The “fall” (autumn for us Brits) has so far recorded more gusts in the financial world than across the UK countryside, where the weather has been sunny and mild.

In my note of Friday, 12th October 2018, I said that risky conditions frequently bring opportunities, but despite recent wobbles, we found no such opportunities post the date of that note. So we have not been buying assets in our multi-asset funds, aside from UK Government Treasury bills, and you can’t get much safer than them. We even took profits from our holding in Greencoat Turbines, no doubt to the delight of many clients who regard their windmills as an eyesore! Caroline will talk more about this decision at the December client seminar.

The price equity investors pay for a generally superior long-term return, compared to other assets, is short-term volatility of share values. We still think the fundamentals for the long-term are good, especially compared to other assets, such as bonds and property. But, unlike 2011, share prices are not ridiculously cheap and with choppy conditions being created by US/China trade wars, central banks exiting quantitative easing, Italian fiscal policy being rejected by the EU, rising oil prices, geo-political tensions and, of course, our own Brexit, this is a time to be seeking safer passage through troubled waters and not sailing too close to the wind.

We continue to be broadly diversified within our multi-asset funds and we are taking a significant proportion of our equity risk through options, which limits our downside. This is why the relevant performance of our funds has been so strong from the start of this latest market unrest. Since the MSCI World index (which represents shares of companies in major developed markets around the globe) hit a 2018 peak on 21st September, it has dropped -6.85% (for reference, the FTSE 100 lost -6.92%). During the same period, our Cautious Risk, Balanced Risk and Growth funds proved more defensive, declining by –3.27%, -4.22% and -5.91% respectively.

I do hope that lots of our readers will be able to join us at our December client seminars when we will cover some of the topics I have mentioned here in more detail. These are fascinating times!