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  • Martyn Johnson

In the UK we Trust?

You may have noticed that there was a recent UK Budget, which has not been particularly well received...

Market Commentary

'Mini' Budget - Spend, spend, spend (or borrow, borrow, borrow?)


For some 20 plus years UK Government backed loans (Gilts) have acted as an underpin to our client portfolios. They have been negatively correlated to equities (shares) and tended to go up when shares went down. Gilts have historically been a very useful sort of insurance policy to hold as part of client portfolios.

What has changed?

As noted above the recent Budget has not been popular. In addition to this foreign investment into the UK has fallen (due to concern over the war in Ukraine and fear amongst some countries of sanctions spreading beyond Russia) as well as which large pension funds have been making speculative moves which have forced them to sell Gilts holdings. All of this has caused Gilts prices to fall.

What next?

Happily, the Bank of England (BoE) are a generally respected institution and they have been buying Gilts to hold up prices. Their independence is one of the best things about UK finance. Interestingly the BoE act as lender of last resort to our banks – something that many countries do not benefit from.

What are our thoughts?

The question now is whether we are in a whole new investment world or alternatively what goes around comes around.

In geographic terms - some 20-30 years ago we typically had 80% of client monies invested in the UK, this has now fallen and the average client now holds circa 40% of investment in the UK. This has helped to mitigate losses during the current market volatility since the value of Sterling has fallen against most other major currencies (particularly the US Dollar).

We are watching markets closely and paying particular attention to the continuing financial standing of the UK in the eyes of the World; as stated before our job is not to be patriotic; our job is to look after our clients and their money.


‘anything could happen in the next half-hour’ (Gerry Anderson, Stingray)

Markets nowadays are moving very rapidly but we are looking to the medium term (5 years) plus. Whilst there have been difficulties this year, there is now much greater investment flexibility and the ability to make changes at little or no cost. We remain confident over the medium term.

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