The Investment Crisis

January 2022

Following COP26 back in October, there have been a number of pensions and investment funds that have suffered, together no doubt with a much larger number of investors.
Decisions were made at the Glasgow meeting, and although watered down dramatically, there will be a knock on effect that will be seen through investment managers approaches to investing in certain companies.
The fact that China, India, Russia and America failed to agree or sign up to certain points means different opportunities will arise.
One big point was that the average person with a pension or investment can put pressure on decision makers by investing more in an Ethical style fund. The problem is, very few places have the knowledge we have accumulated over ten years of researching and investing in Ethical portfolios, and fund names and marketing can be misleading.
Few will understand the EU directives or classifications, or see through what the “Greenwashing” companies are doing to attract investors, to help their share price go up.
Funds themselves have also been effected as they take a hit on returns when they sell out of shares that have fallen out of favour.
Another way individuals are being hit is with the asset allocation in a portfolio. I was comparing the portfolios of a major bank this week with our own, and was surprised to see such a large organisation following the text book asset allocation of over 34% going into their own Corporate Bond and Government Bond index funds; both of which have NEGATIVE RETURNS.
At Beacon, we have our own in-house discretionary investment management team and surprise, surprise we do not currently allocate funds to either of these areas and haven’t done for some time. It means we are holding a bit more cash than we would like, but better that than negative producing returns for the last year.
It takes commitment to save, and we all know bank accounts give little or no return, and in some cases even charge you to hold money in them.
If you have investments, look under the bonnet at what funds you are invested in and ask questions if you see little or no change for negative performing funds.