Holly's Blog - A sad day
9 Sep, 2022
Like millions of others, I feel genuine sadness today at the death of the Queen, who was a bit like a formidable, inspiring, benevolent Third Granny. Her joyful performance with the spoons and Paddington last year will stay with me forever. It does feel like the end of an era as we move into a harsher time with questionable leaders, spiraling debt, a gasping planet and power-hungry bastardos threatening world peace and order.
Yes welcome to your weekly blog of joy!!!! Let me quickly dig for some good news, before you all reach for the gin.
A sigh of relief on energy bills
From a selfish short-term perspective, there was good news from the new PM yesterday as we hear that energy prices will be capped. Importantly, the Energy Price Guarantee limits the amount you can be charged per unit of gas or electricity, so your exact bill amount will continue to be influenced by how much energy you use. Remember that the £2,500 figure being bandied around is just an illustration of the average bill and it’s not a cap, or indeed a very meaningful amount to focus on.
The £400 payment to all homes (allocated as £66 a month over winter) will still apply and this will take the average payment down to £2,100 a year. And the £650 payments to those on many benefits will continue as will the £150 payment to those with disabilities and £300 to pensioners.
As I understand it, anyone on a fixed tariff may be able to get out of this without exit penalties but I think the detail on that is still to be confirmed, so check with your provider.
But with a dispassionate economist hat on…..
This is being paid for by the transfer of an estimated £150 billion Big Ones in taxpayer funds to energy suppliers to make up the difference between what they pay for power in the wholesale markets, and the capped consumer price. That’s a big load of debt we’re incurring, to add to the existing £2.4 trillion debt of the UK Government today. (Sorry kids). And Jacob Rees-Mogg, forward-looking man of the people and new minister in charge of energy, has consistently rejected calls for a windfall tax on oil and gas companies “so they get every last drop out of the North Sea”. (Sorry again, kids).
I still don’t understand how an additional windfall tax would really deter investment, and comments from the BP CEO and Chair all seem to reiterate the very long-term nature of their planning, and improbability of them having a windfall-tax induced strop and flouncing away from the UK. But one can only imagine the lobbying that goes on……Nuff said.
Let’s turn to markets
This week, we asked 5 professional fund selectors where they are looking for performance for the year ahead as inflation soars and markets remain volatile. The coming months feel very tricky but there are always pockets of opportunity. In a nutshell, the consensus seems to be thematic opportunities (e.g healthcare) , the US, commodities and infrastructure.
Poppy Fox, portfolio manager at Quilter Cheviot, observes that” US markets have performed poorly this year with the S&P down over 18% and the Nasdaq down over 25%. The Blackrock IShares North American Index fund would offer good value exposure.”
Over at Interactive Investor, they suggest the WisdomTree Enhanced Commodity ETF for commodities exposure.
And a number of providers highlight private equity and infrastructure as different asset classes offering diversity and potential. Ben Yearsley, director at Shore Financial Planning, picks infrastructure funds for both income and growth, pointing out that they are a beneficiary of inflation with good cash flows. “For capital growth, I’d suggest the First Sentier Responsible infrastructure fund. It also pays a dividend of 2.5% to 2.7%.”
You can read the full article with all picks here or visit our Fund Filter table. This table – updated monthly - currently includes 107 funds made up of the top funds available to UK retail investors which are both well-rated by fund researchers, wealth managers and financial advisers (‘Pros’), and also popular with investors (‘Flows’). I find it a helpful filter for researching some decent options, and hope you do too.
Over and out for this week everyone. I leave with a small plea to the BBC. Could you please just ration the total hours of Nicholas Witchell over the next week? Pretty please….. :0) I can’t take much more……
Holly
