October 2016 Performance
The bubble has finally burst in the UK government bond market and the yield of the ten-year gilt increased 50 basis points to 1.25%. The sell-off began with the release of the Consumer Price Index for September. The headline inflation rate rose to 1.0% as a result of the higher import prices feeding through from the sharp depreciation in sterling. Growth in the economy continues to confound the gloomy predictions from the Bank of England of a post Brexit meltdown. GDP rose 0.50% in the third quarter and increased 2.30% from the same period a year ago. The seismic shift in the gilt market has been driven by the growing realisation that the underlying economy is strong and that the “inflation genie is out of the bottle”. The next move in official rates by the BOE will likely be an increase in defence of the pound, and the need for further quantitative easing measures is no longer warranted. Trading in the foreign exchange markets remains volatile. Sterling suffered a “flash crash” during which several computerised trading systems sold the currency aggressively. The pound lost -5.84% versus the US dollar to close at a thirty year low of 1.22. The performance of global equity markets was mixed and the MSCI World fell -2.01%. The FTSE 100 rose 0.80% and the Nikkei 225 gained 5.93%. The S&P 500 lost -1.94% amidst the growing level of anxiety in the minds of the undecided voters in the US Presidential election. The polls are extremely tight and the renewed FBI investigation into the Clinton email server fiasco has brought Trump back into the race. Irrespective of the outcome, the Federal Reserve remains on track to hike interest rates in December and this will place even more selling pressure on the UK government bond market.
ACUMEN Conservative Portfolio
The ACUMEN Conservative Portfolio Conservative Portfolio returned 0.00% in October and the IA Mixed Investment 20-60% Shares sector rose 0.75%. The portfolio has returned 15.71% year to date and 20.50% since inception on 1st October 2014.
ACUMEN Income Portfolio
The ACUMEN Income Portfolio returned 0.83% in October and outperformed the IA Mixed Investment 20-60% Shares sector, which rose 0.75%. The portfolio has returned 17.19% since inception on 25th February 2016.
ACUMEN Progressive Portfolio
The ACUMEN Progressive Portfolio returned 0.58% in October and the IA Mixed Investment 40-85% Shares sector rose 1.57%. The portfolio has returned 10.52% year to date and 17.15% since inception on 9th October 2014.
ACUMEN Adventurous Portfolio
The ACUMEN Adventurous Portfolio returned 0.96% in October and the IA Flexible Investment sector rose 2.47%. The portfolio has returned 17.00% since inception on 25th February 2016.
The value of an investment in the ACUMEN PROFILES or in the ACUMEN Portfolios may fall as well as rise. Past performance should not be seen as an indication of future performance. Source of data: Tavistock Wealth Limited, Thomson Reuters and Lipper for Investment Management unless otherwise stated.