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Investment Committee Meeting Minutes - April 2015

  • By Richard Ellis
  • 13 May, 2015

Fraser Heath Market Update


  • The FTSE All Share generated a total return for March of -1.07%
  • The FTSE100 set a new index high during March, despite a fall for the month as a whole.
  • The Budget did not reveal any significant pre-election giveaways. The Chancellor was able to report an increase in the 12 month GDP forecast from 2.4% to 2.5%
  • Following the fall in inflation to 0% the Bank of England decided to leave its bank rate unchanged at 0.5% This marked the 6th   anniversary of interest rates being at a record low.
  • The oil equipment service sector was among the better performers during the month whereas the mining sector was one of the worst.
  • In company news, Easyjet released a statement in which it said that trading for the first half of its trading year was ahead of expectations and that this was partly due to the lower oil price.


  • The S&P 500 ended the month on a downbeat note and returned -1.6% (in US $ total return terms)
  • Sentiment focused on the sharp downward profit revisions led by energy stocks and concerns over rising bond yields and a strong US dollar.
  • Sector performance was led by healthcare after a flurry of deals by drug makers looking for new treatments to replace billions of dollars in sales they will lose when existing patents expire.
  • The strong currency and lower oil prices saw materials and energy stocks significantly lag the broader index.
  • The Fed said that economic growth has moderated and they would not raise record low interest rates anytime soon but would wait for the US labour market conditions to improve.
  • This more cautious tone from the Fed cheered markets which tend to see low interest rates as a boost to US firms. However, exporters and US companies with large global operations have seen their earnings squeezed on the back of the strong dollar.


  • European equity markets advanced in March coming very close to 2007 highs.
  • Year to date index returns stood at 18.6% (in EUR total return terms) making the biggest first quarter increase since 1998.
  • Healthcare was the standout performer, increasing by 6.6% For a second month in a row utilities were the worst performer returning -2.3%
  • Germany maintained its strong pace of economic activity with data signalling expansion across various economic indicators.
  • While still in negative territory, headline inflation continued to edge higher in March increasing to -0.1% from -0.3%
  • The ECB began its large scale QE programme stating it will continue to buy assets until a “sustained adjustment in the path of inflation” is observed
  • Unemployment also showed signs of progress with the Eurozone jobless rate fell to 11.3% In Germany the unemployment rate fell to record lows echoing the recent positive trends in Europe’s largest economy.


  • Asian equity market performance in March was mixed in local currency terms with gains for South Korea and the Philippines while Thailand and India ended the month lower.
  • China’s equity market ended the month higher with strong gains for its domestic market as weaker than expected economic data increased expectations there will be further stimulus measures in support of economic growth.
  • Global emerging markets initially came under pressure due to concerns over the appreciating US dollar and disappointing data from China.
  • Some of the equity losses were recovered mid-March following the cautious tone of the Fed’s comments.
  • While most emerging currencies weakened, the Russian Rouble stood out by appreciating strongly against the US dollar.


  • The Japanese equity market ended March higher with corporate reform progress strengthening expectations of higher corporate earnings and dividends.
  • This positive outlook is supported by a competitive yen and lower commodity prices.
  • The Tokyo Stock Exchange announced that a corporate Governance Code will be introduced in the summer. This will focus on capital efficiency and cross shareholdings with companies having to explain why they hold each other’s shares.


  • Bond markets continued to be volatile in March with bonds selling off in the early part of the month before then rallying into the month end.
  • According to data from Merrill Lynch, gilts returned 2.1% with Sterling Corporate Bonds returning 1.2% while Greek Government bonds fell by 12.3%
  • Gilt valuations are expensive and the asset class is vulnerable to interest rate increases as economic growth remains firm. Manageable inflation pressures and central bank guidance can anchor rising bond yields.

As an alternative to our “What do we think” slot, we thought it would be interesting if we provided a snapshot of how the major sectors performed over the last 12 months, along with levels of volatility.

While the graph above shows the actual return, the chart overleaf compares the risk taken by each sector as measured by volatility against the return over the past year

Date of next meeting 21st May 2015

Fraser Heath News

By Mark Fletcher 03 Jan, 2018

The UK equity market retreated in November, only the second month in 2017 where we saw a meaningful fall in the key FTSE 100 Index. Comments made by Mark Carney, following the November Base rate rise, highlighted the Bank’s view that inflation will be a problem for some time to come and how business and consumers react to this will determine the path for the UK economy over the coming months. The Bank said in a statement: “The decision to leave the European Union is having a noticeable impact on the economic outlook.  

By Mark Fletcher 22 Nov, 2017

The Bank of England’s decision at the start of November to raise interest rates for the first time in 10 years was widely expected and caused little initial stir in the markets. Since then the FTSE 100 has fallen a couple of percentage points at the time of writing. Perhaps the combination of negative talk around Brexit combined with the prospect of rising interest rates are starting to bring back a little fear to the market which has, for some time, felt like it has been in a state of complacency.

By Mark Fletcher 01 Nov, 2017

Most commentators expect interest rates in the UK will rise for the first time since July 2007 when the Monetary Policy Committee (MPC) of the Bank of England next gets together for its monthly meeting on 2nd November 2017. Indeed, Mark Carney said on the BBC Today programme, shortly after the minutes of last month’s meeting were released, “What we have said is that if the economy continues on the track that it has been on - and all the indications are that it is - in the relatively near term you can expect that interest rates will rise”. He went on to say, “We are talking about just easing a bit off the accelerator to keep with the speed limit of the economy”, which has been widely predicted to mean that rate rises will be gradual and measured.

By Mark Fletcher 02 Oct, 2017
There used to be a time when the market would jitter at the slightest bad news story. Nowadays it seems that record breaking storms and a war of words amongst leaders with mass devastation at their fingertips can’t shake the nerves of investors. Which is not to say that markets have been driving forward (the FTSE 100 is, at the time of writing, where it was in the middle of January) but rather there hasn’t been the volatility we have seen in recent years.
By Mark Fletcher 05 Sep, 2017
It’s always the case that news stories like Brexit negotiations stalling, the actions of the North Koreans, the daily travails of the leader of the Western World, terrorist attacks and housing market slowdowns can grip us and make us fear the worst.
By Mark Fletcher 31 Jul, 2017
June was another good month for markets, in general terms, with many of the major developed markets once again flirting with new all-time highs. However, we have a sense that all may not be as it seems.
By Mark Fletcher 01 Jul, 2017
As we can see from the above commentary, markets generally continued to make progress in May despite plenty of uncertainty and conflict around the World.
By Mark Fletcher 01 Jun, 2017

Our reason for showing these graphs is to highlight that the VIX index is trading back at 2007 levels of low volatility while stock markets are at all-time highs. We can no more see the future than anyone else but we do know that when it comes to investing, the most money is often made when every sinew in your body is screaming that it is madness to invest, and that sometimes the opposite is true.

By Mark Fletcher 01 May, 2017
A mixed set of results this month reflects the fact that markets are waiting to see what happens in various political arenas around the Globe. Politics is definitely at the forefront of most news bulletins, whether it be President Trump's latest tweets, the UK government triggering Article 50 or the fight to become the next President in France or Chancellor in Germany.
By Richard Ellis 01 Apr, 2017

It has been a strong start to the year for investment portfolios, mostly driven by signs of continued strength in the US Economy and the promise of more to come under the Trump presidency. Markets always move ahead of the economy so to make money, investors will position portfolios to benefit from what they think is around the corner. But what if the promise does not materialise? One fund manager described this recent wave of enthusiasm as the “Trump Bump” and that this may well be followed by the “Trump Dump” if the new President is unable to deliver on his campaign promises due to lack of support from political colleagues. In this respect, it seems that the failed repeal of Obamacare has given investors pause for thought over the last week or so.

While some asset classes are looking expensive, on an individual basis, there remains optimism amongst fund managers. Those who particularly seek to invest in undervalued, unloved but robust companies can see plenty of scope for increased valuations in their investment pool.

Eight years have now passed since the FTSE 100 hit its Credit Crunch low point. In investor memory, particularly among younger investors, we are getting to the point when the slide that started in summer 2007 down to its nadir risks being forgotten. We don’t know what the future holds but the past tells us that investing needs time on your hands to ride out the tough times. We’re confident that investing remains the best long term strategy for your money but make sure that you understand the strategy you are taking and that your portfolio is right for your attitude to investment risk and your time frame.

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