Coming out of Lockdown

24.07.2020

Those of you with little better to do would have noticed that I missed my last slot 4 weeks ago and my Client Email was never completed in late June. I think the lockdown weeks had begun to blur and roll into each other and I obviously lost track of time (or had nothing interesting to say). However, this time round India gave me an ultimatum and a deadline for this week, and I pleased to say that by hitting the latter I avoided the former.

It has been interesting to see how people and businesses are all starting to emerge from Lockdown. I was reflecting on this whilst we grabbed an impromptu trip to the Lakes for a week, the day after the pubs could open. What a joy just to have a change of scene. Foraging for food at the end of the first day we saw that The Yew Tree in Coniston was a little stressed, shall we say, and not coping as well as The Crown Inn round the corner, which had a good system for engaging with their customers with a simple track and trace app and a welcome smile – not a face mask in sight. Being served up a Cumberland sausage and mash with a pint of Cumbria Way after a day on the fells – heaven.

All businesses, including us, are wrestling with ‘how to get back to work’ and ‘what does the new normal’ look like. I do not feed off other people’s woes but an article in Reuters did catch my eye recently and at first, I confess, I did laugh …. and then I could not stop. I paraphrase but the headline was “Government allows Brothels in Athens to Re-Open”. The thrust of the story lay in the trouble that the purveyors of said trade were having with the application of social distancing with their clients, and the problems said clients were having with track and trace, wishing to retain anonymity and not wishing to queue outside keeping a 2 metre spacing – I bet!

One ‘madam’, who owns three establishments, has already returned to profit as she was able to bail out the local football team through a low key sponsorship deal. The players are thrilled that the club has staved off insolvency and will be in a position to compete next season, but are at best ambivalent about wearing a new pink strip with ‘Villa Erotica’ stencilled across their shoulders – I kid you not.

Some businesses may well return to prosperity quickly, and of course, we wish the oldest industry of all our very best, but others will take a while longer, if at all, and there is no hiding the deep seated problems that the world economy faces. Quite what shape the recovery will be – ‘V’ shaped, ‘W’ shaped ‘L’ shaped or ‘Nike swoosh’ shape (whatever that means) or when it will occur remains unknown; however, the world economy will recover because it always does, and it’s our belief that we will look back in years to come on the COVID-19 era in the same way as we look back on the Banking Crisis of 2007/08.

However, there is no doubt there will be continued pain for many businesses and enterprises for some time to come. The contingency planning put in place by our Financial Director is coming into its own this year and that the financial planning process we apply to the development of your financial plan is equally applicable to Brunel i.e. having a rainy day fund to cope with shorter term ruin. By taking the same approach we can retain our fabulous team in full and our longer term plans remain on course.

Our planning and business is only as good as the support that you give us though, and again from me and the Team I wish to take the opportunity to thank you for your continued support and good humour through this crisis.

Steve Brady
Director
Steve Brady

A Sustainable Future

17.7.2020

I hope everyone is keeping safe and well and managing to remain positive. I for one am very much looking forward to taking some time out with the family next week in Cornwall. The past few months have been extremely challenging for everyone and it is easy to forget that we need a break to re-charge the batteries. If you do manage to get away, I hope you have a great time.

In this update, I wanted to share some further developments we are working on for our clients.

One of our core values is that we Care. As a business, we care – about all of us, about how we work together and our environment.

Brunel believes Corporate Social Responsibility is about living the values and principles that govern the way we operate as an organisation and behave as individuals.

Ensuring we sustain safe operations, have a positive and supportive impact on our employees, the communities we work in and the wider environment, and ensuring we continually strive to build the trust and respect of our clients. We recognise the impacts that we make on society, the economy and the planet, and we seek to make a positive difference in the places where we operate.

Many of you will have seen some of the fantastic work our team has done for charity and making a difference in our local community has always been a big part of what we are about. We now have a dedicated team looking at all of this to ensure our impact remains totally positive across all areas of the business and we achieve the high standards we have set ourselves.

We know from our conversations with you, our clients that some of these matters are really important to you too.

One of the biggest themes we are seeing within the investment world is that of ‘sustainable’ investing. You might have seen it referred to as Ethical, SRI (Socially Responsible Investing), ESG (Environmental, Social & Governance) or ‘Impact’ investing but it all fundamentally means the same thing – making a positive impact on our world and the creatures (including humans) in it, through the investments you choose.

I don’t think any reasonable person would argue that this is a good aim.

In the past my only reservations have been what it implies about ‘ordinary’ investing or indeed who’s definition of Ethical, Responsible or Impact we are referring to.

Historically, Ethical investing meant avoiding certain areas you disagree with (negative screening to use the technical term). In recent years people have seen that positively engaging with companies to encourage change has garnered much better results. The reality is that most big investment companies, by their sheer size, command a seat at the table of most big firms to pressure for positive change. Indeed Vanguard, the world’s biggest fund manager, actively engage with boards to deliver good governance and responsible management. But is that enough?

Ethical investing has also previously been seen as a nice idea but one that severely restricts investment choice and gives up financial growth prospects. Time has however shown that neither is true. As demand has increased the range of options has ballooned but also ‘sustainable’ industries are often those in the fastest growth areas and with the greatest long-term potential. A case in point is the impending climate crisis – companies focusing on renewable energy sources certainly have a long and bright future (assuming they get the right technology and source of energy).

While we each may have slightly different definitions of what ethical means to us there is also likely to be a strong overlap of the things that we want to see in the future. The UN have come up with a set of Sustainable Development Goals which many of us will agree are taking us in the right direction:

At IronBright we have decided that the time is right to introduce focused sustainable portfolios as an option for our clients. If you want to find out more, please get in touch with your financial planner.

With best wishes

Damien Rylett
CEO

With thanks to Dan Hiles, Chair of our Investment Committee for his contribution.

 

Lockdown Diaries – Where did the first half of the year go?

10.07.2020

I won’t bore you with a week by week account of events for the last 15 weeks since the commencement of lockdown back on 23rd March other than to say my PopMaster prowess has not really improved with Mrs Hill having taken victory on 75 occasions out of a possible 76!

However, I have had time to reflect on the work my colleagues and I undertake on behalf of our clients with a view to providing confidence in your financial future. This possibly can be best illustrated in the “Advice Tree”:

You will see I have broken down our work into three branches, with several individual elements on each branch:

  • Confidence
  • Your Goals
  • Your Money

In this post, I would like to concentrate on the “Confidence” branch and will pick up the Goals and Money branches in future articles.

Our experience – in the team we have many years of experience in dealing with the ups and downs of financial life. By way of example, we can help with a business sale, planning a legacy or receiving an inheritance. It is always good to be able to talk to someone who has been through it before- that’s what we are here for.

Achieving your goals – we can help you work out and achieve your financial goals in a relaxed but structured way; We will help you to understand risks and opportunities, to build a clear plan for your future. Really, our job is to give you confidence in the future.

Making the complex simple – The simpler we can make your plan the more likely you are able to stick to it. We also help to reduce your paperwork making sure you keep the important documents and destroy the spam!

Building trust in your financial future – we can often spot opportunities and by fully understanding your goals we can alert you to opportunities. We are your eyes and ears in the ever-changing world of tax and legal aspects of financial life. Our aim is to keep you on track over the months and years ahead. We achieve this by being available to you at any time throughout the course of the year and more formally at our Annual Planning Meetings.

I hope you find the “Advice Tree” helpful and informative. Your dedicated Financial Planner can always elaborate on any of the elements contained within the Advice Tree.

I’m off to catch up with the highlights of the first day’s play at the test match. Yes, cricket is back and so is the rain!

I hope you and your family continue to stay safe.

Peter Hill
Director

Peter Hill

Getting the right (re-)balance

03.07.2020

Call me old-fashioned but every now and then I like to see a bit of evidence that investment disciplines do actually work.

One discipline which has been long proven is that of re-balancing portfolios. This is the process of bringing a portfolio back to its original allocations on a regular basis. This could be quarterly, half-yearly or once a year. In the long term it makes little difference as long as you actually do it.

When we created IronBright, we took the decision to re-balance all of our client portfolios half-yearly and have stuck to this discipline ever since.

The primary goal of re-balancing is to maintain the risk and return characteristics of any given portfolio over time. In simple terms: if you buy a portfolio of 2 funds; in equal weightings; with one representing stockmarket (growth) assets and the other fixed interest (defensive) assets and do nothing the likely long term performance of the stockmarket component will mean that a 50/50 investment will start to drift to 60/40, 70/30 or beyond.

This leaves a client in a totally different asset allocation (and hence risk and return trade off) than they are comfortable with. The result of this is that, if the stockmarket takes a temporary dive as it did in March this year then the investor suffers significantly more volatility than they were originally comfortable with.

Regular re-balancing makes sure the weightings never drift too far apart and the portfolio continues to act as expected over time.

The nature of re-balancing also means you are, by definition, selling things that have done well and buying those that have done less well. This is selling high and buying low – the nirvana of investing!

Long-term this can also serve to enhance the returns of a portfolio and our most recent rebalance at the end of March serves to illustrate this point. Due to the significant market movements in March this is an exaggerated version of what we usually see but hopefully will demonstrate the principle.

For ease, I have chosen our IronBright 50 (Passive) portfolio as it is evenly weighted between ‘growth’ and ‘defensive’ (or Equity and Fixed Interest) funds.

Between the previous re-balance in November 2019 and the latest one at the end of March the Fixed Interest part of the portfolio actually increased by 1% while the Equity component dropped by 20%. This led to the portfolio becoming overweight in Fixed Interest funds. The re-balance prompted the ‘profit’ from this element to be realised and reinvested into the Equity funds which were temporarily suppressed. From the end of March to now the Fixed Interest element has grown by just 6% while the equity funds have grown by 14%.

Given the risk and reward characteristics of the IronBright 50 portfolio, a rebalance like this will have served to enhance the returns for our clients over and above a portfolio that was not rebalanced.

It is important to note that, like all areas of investing, discipline is key. That is why we have always rebalanced and will continue to do so on a regular basis.

Dan Hiles
Financial Planning Manager

Trust and Transparency

26.06.2020

If you are anything like me, I now find it impossible to turn on the television or pick up a newspaper without reading or hearing about another breach of trust. Sports teams, charities, businesses, politicians are all equally guilty, routinely putting their own interests ahead of the people they serve.

Coronavirus, however, has added another dimension to this. People now wake up every day to read about hundreds of thousands of redundancies or dozens of high-profile businesses struggling to keep the lights on. Trust and transparency has become about more than just behaviour. It is about survival.

How to treat your customers in a crisis

I would like to quote a couple of friends (including myself) and their experiences with British Airways — a case study in what not to do.

Like myself, they were booked on a flight this summer which has obviously now been cancelled. Legally, we know we are allowed a full refund. British Airways, however, is offering a voucher which is valid for 2 years. If you want the cash refund you must navigate something akin to the Crystal Maze. Unsurprisingly, if you take the voucher, the system works perfectly. If you want the cash refund, the problems begin.

In 15 minutes of searching you cannot find the information on their website, nor can you find an email address to send your query to. The chat function is run by a machine, not a person, and none of the choices you are offered allow you ask the question you want to.

All of this from a company whose motto is ‘To fly, to serve’ and where its values include respect, responsibility, and fair play.

The thing I think they’ve misjudged is that most of us would genuinely be OK if they were open and transparent and explained that coronavirus is having such an impact on their business that the only way to ensure survival is to issue vouchers rather than refunds.

But they are not. They are avoiding transparency with their customers at a time where it would go a long way. It is something I (and presumably millions of other customers) will never forget.

The lesson in all of this is simple — great companies are simply about how they make their customers feel. And this is particularly true in times of crisis. Companies would do well to recognise that the world is so connected and so transparent that everyone can now see not only what you do but also how you do it. Total transparency is the only way forward.

It is with this in mind that I thought I would update you on how we are faring in light of coronavirus.

  • As you know we feel a great deal of responsibility to our team and thus we have not furloughed or made any of our employees redundant. This, in hindsight, was absolutely the right decision. The reaction from everyone across the business has been very encouraging and will, I believe, bind us even more tightly together in the future.
  • Our balance sheet remains strong and we continue to make long term decisions which we believe are in the best interests of all our stakeholders
  • We have successfully rolled out our new Personal Finance Portal to improve the security of all our communications which have your personal data included.
  • We are developing and testing a new platform to hold your assets which we believe will improve your experience when looking and reviewing your portfolios.
  • We plan to roll out a range of responsible model portfolios to compliment our existing portfolios with the aim to preserve and grow our client’s capital in a sustainable manner over time.

While we are still a long way from business as usual, the last few weeks have seen some sense of normality return. Stay safe and healthy.

David Buchan
Finance Director

David Buchan

Lockdown Diaries – Reasons to be optimistic

12.06.2020

This is the third update from me. The first one was understandably, a little downbeat in outlook for the world economy and asset prices. The second was more upbeat and this update confirms that I believe there are reasons to be optimistic.

Late last week the US payroll numbers delivered one of the biggest economic data shocks: consensus had been for 7.5 million job losses whereas the report showed 2.5 million job gains! Other data suggests that domestic activity in the US is improving with weekly mortgage approvals and house purchases back to levels seen in mid-January alongside a rebound in new business openings. Why do I consider this to be a reason to be cheerful? Well, the US is nearly always the first economy to come out of recession and at a faster pace than anywhere else and it consistently grows faster than other developed markets. This growth normally spreads to other economies including Europe and the UK. You are probably familiar with the phrase: “when America sneezes, the world catches a cold”.

Last week the European Central Bank (ECB) boosted its pandemic-driven bond buying programme by 600 billion Euros and extended it until at least June 2021. So, central banks continue to support their populations, businesses and financial markets. Governments are also doing “whatever it takes” and it is likely the UK Government is going to have an emergency budget in the coming months that could announce large scale spending plans and other measures to stimulate the economy. Let’s hope that the EU and UK Brexit trade deal negotiators can progress their discussions towards a deal.

The world’s largest pharmaceutical companies at the forefront of COVID-19 vaccine development advise they are making progress and production lines are already set up for when a vaccine becomes available. Positively, they are expecting a vaccine to possibly become available as early as autumn or winter this year. This is a constructive backdrop for getting most people back to work, which would be supportive for asset markets.

Contract tracing and the NHS coronavirus smartphone app have identified infections and reduced the spread of the disease, official figures suggest. Analysis of the system that is being used on the Isle of Wight appears to show that it has contained the infection during the trial. The data gives hope that the integrated system could help to control infection rates as the lockdown is eased.

The world’s health seems to be on an improving trend, which is leading to a slowly normalising society, which, in turn, is generating improving economic data. I hope that all continues.

Finally, for now, the news that the families of front-line workers are to be exempt from Inheritance Tax should they die as a result of COVID-19 will be welcomed by many. The government calls this the “blue light exemption”.

I hope you and your family continue to stay safe and as always, please do not hesitate to contact us if you would value a discussion.

Peter Hill
Director
Peter Hill

What next for markets and the economy?

05.06.2020

I was delighted to speak with Colin McInnes, IronBright’s Chief Investment Officer recently. During the short video below, Colin provides his views on where we are with markets and the economy in the midst of this crisis and where they may go next. I hope you enjoy the update.

Damien Rylett
CEO
Brunel Capital Partners

Damien Rylett

Will lockdown change your plans?

4.6.2020

One positive thing about juggling 2 jobs and 2 young children during lockdown is that my wife and I don’t have much spare time to dwell on the state of the world outside of our four walls.

That said, when the kids are in bed and we finally have time together, one topic we do talk about is whether lockdown will change how we live our lives in the future and are the things we aspired for before still the things we want from this life.

Undoubtedly, the slower pace of life has been welcomed as well as enjoying lots of quality time with our boys. Being largely confined to our home does however help focus the lens on what is important to each of us and how we could embrace those things when lockdown eases to the extent we can do them. It has helped us realise the importance of our physical and mental wellbeing and, judging by the amount of ways we have found/bought to communicate with others, our relationships with friends and family.

Speaking with friends (I include our lovely clients in this category) and family it has become a common theme that many felt too busy and pressured pre-lockdown. I have had several conversations where (over?) commitment to work at the expense of their home lives is being questioned.

When we do find the time to look beyond our own four walls it is clear how lucky we are. I know that I had taken some things for granted. The freedom and luxury we enjoy compared to most people in this world is put in stark focus when for many of us our most pressing issue is that we can’t buy flour and eggs.

Never again will I take for granted the freedom we all enjoy to travel, to follow our dreams and passions and to hug the ones we love.

Plans are always subject to change which is why we like to be part of the long-term journey with our clients. It is however times like these that bring a sharper focus on these plans.

So, if you are thinking of a change be it working less (or more!), retiring earlier or want to know if you can follow a previously unspoken dream – speak to your planner. We will help you work out if you can do this already or what you need to do to make it happen.

Dan Hiles
Chartered Financial Planner

Daniel Hiles

Sunny Days and Time to Reflect

29.5.2020

The continuation of the lockdown, albeit with a chink of light from the government on this being relaxed slowly through June and July, continues to give us time at home we would not normally have had. In my conversations with clients, I have been impressed by how we have adapted and how we have used the time to reflect and consider some of the benefits of these circumstances.

Following the frosts of last week, it definitely feels Summer is now in full flow and judging by my recent trip to the garden centre to buy some compost, gardens are probably looking their best in years. You probably guessed that I was greeted by a wry smile and went home with an empty Land Rover! Fortunately, Dr Buchan came up with a solution of using her stash of grow bags to pot up yet more plants and vegetables. Plant trading has become the new lockdown norm – social distancing firmly adhered to!

The fruits of her labour are now in full bloom. The view from my home office is a show of colourful Lupins (yes, I have been educated on all our different variety of plants). Much more pleasing for me, I have picked our first strawberries and the raspberries are not far behind. The first picking is always the best. The vegetable garden is now fully planted, and we wait to be self-sufficient over the next few weeks. The good life is in full swing.

Even our pets have joined in the joys of summer. Four mice caught last night by our two cats; eggs a plenty from the chickens and our 4-month-old Cockapoo now thinks he can sniff out truffles. I hope so as my Italian father-in-law will be very happy. A trade of truffles for wine seems fair to me!

I am sure your discussions with us have encompassed similar topics. With holidays on the back burner we can share garden and family stories before moving onto your reviewing your financial plans. Dan and I were only saying today how we missed our face to face client meetings; Zoom/Teams and telephone calls are not quite the same, but as we adapt, I am sure we can get better.

I hope that you all remain healthy.

Best wishes,

David Buchan
Finance Director
Brunel Capital Partners

David Buchan

Lockdown Eases

15.5.2020

I hope that everyone is keeping safe and well.

The slight easing of the lockdown has lifted spirits in the Rylett household somewhat. We are now able to meet up with another person from outside of our household for the first time in months and just get out a bit more. Exciting stuff! I think this is extremely important for our sanity and mental health.

For us at Brunel, it is more of the same. The safety of our team and clients is paramount, so we will continue to work from home and we will only return to the office and offer face to face meetings when it is safe to do so.

There has been lots of talk about a recession this week and markets have been reacting to the news. We all know that the economy will suffer as a result of the crisis but what we don’t know is how deep it will be or for how long it will last.

As always, our advice is to maintain a long-term approach and not make any knee-jerk reactions. Your investment portfolio should be aligned with your objectives and if they haven’t changed, your portfolio shouldn’t change.

I wanted to share a couple of articles with you this week. The first, from me is a short note on being prepared for the unexpected. The second is from our friends at Vanguard about the nature of economic recoveries.

Article 1 here

Article 2 here

I hope that you find them of interest and as always, we welcome your feedback and if there is a particular topic you would like to hear from us on, please let me know.

If you have concerns or questions or would like to discuss your financial arrangements, please get in touch with your financial planner.

With best wishes

Damien Rylett
CEO
Brunel Capital Partners

Damien Rylett

Brunel Capital Partners is a sister company of Pilgrim Financial Planning