Clearwater Portfolios Update

In amongst all of the doom and gloom surrounding coronavirus, there is perhaps a little bit of light shining in the tunnel, we don’t know yet whether it’s just somebody with a torch in the middle and it’s still really dark in there or whether it genuinely is daylight at the end. However, as talk turns to curves flattening and lockdown restrictions easing, markets have begun to recover, albeit in fits and starts.

Why is there even talk of easing lockdown restrictions at the moment, when the death toll is still so high? Well let’s take a look at this first chart which is something I have been sharing on my personal Facebook page, it shows the daily number of deaths from COVID-19 in the UK since 10th March and it also highlights the Rolling 7 Day Average. The numbers are still high (and by the way, this chart includes deaths from all settings, not just hospitals) but there is a very clear ‘flattening of the curve’. The government advisers think this shows that the impositions of the lockdown and the enforced social distancing measures have worked, which by extension means we have some control over this virus and its spread.

This is of course, a cold analysis of statistics and we must not forget that each one of these deaths represents a tragedy for a family somewhere in the country.   

This flattening of the curve is good news and points to a possible relaxation of restrictions in the not too distant future. Markets like good news and the next chart shows the performance of a range of the Clearwater Portfolios since March 23rd which was the lowest point for markets (so far).

That’s quite some growth in just a 5 week or so period BUT we need to keep this mini recovery in context and the chart below shows the full 3 months from 29th January, which includes the period shown above.  

So, in conclusion (I know one shouldn’t start a sentence with a conjunction but I am being colloquial), we have still got a long way to go and whichever way one looks at it, this recovery is fragile and any bad news (worse than expected economic data, failed vaccine trails etc.), could see us test new lows in this bear market.

Here’s hoping for some good news soon.

As always, please do feel free to call me at any time to discuss anything that might be concerning you.

With best regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Past significant virus outbreaks

As most of you know, we outsource responsibility for constructing the Clearwater Investment Portfolios to a company called Evidence Based Investments (EBI). EBI provide us with a wealth of resources to help us articulate our investment proposition and they are also able to analyse for us how various market events compare with those that have gone before.  

On this occasion, they have produced a brief presentation looking at how a range of the EBI Portfolios have reacted to previous virus outbreaks in recent times, namely:

• SARS: January 2003 - March 2003

• Avian Influenza: January 2004 - August 2004

• MERS: September 2012 - November 2012

• Ebola: December 2013 - February 2014

• Zika: November 2015 - February 2016

• Coronavirus: January 2020 - Present

I have reproduced the summary chart below but if you would like a copy of the full report (it’s mostly nice graphs and not too heavy), please let me know and I will e-mail it over to you.

The chart below will be easier to read if you select ‘web layout’ under the ‘View’ options in Word. I will be able to e-mail the fiull report as a PDF.

I don’t think it will come as a surprise that the coronavirus pandemic has caused the most extreme reaction, as none of the previous outbreaks led to an effective shutting down of the global economy.

As always, please do feel free to call me at any time to discuss anything that might be concerning you.

With best regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

The Wisdom of Crowds

I do hope that you had an enjoyable Easter Weekend, at least the weather was nice, providing an opportunity to get lots of those gardening jobs done. My girls and I spent the weekend painting fences, garage doors and gates and unaccustomed as I am to painting, I did get a warm feeling of satisfaction when looking at my handiwork and how much better everything looked, maybe there is something in this DIY malarkey after all.

As for the Raclette, the less said about that the better; with everything prepared, the moment we switched it on it blew a fuse and that was that. We ended up standing around the cooker frying everything up, surprisingly it was still good fun though!

I wanted to share with you the following, which a good friend of mine in Scotland sent me over the weekend, it’s a piece he put together to explain the workings of the stock market. I think it provides a very clear illustration of why it’s pretty much impossible to beat the markets, even though one might be able to come up with a rational argument for taking action of one sort another in an attempt to do so.

“Many of those reading this short note will have, at some time, travelled down to Devon for a lovely summer break amongst the rolling fields, moors and beautiful beaches of this somewhat remote county. Only a few will have ventured into Plymouth, the famous naval seaport and home to Sir Francis Drake (that famous Elizabethan pirate who so vexed our Spanish friends by stealing their gold) and the site of the departure of the Mayflower with the pilgrims on board heading to America 400 years ago this year. Even fewer will know that it was the place of an amazing insight into the powerful nature of crowds, which provides us with a wonderful word picture of how stock markets operate.

In 1906 a Victorian gentleman named Sir Francis Galton attended a livestock fair aptly named The West of England Fat Stock and Poultry Exhibition in Plymouth. One of the many attractions at the fair was a guess the weight of the ‘dressed’ ox on display (similar to the game of guessing how many cookies are in the glass jar). The competition attracted 800 people all paying 6d (half a shilling) to write down their guess, name and address on the back of the ticket. The nearest guess to the actual weight would win a prize. The fair, as you can imagine, attracted many sorts, from the general public (old and young) to farmers and butchers. Being a statistician, amongst many other things, Galton bought the used tickets off the stall holder. Of the 800, 787 were usable. Back home he analysed the guesses and published his finding in Nature, March 7, 1917 in an article titled ‘Vox Populi’ . His remarkable finding is illustrated below.

Figure 1: Guessing the weight of the ox – the ‘crowd’ got it more-or-less spot on.

The range of guesses was wide (-133 lbs. below the average to +86 lbs. above it), the participants were varied, and the numbers involved were quite large. The ‘crowd’ in aggregate showed ‘wisdom’ compared to its individual participants.

This story provides a great insight into how modern financial markets work. The markets are made up of many players, from individual DIY investors, day traders, stockbrokers, hedge funds, fund managers, sovereign wealth funds, endowments and other institutional investors. Each investor holds their own view on the future prospects for a specific security, such as the price of BP or Apple shares. Some will like a stock and others not. They cannot both be right. The market – given all the information available to it – settles on an equilibrium price for every stock. This price will move, sometimes dramatically, as we have seen recently as the ‘market’ reaches a new equilibrium price, given the new information that it has collectively processed.

At times like these, some investors are prone to running ‘what if’ scenarios in their heads such as: ‘if companies are in trouble because their revenues have been cut off, then they will renege on their property lease terms and the landlords will suffer. It seems likely that things will get worse over the coming weeks. If property landlords are in trouble that might lead to problems in the banking sector’. It all sounds plausible. They may then be tempted to sell out of property or banks or even equities altogether. The crucial mistake is that they forget that they are not the only person to have thought this through and these very sentiments and views are already reflected in the current price of listed commercial property companies, bank stocks and the markets in general.

Markets will move again – down or up – based on the release of new information, which in itself is random. Second guessing random events is futile. You may make a guess and be lucky but that is speculating not investing. Accepting the ‘wisdom’ of the market helps us to challenge ourselves as to whether we really have superior insight relative to everyone else. It seems unlikely. As Charles Ellis, the wise sage of investing from the US, states:

‘In investing, activity is almost always in surplus’.

Activity based on guessing – particularly when it relates to shorter-term issues that sit well within your true investment horizon – is best avoided.

Next time you pass Plymouth on the A38, reflect on one of its great historical events, The West of England Fat Stock and Poultry Exhibition of 1906.

Note: if you are interested in this subject and have time to fill in the coming weeks, perhaps take a look at The Wisdom of Crowds by James Surowiecki published by Greener Books.

Duncan R Glassey”

As always, please do feel free to call me at any time to discuss anything that might be concerning you.

With best regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Checklist for a Crisis

I do hope that everyone is managing to stay virus free and that you are not going stir crazy just yet. Things must be getting desperate at our house because we having a raclette tomorrow evening, something I never thought we would do again, after the last time in about 1972!

On a more serious note, the daily numbers of deaths from coronavirus are very disturbing, particularly of course as each death represents a personal tragedy for the families involved. However, the numbers from Italy and Spain are starting to look more encouraging and the longer this improvement continues, the nearer we come to a release from the lockdown. In the hope of saving many more lives, I am sure we can all endure the relatively minor inconvenience (for most) of staying at home for a few more weeks. We will all be able to emerge from our houses and meet up with family and friends soon enough.

The following is something I received yesterday from The Chartered Institute of Securities and Investments (CISI), it is a sort of checklist for people who might be struggling to deal with basic money worries during this crisis. I don’t expect this to be of direct relevance to most my clients but you might know someone who could find it useful, it’s mostly common sense but it can be hard sometimes to see the obvious when one is enveloped in a cloud of uncertainty. Please do feel free to share with anyone you think it might help.   

“Financial Planning is here to help you

By Jacqueline Lockie CFP™ FCSI, Head of financial planning, CISI – 8th April 2020

In the UK the Office of National Statistics (ONS) has released its first weekly ‘rapid’ statistics data during the Coronavirus pandemic.

The initial results from the new Business Impact of Covid-19 Survey show:

• 73% of households in Great Britain, whose household head is an employee, had enough financial assets to cover a 25% fall in household employment income for a period of 3 months

• 54% were able to cover a 75% fall for 3 months

• 76% of self-employed households had enough financial assets to cover a 25% fall in their household employment income, and 61% could cover a 75% fal for 3 months

The ONS found that older households were most likely to be able to have enough savings to cover a fall in their household employment income for this period of time.  After that the picture changes significantly.

This guide aims to help you think about your finances by highlighting the important factors that our community of leading and highly qualified experts from all over the UK - CERTIFIED FINANCIAL PLANNERS and Accredited Financial Planning Firms – think you should look at during this uncertain and challenging time. 

Solve the task at hand now - Cash management for individuals and families

Many people have seen a cut in their income each month.  Some of you may have been made redundant and might now be claiming benefits.  Other families are bracing themselves for more severe reductions in their income in the coming months. Here are our top tips for looking at the cash you immediately have available if you have a sudden loss in income:

1. Prepare a clear budget for food and other essential bills:

Write down everything you buy and review objectively.  Can you cook more and save on more expensive processed meals?  Do a daily food menu and only buy what you need to save wasting food. Write down all your other bills and when they are due.  Cut back now on all non-essentials.  Research online what state assistance or charity help you might be eligible to receive and apply.  Avoid taking on significant loans with high interest rates. Talk to your mortgage lender and bank about what they might be able to do to help you in the short turn.  Check with your local authority if you can spread your council tax over 12 months rather than 10, cancel any travel tickets not now being used and sell unwanted items in your home such as old consoles and mobile phones that might be hidden away in drawers.

2. Stop all unwanted or forgotten direct debits and standing orders from your accounts. 

Review your credit card statements and bank statements to ensure you are not paying out on unnecessary or forgotten regular payments. Please be careful what you are cancelling and make sure you understand the implications – money being spent on insurance as they might be the fall back items you might need longer term.

3. Be aware of scams:

Many people are worried about their futures at the moment.  This anxiety in the global population can be an opportunity for scammers to pounce.  When you are rushing to secure your own financial situation, you might be more susceptible to falling victim of a scam.  Follow simple rules: do not answer texts or calls asking for bank details unless you are expecting the contact.  If in doubt use the number on the back of your cards to contact your provider.  Never give your bank or credit card details over the phone to cold callers no matter who they say they work for. Here is some guidance from the City of London Police on common ways you might fall victim to foul play.

4. Look after your physical and mental health:

Set a daily routine for yourself, talk to loved ones via video links and ensure you get enough sleep. These are all practical things you can do to help yourself stay healthy and keep a sense of perspective when dealing with money.  There are many free apps and other online resources for yoga, meditation, sleep and exercise. Take advantage of them and encourage others to participate with you.  Being tired and worried can lead to poor decision making when dealing with your finances. See the CISI’s mental health portal for advice on how to look after your well-being. LINK

5. Get help early:

Don’t wait until you have no money for essential items - ask for help from your local government, charities or other institutions now and try and plan ahead.  It can take time to find out what sort of help might be available to you and you may need to apply for that help.  If you know that you are going to struggle to pay your mortgage, contact your lender now – most banks are operating a simple form online to apply for this.  Talk to them about mortgage premium holidays and other ways to reduce your mortgage payments.  Make sure you understand the implications of taking a payment holiday – some mortgage terms will mean you still have to pay the interest on those payments, so your monthly payments may go up once you start paying again and it might take you longer to pay off your mortgage. Check to see if you have any insurances that you could make a claim on.

Managing through the cycle

It is important to keep a close eye on your finances whilst we work through this global pandemic.  Ignoring issues will only make matters significantly worse later on.

1. Revisit your budget regularly and identify where you have been struggling.  Tackle those areas with a calm attitude and seek professional help if needed.

2. Be realistic.  Don’t deprive yourself of all your pleasures in life, but don’t go overboard.  If you put yourself on a strict crash diet for your finances, it might work for a few weeks but probably isn’t going to work for many months.  Be sensible.  Cut down on luxuries but don’t cut everything out unless your financial position really necessitates it.

3. Take small actions to improve your financial situation.  Is there any part-time work available?  Are there things you can make from your own home that you can sell online?  Can you do anything to help family, friends and local charities?

4. Try to stay positive  Do not constantly watch or listen to the news, restrict your news updates to once a day.  Plan out what you are going to do each day and you will feel a sense of achievement by doing those tasks.  Stay in touch with others and be honest about how you are feeling but don’t spend the whole conversation talking about the virus.

Try to plan for the future when we get out the other side of this pandemic.  Yes, we are going through very hard times right now, but we will get through this.  We need to stay focused on solutions to our financial issues and not continually focus on the pandemic.  For example, what can you do at home?  What can you plan for when curfews are lifted and we can all go about our daily lives again?  Are there things that you have wanted to do but never had the time to do?”

As always, please do feel free to call me at any time to discuss anything that might be concerning you.

Please do keep safe and of course, Happy Easter!

With warmest regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Touching Base

As we head into the weekend I thought you might appreciate a very brief update on how our investment portfolios have performed over the past 12 months, taking into account the impact (so far) of the coronavirus pandemic.

In the following chart I have shown our lowest risk portfolio (EBIP UK Bond) and then included the 3 most widely used portfolios (EBIP 40, 50 and 60). The purple line is the FTSE 100 which is of course, the index that is quoted on the news every day.  

There is no hiding from the fact that our investments are substantially down over the year but it is reassuring to see that the highly diversified nature of our portfolios has helped shield our clients from the very worst of the falls that we have been hearing about.

On a separate note, the following is a link to an article on Covid-19 which appeared in the Spectator on 27th March. The statistics quoted in the article are already well out of date but it provides an interesting slant on things, nonetheless.

https://www.spectator.co.uk/article/The-evidence-on-Covid-19-is-not-as-clear-as-we-think

As always, please do feel free to call me at any time to discuss anything that might be concerning you.

Stay safe everyone!

With warmest regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Lockdown and anxiety

We are just approaching the end of the first week of the ‘lockdown’ in the UK and I am sure I am not the only one who thinks it feels a lot longer. My wife, Vikki, my two daughters, Ellie and Charlie and I are comfortably holed up at home, trying to make the best of things; the girls have a small greenhouse and they have been busy planting vegetables ……… just in case! Vikki is actively involved with supply chain issues with her company and has never been busier and for my part, I am trying to make myself useful around the house (with mixed results), at least my drumming is coming on a treat and I am starting to look a little less like that Duracell monkey! The most important thing however, is that we are keeping our spirits up whilst not forgetting those who are much less fortunate than ourselves.   

Over the weekend I was reflecting on how everyone might be feeling re their investments and on how they might be worrying about how this ongoing situation might impact their future financial plans. I have already sent a number of these ‘Round Robin’ e-mails in which I have reiterated the advice that sitting tight and not panicking is the correct response when markets crash and we are in the midst of so much uncertainty. However, as I have watched the value of my own investments evaporate (albeit temporarily), I am conscious that many of my clients will nonetheless be feeling anxious and that they might welcome a friendly chat and/or some quiet words of reassurance. If this is how you are feeling, please do not be afraid to call me, you are not being silly by being unsettled by these events and neither is that pit of the stomach feeling of anxiety imaginary, I have it too!

I know many of us will be worried about more than our finances at this time, particularly those with elderly relatives who are really struggling with the social isolation of a lockdown or you may be in a high risk group yourself but please do feel free to call or drop me a line telling me how you are feeling, if you think it would help. I can’t promise to offer magical solutions (if only) but I can promise to listen.

Thinking of you all and your families at this very troubling time.

With warmest regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Lockdown

I think the announcement from the Prime Minister last evening was widely expected and according to a survey this morning, 94% of those asked felt this was a proportionate response to what we are facing, I agree. The evidence from Italy is that a state of lockdown has reduced the rate of infection and the subsequent deaths. It’s early days to claim a 2 or 3 day reduction points to a clear trend but at least it provides some hope and it does follow on from similar experiences in China and South Korea.

Markets have responded well this morning but it’s doubtful we are out of the woods yet, particularly in the UK. I would expect the rate of infections and deaths to increase over the course of the next 2 weeks, as all those that are likely to present with symptoms over that time period, will already have been infected. Let’s then hope that we will start to see similar results from the social distancing and isolation policies. I have a friend who lives in Spain and she says that after a week of ‘lockdown’, infections and deaths are still rising but they are hoping to follow Italy with some improving numbers soon.

Whilst writing I thought I would take this opportunity to share the following chart with you, which looks at global Bull and Bear markets since 1980. The chart has been produced by the US firm Vanguard.

What this chart shows us is that downturns are a feature of markets: they are not an aberration, they are not out-of-the-ordinary, they happen quite frequently and although it’s always something different that causes them, they are to be expected. Exposure to volatility and frequent falls in value, some of them severe, are the price we pay for the long-term growth of our wealth over and above inflation, and in excess of bank interest.

The chart also shows us is that every time there has been a sharp drop in the price of shares – a bear market – it has been followed by a prolonged period of rising share prices – a bull market – that far outweighs the earlier fall. Longer-term charts going back as far as 1900 show exactly the same thing.

Of course, there is no guarantee that this time will be the same, but think about this: when the worst is over, whether that be three weeks, three months, or three years, people will need to buy food and clothes, and they will want to go on holiday and change their cars. I suspect, as with every upheaval like this, the way we do some things will change – hopefully for the better – but the basic human instinct to improve one’s lot will not disappear.

“The investor who says, this time is different, has uttered among the four most costly words in the annals of investing.” †

And finally, a cartoon from US financial planner and artist Carl Richards, of the Behavior Gap

Your financial plan is a long-term strategy, looking decades into the future, I have no intention of letting that be derailed by what’s happening over the course of a few weeks or months.

But do please do let us know if you have any queries or concerns. That extends to letting us know if you are feeling unwell and don’t have anyone else to talk to. And if you have family or friends that are worried about their finances and don’t know where to turn, please put them in touch – we’ll help if we can, even if it’s just a listening ear.

And above all, stay safe! Your health and wellbeing are more important than anything else we could be talking about.

† John Templeton ¥ There’s plenty more excellent drawings on Carl’s website, if you’re interested.

Please note that past performance is not a guide to the future, the value of an investment and the income from it could go down as well as up. You may not get back what you invest.

As always, if you have any questions concerning this e-mail or any other finance related matter, please do feel to contact me at any time.

With kind regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Seeing Past the Coronavirus Shock

I am most anxious not to inundate you with information during the Coronavirus outbreak but I feel sure the occasional update will be well received. It is my intention to provide such updates each week as the situation develops, for the time being.
The following is a blog post from yesterday by Alistair Meadows of EBI Investments Ltd. It is EBI who construct our investment portfolios.

“As unexpected shocks go, Coronavirus ranks in the very top tier of events capable of disconcerting investors, amongst the Great Financial Crisis (GFC) and Black Monday. Whilst news continues to horrify many investors with the human and economic implications, buried in the latest data in what statisticians refer to as “the inflection point of a logistics curve”, is a sign that the very worst may be over.

February news was dominated by the global spread and impact of the Coronavirus (Covid-19). Dow Jones, S&P 500 and the FTSE All-Share fell by over 14%, 12% and 11%. So far in March (16th March 2020), these Index markets have been continuing their decline and the correction has now developed into a full-scale bear market.

The first wave of market declines was influenced by two drivers: The world supply chain being compromised and the closure of much of China’s businesses. China is responsible for approximately 16% of World GDP and 35% of World GDP Growth.

Commodities (raw materials; sugar, rice etc) have also felt the impact of the virus. Unsurprisingly, the impact is increased when looking at the products China heavily consumes. Raw materials price declines have a shockwave effect to export dependent countries; Brazil, Chile and Peru have high export trade as a proportion of their GDP (approximately 29%, 59% and 49% respectively). All will be feeling the pinch.

The second wave has been primarily driven by one factor; failure to contain the virus globally, leading to the coronavirus being declared a pandemic by WHO (World Health Organisation), with Europe now as its epicentre.

The severity within Europe has caused some countries to shut down, imposing country-wide lockdowns, border closures and curfews to control the virus. Countries like Italy, Spain and Germany now have more active cases of the coronavirus than China.

As coronavirus spread to North America, the Federal Reserve cut interest rates to zero and launched a $700bn stimulus programme in a bid to protect the economy from the effects of coronavirus.

The consensus for the short run is that the situation is most likely going to get worse before it gets any better. The credit rating agency Standard and Poor (S&P) stated "The initial data from China suggests that its economy was hit far harder than projected, though a tentative stabilisation has begun…Europe and the United States are following a similar path, as increasing restrictions on person-to-person contacts presage a demand collapse that will take activity sharply lower in the second quarter before a recovery begins later in the year."

Nevertheless, amongst the bad times of late around the globe there are now some positives. The high levels of quarantine measures taken in China are easing and the President is urging China’s inactive workforce to now return to work. Additionally, the realisation that global slowdown in supplies hasn’t affected domestic consumer prices yet, which is a positive. China’s experience serves a model of how the rest of the world can control coronavirus, locking down and quarantining huge sections and building hospitals to increase capacity appears to be working.

In addition, new academic analysis of the infections data suggests that for Italy, the shape of the graph’s curve of is forming what statisticians refer to a logistics or “S” shaped curve, changing the shape away from the exponential “J” shaped curve so the current state forms an inflection point. This demonstrates the success of the lockdown model.

Source: http://nrg.cs.ucl.ac.uk/mjh/covid19/

We are also now universally seeing all countries taking drastic measures to help stop the spread of coronavirus and providing economic stimulus to help the economy deal with the effects of the outbreak, for example, the US and the UK have provided emergency rate cuts and countries are starting to provide economic stimulus.

As hard as it may seem, fear and panic should not be allowed to drive investment decisions. In general, it’s good to remember that any losses incurred are only realised if you sell. The idea that markets go up and down and don’t show a continuous level of performance is no surprise.

Remember, EBI Portfolios’ all-weather investment philosophy offers a long-term investment solution suitable for any market regime or circumstances, so it should be no surprise we are focusing on the long term. Unless you believe that capitalism will be brought down by a virus, this most likely is just another bout of selling that will lead to buying again.

Please note that the value of investments and the income derived from them may fall and you may get back less than you invested. Past performance is not a guide to future performance.”

As always, if you have any questions concerning this e-mail or any other finance related matter, please do feel to contact me at any time.

With kind regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Clearwater Remote Working

In accordance with Government guidelines and in the interests of our team and clients, we have decided to operate a ‘work from home’ policy, until Government advice changes. An obvious implication of this is that we will not be able to hold client meetings at our offices for the time being. However, Adam, Kim and I remain committed to providing the highest level of customer care and we have every confidence that this can be maintained, even though we will be working remotely.

Please note the following:

1. We will be observing normal office hours – 09:00 to 17:00. However, I am likely to see e-mails outside of these times, if you have an urgent query.

2. If you need to call us, please use the usual office telephone no. 01494 717000. If, for any reason you are unable to get through at the first attempt, please leave a message (or send an e-mail) and someone will get back to you as soon as possible.

3. Our preferred method of communication throughout this period will be by e-mail. As we will be working remotely, it would be helpful if you could copy all 3 of us in on any communications, our respective e-mail addresses are below:
   graham@clearwaterwealth.co.uk
   adam@clearwaterwealth.co.uk
   kim@clearwaterwealth.co.uk

4. It should be possible for us to arrange a video meeting, if this would be helpful. Please just call in the first instance, so that we can agree a mutually convenient date and time.

I have been in discussion with our platform providers (Transact and Standard Life), their business continuity systems are robust and your access to their websites will not be affected. We do not expect work standards and timeframes to change throughout this difficult period but if you do experience any undue delays, please notify us immediately and we will do everything we can to rectify the situation.

These are unprecedented times but please rest assured we will continue to provide any help or guidance we can throughout.

As always, if you have any questions concerning this e-mail or any other finance related matter, please do feel to contact me at any time.

With kind regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Clearwater Portfolio Update

I know many of you will be more than a little concerned about the fast developing coronavirus situation, not just from a health perspective but also from the point of view, how is market turbulence affecting your investments?

Probably the best way to answer this question is to take a look at the following 2 charts:

This first chart shows how our lowest risk portfolio (EBI UK Bond) has performed since 1st January when compared with our highest risk portfolio (EBI UK 100). The dramatic difference in fortunes is plain to see, with the Bond portfolio actually increasing through most of this coronavirus scare (well, so far at least).

We will look at a wider range of the portfolios below but please remember each portfolio contains an element of the Bond portfolio and the 100 portfolio. As an example, EBI UK 60 is essentially 60% of the 100 portfolio, blended with 40% of the Bond portfolio, and so on.

This second chart shows how a higher exposure to Bonds has cushioned some of the portfolios from recent falls.

My advice remains resolutely that, unless our clients are in dire need of funds, they should attempt to ride out what is likely to be a painful but temporary downturn and NOT to disinvest at this time. However, if you feel you have no alternative, it will be possible to take money just from the Bond element of the portfolios, thus not selling equities (shares) when it is clearly not sensible to do so. This will change the balance of what remains in the portfolio to higher risk but this can be addressed by a ‘rebalance’ when markets recover.

If this is something you feel you need to do, please contact Adam and he will advise you how to go about this.

Serious though this situation undoubtedly is, now is the time to put on one’s tin hat and hide behind the sofa, until things improve.

As always, if you have any questions concerning this e-mail or any other finance related matter, please do feel to contact me at any time.

With kind regards,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner