Investments have Bombed, so How Did You Do?

Looking back at our records, you have been a client for XX years now, during those years you have enjoyed a high level of “income” by way of making regular capital withdrawals from your investment accounts.

Your previous investment holdings would not have provided such a generous level of “income”, you would have had to eat into capital, with little chance of recovery.

Our “Total Return System™” has a similar drawback except that as you have tested as a Risk Level 4, we include within your investment mix, investments that can produce a high rate of return.

You have been very happy to utilise this system and my expertise in monitoring markets and selecting some useful funds for you to consider.

Over the past year we have advised you to go “off investment piste” and amend your asset allocation to include a far higher allocation of safety-first investments. We care very pleased that your confidence has been rewarded. [This process is known as strategic asset allocation].

Please examine the charts:-

Chart A – demonstrates how your present portfolio has performed compared to the FTSE 100 over a 12 month period.

Chart B – demonstrates how your current portfolio has performed compared to a Risk Level 4 portfolio.

As you take a fairly high level of capital withdrawals – it is even more important to ensure that taking withdrawals is not provided for by selling investments at a loss.

So, I think you will agree that our caution was warranted.

Why have markets been tumbling (simply a lack of liquidity)

If there is less money to go around, then all of those investments are competing for a share of a smaller pie. Therefore something like 80%-90% of asset classes have lost money this year. Just as a rising tide lifts all boats, so a receding tide dumps them back down again.

Liquidity is drying up – driven by the Fed

In other words, in times of high liquidity, any old rubbish can get funding as long as it promises something shiny enough in return. In times of low liquidity, people are much more careful with their money.

So tighter monetary policy does not have to be bad news for investors, or even – in the longer run – for the economy. Investment will go towards genuinely productive businesses, put very simply, we’re likely to see a switch from “growth” to “value”.

That is one of the reasons the one investment we did advise you upon more recently is a value fund, namely XXXXXXXXXX.


The third chart I have provided you allows you to examine the short-term performance (highlighted in yellow) and the medium term performance (highlighted in blue).

Our agreed strategy for the following 12 months

To gradually move from our mainly safety-first asset allocation to our normal Risk Level 4 asset allocation using mainly “value” investment funds.

Please confirm that you are pleased to proceed with this strategy, as discussed.

Ray L Best

Ray Best is a resilient Financial Planner with a unique approach to investment planning, his work ethic has propelled him from humble beginnings to be voted as a top UK Financial Planner by Vouched For (as published in the Sunday Times). These days he works with families with large investment portfolios or big inheritance tax liabilities, the first step, is to book a Discovery Meeting HERE.

More Posts