KMG Rebalance June 2022

Nick Matthews – Chartered Financial Planner

Our Investment Committee met this week to review where we are and what else we can look to do both to protect values during the difficult months of the summer but also as we continue to look further ahead. The balance is particularly difficult now with the combination of inflation, global politics and the still-present spectre of Covid.

Inflation is high and longer-lasting than policy-makers believed last year.  No doubt this is partly because of pent-up demand and savings accumulated during 2021, but clearly also because of what is happening in the Ukraine as well as the incredibly tight lock-down across parts of China.  Of course, Central Banks have printed a phenomenal amount of money that was always likely to lead to rising inflation at some stage and this is all making it incredibly difficult for those Central Bankers as they tread the narrow path between reigning-in the surging cost of living without damaging future economic prosperity.  Whether they will get it right…?  Well, we are not sure the track record is very good.  

The future may be about corporate investment to raise productivity, huge amounts of money to update infrastructure, migration and demographics, along with the need to decarbonise the World, but the immediate future is still about inflation and the possibility of a recession of some sort.  To that end we are looking to extend moves made in the Spring by adding to real assets (largely commodities and infrastructure) that can benefit from higher inflation.  We are adding income generating more defensive stocks that seemed outdated and unloved when technology stocks did so well in recent years, yet the steady income paid out will be reassuring in these times.  The other side is to further reduce some of the highly volatile growth stocks which will find it difficult while inflation is so high. 

Finally, we are making sure we keep a relatively high cash buffer in part to make sure we have liquidity when needed and in part because we would rather have cash than fixed income assets which are still very expensive and have been losing value as the prospect of higher interest rates lingers.

The aim is to keep a balanced approach in this incredibly uncertain environment as events unfold and as we learn more about inflation and interest rates then we may need to be in a position to be more nimble than ever.

The specific changes to the portfolios are detailed on the KMG website at the address below and will be actioned as soon as possible.


Where changes are made within portfolios there may be some capital gains tax incurred when switching outside a tax-free wrapper.   Any changes within the VT KMGIM Medium High fund will not be taxable.

Fund charges

The fund charges for the portfolios will decrease as a result of these changes, other than the High portfolio which will remain the same. There is no change to the fund fee of the VT KMGIM Medium High fund.

More detail of the specific charges are shown on this news section of the KMG website.


We endeavour to find our way through the turmoil while waiting for more stability after the past few years. So, we will continue to review the portfolios on a very regular basis and report to you on our outlook in the months ahead as we balance thinking long-term while protecting against what is happening from day to day.