Safety Play

It’s rather disagreeable to start the new year on a sour note but that’s the way the taxman likes to do it. In the UK the Inland Revenue likes its customers to settle up by the end of January.

I do not enjoy telling my excellent accountant my income, etc. in the summer and I like even less paying the bill in January. This year, unusually, there is less cause for complaint. The stock market is much higher than expected and every adviser will be telling their clients how well they have done.

I will buck the trend by reminding you how badly you have been advised if you followed my recommendations. The price of oil fell to almost $25 in January and only now has got back above $55. I thought that by the middle of 2016 it would be up to about $65.

Most shares and funds had an excellent year, including most of the ones name-checked here. Two under-performers are McInroy and Wood’s Balanced and Income funds; the former up about 16% and the latter 11%. I hope my friends at M&W don’t take offence at being singled out but actually I want to congratulate them. They were nervous at the end of 2015 that equities were over-priced and increased (up to 40%) their weighting in bonds. I think this was a prudent measure to safeguard their clients’ capital in the longterm. In fact, so far, their fears have not been realised but nor have they been quelled. They are starting this year even more defensively with 5% in gold, 34% in bonds and 1% cash.

They are a pessimistic lot up in Haddington but I’m glad to know that if equities collapse those M&W funds will weather the storm better than most. They don’t call themselves an Absolute Return fund but that’s what they look like to me.

They have two other funds, Smaller Companies and Emerging Markets, which only invest in equities. They went up 18.6% and 25.5% respectively. They are good stock pickers when they aren’t battening down the hatches for a storm in the markets.