being at, or around 1%.

A base rate of 1% is nothing to get excited about. Businesses and households can be expected to easily to absorb this rise, despite the headlines trying to convince you otherwise.

 

Underlying themes

There are a number of recent political events to be aware of, which could have a bearing on markets. No longer in Brexit on our agenda, it’s yesterday’s news.

Russia’s possible invasion of Ukraine, although highly unlikely, would have a knock-on effect to global markets, while closer to home, the ever increasing noise around Boris’ leadership of the government would cause unrest within UK markets.

Watch this space on these events, especially the latter.

 

TCFP Portfolio

All things considered, we are very pleased with the portfolio and the split of asset classes we hold. It’s simply a case of, steady as she goes.

As the anticipated 10-15% market drop did not occur in 2021, we have not rebalanced portfolios for 12 months. It’s good form to rebalance at least annually and so we agreed to do so. That process started yesterday and should take the week to complete.

By rebalancing we are effectively selling high (large and smaller companies) to buy lower (bonds and emerging markets companies), it’s investment strategy 101 stuff.

That was it for our first meeting of 2022. The next scheduled meeting is due to take place on 25 April, or sooner should needs be.

 

Boring But Effective | Truthful, Helpful, Kind

advice@townclosefp.co.uk 

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