Market Conditions

We are sure you have all been watching events in the Ukraine in the last few days in particular, with press coverage showing the very real human cost of war. There is no doubt in our minds that this is one of the most dangerous times in geo-politics for many years.

 

It appears that authoritarian states are becoming more aggressive in their expansionism, acting on the perceived weakness and cultural divisions in the West that is still recovering from the pandemic. The coming months will require careful negotiations by World leaders and the need to tread carefully to avoid the risk of an even "hotter"war starting.

 

We must also be mindful not to draw too many parallels to the 1930's and Pre-War Europe, to do so runs the risk of believing that we are on an inevitable path. We are not in any doubt that there are major changes afoot but the World is now a very different place. Hopefully, the economic sanctions being put in place will be enough to discourage Russia; the impact of being cut off from financial markets and trade will be significant and the aim is that thiswill make Putin's position in Russia untenable.

Unfortunately, the effect will be acutely felt by not just the Russian population but all of us.We do not know, and would not like to guess, how this will play out but from an investment context we feel that it may well accentuate inflationary pressures and a move to safe havens like gold in the near term.

 

Talking about investment strategies and the effect these events could have on portfolios feels almost secondary when we see the reality of a war that is much closer and more threatening than we have seen before.However, we know that you - as well as us - will be concerned about the effect on investments.

 

We hope that if there is volatility our defensive approach and focus on inflation protection will do there job.What we do know from history is that conflicts and economic sanctions lead to Governments seizing assets and we should be actively avoiding assets where thiscould happen.

 

At the time of writing we know that evenor most aggressive investment strategy has less than 0.5% invested in Russia. We also intend to review how we are allocating to Geographical regions to hopefully limit this type of potetnial risk.We have delayed providing our detailed Annual Investment Review as events unfolded but will be issuing this inthe next week or so, followed by our Quarterly Newsletter at the end of March.If you do have any concerns or questions then please do not hesitate to get in touch.