Forward Glance - April 2018

The April edition of KMG's forward glance

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April – Forward glance

Our latest Forward Glance Strategy document illustrating the Medium portfolio for April 2018

1st November 2011 – 31st March 2018 – gross return (since inception)

The Investment Committee met on 10th April in the midst of claim and counterclaim about nerve agent attacks in the UK and Syria alongside bellicose observations from Trump and Putin et al.

With a background of acid confusion about who said what and why, and in a climate of complete mistrust based around a total fabrication of fact on both sides, we suspect we were forced to concentrate on the fundamentals of life and assume that the idiocy of the current situation will abate.

However, we must recognise that the alternatives to our current investment strategy are very unpalatable for we are just as likely to lose control of the value of money as we are to see significant adjustments to property prices through migration in reverse and illiquidity if the global economy is to slow down. Fixed interest funds provide little comfort because the price is so high, and the yield so low and ultimately of course fixed interest funds can and probably will default if our suspicion about the eventual outcome of the mountain of debt in the world is to be resolved, albeit that we fully recognise that this is probably still a long way off.

We decided that there were also significant buying opportunities in various parts of the market although we also recognised that the retail trade maybe in decline as people appear to be moving from “buying things to doing things”.

The trick as always is to spot future trends and invest in areas of growth irrespective of the general climate of negative overall returns.

It has to be recognised that the world has never seen so many people employed, it has to be recognised that the world has never seen so little poverty and extraordinarily, it has to be recognised that we live in a far less aggressive environment in the world than humans have ever known.

This leads us to the onward march of technology and very rapidly changing shape in economic activity which many economists, governments and market makers are finding difficult to understand, predict and therefore invest in.
We feel that we must adjust our strategy at the margins in order to have a higher exposure to more liquid low-risk investments hence the move to the JP Morgan fund; just as importantly to move away from holding so much cash and allocating some of this to ‘artificial intelligence and technological innovation’ growth and opportunities in various markets where we see the future of valuable profits as subliminally humans work towards a changing society.

As always, it is about taking the long-term view; trying to ignore short-term noise, hope that Armageddon does not arrive and invest in the future. History also demonstrates that being brave when others are being weak proves to be remarkably profitable over time.

In general, the sense of the strategy is not changing but by making these marginal changes we hope to capture more upside without increasing volatility in the short-term.

Portfolio analysis

Investment objective

The medium portfolio offers a diverse fund range with the aim of achieving capital growth over the longer-term. The portfolio has the ability to invest in a broad range of investments on a wide geographical basis. Equity exposure within this portfolio will vary between 50% – 70%.

Contribution to performance by fund – 1 year

1st October 2017 – 31st March 2018 – gross return (six months)

Statistics

Gross