Newsletter: May 2024
It has been some time since I last wrote to you, and it feels good to be able to do so on the back of a sustained positive period for investment markets. With the news of falling inflation at the back end of 2023, markets reacted well, and inflation has continued to fall, albeit at a slightly slower rate than expected. From September to October 2023, the inflation rate fell from 6.7% to 4.6%, and as of May 2024, now sits at 2.3%, with hopes of continued falls across 2024.
Of course, the last few weeks also brought the further good news of the UK’s strong growth through the first quarter of 2024, meaning that we have now pulled out of recession. Indeed, the middle of April saw the FTSE 100 (the index of share prices for the top 100 UK companies) break the 8,000 barrier (for just the second time in its history), soaring to a record-breaking peak of 8,445.80 in the middle of May. This was a huge moment for the UK, perhaps signifying that we have broken through the volatile ups and downs since September 2021, and since the crash at outbreak of COVID-19 in March 2020.
Although this is good news, it should be kept in context as FTSE100 growth does not guarantee investment growth, however, in signalling the increased strength of the UK’s top 100 companies, we can hope that this translates to wider investments. To add to this, in escaping recession, it is noted that the economy is only around 0.2% bigger than last year. At least, however, it is going in the right direction. Perhaps Taylor Swift can help UK growth continue with her 15-date UK tour expected to boost the countrywide spending by a whopping £1bn through June to August! Her huge impact has been dubbed “Switftonomics.”
With these bits of positive news, the topic of interest rates will be weighing heavily in the minds of the Bank of England, particularly Governor Andrew Bailey. Rates have been on hold at 5.25% since August 2023 and it is widely expected that they will be reduced before the close of the year. However, will the BoE diverge from its recent method of joining the European Central Bank in following the lead of the US? To predict this would be foolish, but I think we can be sure that it is a question of when rates will be cut, and not if.
It will also be interesting to see the effect rates have on property and mortgages. It is understood that UK construction activity has picked up after a significant downturn over the last 18 months, however, with higher mortgage borrowing costs, and stubborn house prices, demand has certainly cooled. Due to this, housing has become a huge topic across the minds of the electorate, particularly younger voters aged between 18-24, who believe housing to be the third most important issue facing the country, behind only health and the economy (Based on YouGov polling data).
With Mr Sunak’s sudden election announcement for 4th July 2024, many young people who were hoping to vote for the first time in an Autumn election will no longer be able to. Nonetheless, many polls continue to suggest an incoming election wipeout for the Conservatives, and whilst Labour will be licking their lips at the prospect, they have yet to announce their strategy on many key election topics. They will no doubt be thinking long and hard about how to structure their manifesto around issues such as housing, the economy, NHS, and immigration.
Meanwhile, in speaking to different companies and investment managers whose services we utilise, we hear a consensus of view regarding Conservative vs Labour. Feelings are shared that any political turmoil should not affect markets too significantly, as no matter how large (or not) the ideological difference between the two main parties, the similarity of cautious approach of both Chancellor Jeremy Hunt and Shadow Chancellor Rachel Reeves, should provide some predictability. Perhaps then, despite the importance of the economy to the public, it may be that other topics tend to grab the headlines in the near future.
Of course, one of these topics is the continuation of war across the globe. Whilst I do not wish to compare and dissect the Ukraine/Russia war with the conflict in the Middle East, it must be said that the economic effects on the UK of the former, were much more significant. With our European ties to Ukraine, the markets were hugely affected at the start of 2022, whilst markets have performed well since October 2023 with the backdrop of the Middle East. Of course, I must stress that the markets have not performed well as a result of the Middle East, and that the continuation of both conflicts always holds potential for us to be affected further, not least being dragged into the conflict on the ground.
Symphony Updates
Over the course of the last 6 months, we have also continued to develop our research and due diligence of the providers, plans, and investments which we recommend. Whilst the last 6 months have provided strong performance, it has been a good time to compare and contrast the different styles of investments across the market, to understand who and what has done well, and most importantly, why, and what steps will be taken in the future to continue or correct course. We continue to be impressed by the offering of those companies which we have recommended over recent years, and have confidence that they will continue to provide both us and you with the best service possible.
In conducting our research, we have also uncovered a new piece of software which looks to bring together many of the processes which financial advisers undertake. This software is called ‘Fintegrate’. We implemented Fintegrate into our processes at the start of the new tax year on 6th April 2024, and so far, have been very impressed with the succinct and professional manner in which it collates information. Being a new piece of software, there is still a lot of progress to be made with the system and its underpinning technology, however, we are excited to see what developments they bring to help us to service you as best as we can.
Sharon Harrop Retirement
Sharon joined Symphony in April 2018 and took on a number of my former Director, Ian Walmsley’s, clients following his retirement in December 2019. Sharon has also taken on many new clients, introducing them to Symphony, and helping them plan their financial needs and for retirement.
We are extremely grateful for all the care and diligence that Sharon has put into her work in her time at Symphony, her dedication has been exemplary. I know that her commitment has been greatly appreciated by her clients and colleagues alike.
Sharon is a very close friend and will continue to stay in touch, but we will miss her beaming smile and huge personality in the office. We wish her a long and happy retirement!
Everyone who has been a client of Sharon’s over the years should have received contact from us informing you who your new adviser is to be. Nonetheless, over the course of the year, your new adviser will be in touch to arrange a meeting to introduce themselves, should you have not already met them. Our advisers taking on Sharon’s clients are Mark, James, and Tom.
Tom joined Symphony on the eve of the COVID pandemic in 2020 and has worked very closely with Sharon ever since. Although their little team has come to its natural end, I know that his help has been tremendously appreciated by Sharon and we know that he will continue to follow in her footsteps in helping you. Many of you will have met or spoken to Tom, whether that be in his non-advised roles in the past, or in his more recent role as a Trainee Adviser. I am delighted however, to announce that Tom has progressed to the role of Independent Financial Adviser in his own right. It has been great to see Tom’s progression over the last 4 years, and we look forward to seeing his continued development over the many years to come!
As ever, please feel free to contact your adviser should you wish to discuss anything in this letter in more detail. In the meantime, I hope that you have the chance to enjoy the better weather over the summer, whether that be on local or distant shores.