Managed Portfolio Service Monthly Newsletter

July 2020 Update Provided by Quilter Cheviot

Investors will be pleased to see a relatively stable month come and go – by 2020’s standards at least. A positive finish to June, despite the early volatility, completed a pleasing quarter of returns for the Prosser Knowles MPS strategies, with July continuing to see an upward trend in equity markets to date.

Since our last newsletter the big talking point in the UK has been the Chancellor of the Exchequer Rishi Sunak’s “mini-budget”. He confirmed plans to close the UK furlough scheme in October, alongside a number of measures aimed at boosting consumer spending and supporting the jobs market. The stamp duty threshold was also raised in an effort to put more cash in the hands of economically active house-movers.

The flipside of these welcome fiscal injections into the economy is of course the increasing indebtedness of the UK Government. On the one hand it makes a lot of sense to borrow when it is so cheap to do so (30 year UK government debt currently yields a paltry 0.67%). But the Bank of England’s continued bond purchasing program provides demand that suppresses government bond yields and supports borrowing at such low rates. For many years the “new normal” has been described as low growth and low inflation, with low bond yields and high asset prices supported by the large balance sheets of central banks around the world, accrued during extensive quantitative easing programs.

Whilst central bank bond purchasing provided a debt-fuelled economic recovery from the financial crisis, the UK Government’s austerity program was introduced in 2010 due to fears over the rising UK national debt (around 70% at the time). In May this year the national debt rose above 100% due to unprecedented modern day levels of fiscal spending, combined with a fall in UK GDP of around 25%. The UK is not alone in this situation: the national debts of France, Italy, the US and Japan all exceed 100%. The hope is that this is temporary, but whilst equity markets have experienced a v-shaped recovery, you have to look very closely at the UK GDP chart to see the beginning of an uptick. Could we see a return to austerity once all this is over?

Investors seem relatively unperturbed – whilst equity markets continued to rise last week, so did the spread of Covid-19, with the number of new global cases topping 260,000 on Friday, the highest twenty-four hour figure so far. The sunbelt US states show a worrying increase in cases, especially Florida, and the possibility of further lockdowns is becoming real.

While coronavirus continues to suppress economic activity, governments have little option but to borrow and spend to support the economy. Even in Europe, where the virus is better contained, the EU has recently passed a €750 billion recovery package, adding to the debt pile. Since the financial crisis we’ve become accustomed to low growth, high debts and low yields, but Covid-19 is the biggest test of the stability of the “new normal” that we’ve ever had – hopefully that vaccine isn’t too far away…

MEET THE PROSSER KNOWLES MPS INVESTMENT TEAM

The Quilter Cheviot Managed Portfolio Service (MPS) team has a 18-year track record of delivering successful client outcomes, and a proud reputation for innovative partnership with financial advisers. The team comprises a dedicated Investment Management capability that sits at the heart of the Quilter Cheviot investment process as well as Platform & Services specialists focused on ensuring the smooth running of all aspects of the service.

From left to right:
Scott Wilcox, Platform Executive: Scott’s role incorporates two key areas – firstly, to ensure that both intermediaries and colleagues are provided with timely information relating to the overall MPS service; and secondly, to work closely with our platform partners to ensure the efficient running of the platforms. Scott previously worked at M&G Investments for 8 years and he has also undertaken contract roles at RBS Coutts, Mercer and Financial Express. Scott graduated from the University of Huddersfield with an honours degree in Law and has also completed the Investment Management Certificate (IMC).

Toni Adochitei, Administrator: Toni is the main point of contact for MPS and Platform operational and administrative queries. Toni’s primary role is to assist with production and oversight of MPS documentation and literature. Toni also produces and maintains MPS and third party platform management information, as well as providing support to the Investment Managers and Business Development Teams.

Antony Webb Chartered FCSI, Portfolio Manager: Antony joined Quilter Cheviot in 2010 having graduated from University College London with a BSc (Hons) degree in Economics. He is a portfolio manager on the Quilter Cheviot Managed Portfolio Service (MPS), and sits on the firm’s Investment Funds Committee. Antony has completed the Investment Management Certificate (IMC) and the CISI Masters in Wealth Management.

Simon Doherty Chartered FCSI, Lead Portfolio Manager: Simon joined Quilter Cheviot in 2007 and is lead portfolio manager of the Quilter Cheviot Managed Portfolio Service (MPS) and chair of the firm’s Investment Funds Committee. A graduate of Trinity College Dublin with a first class honours degree, Simon has completed the Investment Management Certificate (IMC), the CISI Masters in Wealth Management and has passed Level I of the CFA Program.

Olivia Wingrove, Investment Analyst: Olivia joined the MPS team in 2017, having graduated from the University of Exeter with a first class honours degree in Politics, Philosophy and Economics. Olivia supports the Managed Portfolio Service (MPS) Investment Managers with the ongoing management of the MPS strategies and is primarily responsible for monitoring the strategies’ allocations and risk profiles relative to their strategic benchmarks and assisting with the production of performance attribution data. Olivia has successfully passed Level I and II of the CFA program and has also completed the Investment Management Certificate (IMC).

Wayne Smith, Platform Manager: Wayne graduated from the University of Witwatersrand (South Africa) with an MSc in Botany. He came to the UK in 2000 and worked for investment management and research company, Allenbridge. In February 2011 as operations and IT Director he transferred to Close Brothers Asset Management when they acquired the retail arm of Allenbridge and was made head of client services – self-directed. Wayne joined the Quilter Cheviot Managed Portfolio Service team in February 2013.

This financial promotion has been approved and issued by Quilter Cheviot. Investors should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future returns. You may not recover what you invest. This document is for general information purposes only, is subject to change and should not be relied upon. Unauthorised dissemination or copying is prohibited.

Prosser Knowles Associates Limited is Authorised & Regulated by The Financial Conduct Authority. Quilter Cheviot and Quilter Cheviot Investment Management are trading names of Quilter Cheviot Limited. Quilter Cheviot Limited is registered in England with number 01923571, registered office at One Kingsway, London WC2B 6AN. Quilter Cheviot Limited is a member of the London Stock Exchange, authorised and regulated by the UK Financial Conduct Authority, regulated under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission for the conduct of investment business and funds services business in Jersey and by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law 1987 to carry on investment business in the Bailiwick of Guernsey. Accordingly, in some respects the regulatory system that applies will be different from that of the United Kingdom.