Rebalance March 2021

Changes and the New Fund documents

New tax year and the months beyond lockdown (in the UK at least)

Our Investment Committee has met ahead of the April tax year-end in what continues to be rather extraordinary circumstances. In the UK and parts of the US, but certainly not everywhere across Europe, the next few months bring enormous expectation with vaccines, a physical return to schools, along with eating out and even holidays for some to enjoy the better weather. 

With the opening up and restarting of parts of the economy and the corresponding rise in consumer activity, so the economic cycle restarts its journey back at a more realistic level.  Within the investment strategy this allows us to begin to reduce the ownership of some growth orientated stocks which have done very well over the past year, things like Tesla and Microsoft, replacing them with good old-fashioned organisations like Tesco or the Prudential.

We are looking ahead to higher rates of inflation, and the very expensive funds are more likely to find it difficult to retain their exceptional valuations compared to some of the more basic utilities. Therefore, we are taking some of the profits made and moving these to provide a better balance for the future.

We are also taking advantage of these changes to bring the rest of the portfolio back in line with the main strategy, having drifted from our desired model through a real divergence of performance in recent months.

As usual, greater detail of the exact changes is detailed below.  

Strategy update

There are no changes to the Medium-Low portfolio, but for the Medium, Medium-High and High strategies we are reducing the HSBC American Index and adding Threadneedle Smaller companies.

We are also marginally reducing holdings in the JPMorgan Japan fund, as well as the LGIM Cyber security ETF, and replacing these with the Artemis UK Select fund.

Rebalance

As discretionary clients of KMG Investment Management we are advising you of the changes which will be made from the 23rd March 2021. 

Risk profile

We have continued to asset-allocate your funds so that your total exposure to equities is within your risk profile and we will continue to monitor and manage the volatility of the strategy.

Tax and fees

Please remember that these changes will not incur fees from either KMG or your platform provider as neither charge for switches.  There will be a marginal increase of between 0.02% and 0.04% in the fees for the funds within the portfolio.

Where funds are held outside an ISA, pension or bond, the changes will be subject to capital gains tax.  Where profits are made, we make no apologies for creating taxable gains – no pain no gain.  We never let the tax tail wag the dog.  Any tax will not be payable until January 2022 and as always, we or your platform provider will inform you of gains to include in your tax return in the future.

Conclusion

Tables showing the changes to your portfolio can be found on our website in the News section along with fund factsheets for the new funds that we will be using.  


As always should you have any queries please do not hesitate to contact us.