independent financial advisers€¦ · hurst financial consultancy update happy new year i would...

~ S T R A I G H T F O R W A R D A D V I C E . . . . . I N B L A C K A N D W H I T E ~

I N D E P E N D E N T F I N A N C I A L A D V I S E R S

Investment Review November 2012

Investments &

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Insurance

~ S T R A I G H T F O R W A R D A D V I C E . . . . . I N B L A C K A N D W H I T E ~

About Hurst Financial Consultancy Hurst Financial Consultancy was founded in 1997 by the Managing Director, Michael Hurst. The company has operated successfully in Salisbury from inception serving clients locally, nationally and internationally. The company focus has always been on excellence. We have also developed a strong focus on state of the art information technology being aware of its significant value in not only collating data, but managing the performance of investments. We have our own in-house IT department and use its services constantly to develop the service that we give to our clients to ensure it is always “leading edge”. As Independent Financial Advisers we have access to the full range of products and services available in the UK as opposed to a Tied Agent or Company Representative who may only advise and offer products from the company they represent. This means that we are able to give you impartial advice and recommend the most appropriate products for you, so that you will enjoy choice, value for money and our high-quality service.

Cheviot House, 71 Castle Street, Salisbury, WiltsTel. 01722 411 411

Investment Review

January 2013

Cheviot House, 71 Castle Street, Salisbury, Wilts.Tel. 01722 411 411

Hurst Financial Consultancy UpdateHappy New Year

I would like to wish you all a happy and prosperous 2013. The new office in Salisbury is now running smoothly and I am pleased to confirm that all our advisers meet the newFSA standards for providing independent financial advice and are in possession of their Statements of ProfessionalStanding.The new regime for financial advice came into effect on 1st January 2013. Please take a moment to read our newTerms of Business, the link on this page will direct you to our web page for this. If you have any questions please feelfree to call us – you will not be charged!

2012 events

The year was dominated by three main areas:

• US - “fiscal cliff” where tax increases and spending cuts threatened to send the USeconomy back into recession – a last minute deal avoided this but raising the debt ceiling is the next issue for 2013

• Eurozone – would the Euro survive? Greece did not leave the Euro in 2012 and the Eurozone remained intact with promises from the ECB to do “whatever it takes” to support the euro

• China – the impact on the global economy if the slowdown continued. There are signs that growth is accelerating again following positive growth indicators at the end of 2012.


The New Year has brought with it some signs of hope for Europe and the US although there is much to be done to address the continuing issues in these areas.As we predicted last year, the FTSE 100 has broken through the 6000 points.

Eurozone - Greece did not leave the Euro in 2012 and the Eurozone survived intact. Europe’s leaders’ commitment to defend the euro and actions such as a reduction in the borrowing costs of countries like Spain and Italy provided a boost in confidence worldwide. The austerity measures are very unpopular and there continues to be resistance to them across Europe therefore economic growth as a result of these measures need to be evidenced to sustain support and maintain market confidence. A positive step is the supervision of the Eurozone’s big banks by the ECB (European Central Bank) intended to be implemented in 2014. Once this is in place, troubled banks should be able to apply directly to the ESM (European Stability Mechanism), a permanent bailout fund, rather than relying on government funding that increases the country’s debts.

Economic Outlook 2013

United States - The deal reached at the eleventh hour to avoid the US “fiscal cliff” raises taxes for the wealthiest Americans and delays spending cuts for two months. This means that the Bush tax cuts have now become permanent for all but the wealthiest 2% of Americans. Raising the US debt ceiling will be the next topic for discussion and is crucial to a recovery. Because it is still the world’s largest importer, a weakened US economy and any fall in demand would have had a knock on effect on the rest of the world.


Economic Outlook 2013Asian is projected to remain the global growth leader during 2013 expanding by over 2 percentagepoints faster than the world average.Concerns over the slowdown in growth China have now eased with economic growth stabilisingand growth levels expected to continue to increase steadily but not at the past high rates. This will benefit commodity markets and consumer sectors as the government steers to economy towards household consumption.

CommentText book and historical strategies have advised investors to diversify their portfolios to spread risk to maximise investment returns. One of the obvious benefits of diversification was that many areas were negatively correlated so for example investing in the shares of an ice cream company and an umbrella company would see returns on sunny and rainy days, spreading the risk. Similarly investing in developed markets and emerging markets where risks in one part of the world would not affect others also provided diversification.Globalisation of economies including supply chains, capital and labour flows and financial markets has led to much closer global and asset correlation, making true diversification now more difficult to achieve. We endeavour to build portfolios for our investors that spread risk and generate returns that justify those risks. For the coming year, further volatility is expected as the economic crisis continues on into new territory.

The other BRICS countries (Brazil, Russia, India and South Africa) should see continuing growth in 2013 although real GDP growth has been slowing since 2010.


Charts


Chart Commentary and SummaryReferring to the chart on the previous page, this encompasses the past 12 months of performance of the FTSE 100, S&P 500 developed economies and the MSCI Emerging Markets indices to demonstrate the previous comments about the effects of globalization and how the developed and emerging markets are moving more closely together.

Summary – a negative real return on “risk free” assets such as cash and gilts is likely to continue for 2013. There is now thought that interest rates will stay at 0.5% until 2017 so investing in cash for the next 4 years will almost certainly result in its real value eroding fairly significantly.

Despite weak global growth in 2012 risk based assets performed well with both global equities and corporate bond markets out-performing risk-free assets. To achieve potential returns beyond inflation for 2013 it will mean remaining invested in a diverse portfolio of equities and fixed income instruments.

Volatility will continue, therefore anyone invested directly in the markets is still going to experience ups and downs for the foreseeable future. We hope that our risk rated investment portfolio strategies will continue to provide our clients with a less bumpy ride.

We will obviously continue to keep abreast of affairs but in the interim if you would like to contact us, please feel free at any time - and no charges will apply because it is all part of our service to you - our contact details follow on the next page.


Keeping In Touch

Telephone: 01722 411 411

Email: [email protected]

Website: http://www.unbiased-advice.co.uk

Client log in facility: http://www.fenetra.co.uk

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I N D E P E N D E N T F I N A N C I A L A D V I S E R S

Hurst Financial Consultancy Ltd Cheviot House 71 Castle Street Salisbury Wiltshire SP1 3SP

Tel.: 01722 411 411 Fax: 08704 329 575

eMail: [email protected] Web: www.unbiased-advice.co.uk

independent financial advisers€¦ · hurst financial consultancy update happy new year i would...

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