Inside the mind of an Investment Manager, Alex

The last few months have proved to be very challenging for anyone investing. Incredibly high inflation, interest rates still on the up and the news of banks collapsing grabbed the headlines.

| 3 min read

It isn’t all doom and gloom, at the recent Spring Budget the Chancellor said that forecasts from the Office for Budget Responsibility showed the UK would avoid a recession in 2023, despite previous predictions. As investors we must also remember that volatility, although uncomfortable at times, can equal opportunity. When investing for the long term, falling prices can offer the opportunity to own an asset at a more attractive price.

What does the new tax year have in store?

A new tax year, a new opportunity to shelter investment returns from tax. It is important to remember Individual Savings Account (ISA) and Capital Gains Tax (CGT) allowances cannot be carried forward, they are ‘use it or lose it’ allowances. I would argue that making use of your annual ISA allowance has never been more important. Your ISA allowance stands strong at £20,000 (although this has not increased for a few years, this is the highest it has ever been) while your personal CGT allowance has fallen from £12,300 to £6,000. This is set to fall again to just £3,000 on 6 April 2024. Consequently, it is becoming increasingly difficult to manage a portfolio within an investor’s CGT allowance and avoid a tax bill. To help, it is best to fund your ISA every year. You pay no income tax on the interest and dividends you receive, and any profits on investments are free of CGT.

Our investment philosophy at Cambridge

Every one of our clients is different, and we do our best to build a portfolio of investments to meet those unique circumstances. At the heart of everything we do is ensuring we have a deep understanding of our client’s overall financial position, their attitude to risk, their core objectives, and any other requirements they may have (this could be a set income target, certain investment restrictions or a request to have exposure to particular responsible investments). The result is a truly bespoke portfolio.

At the heart of everything we do is ensuring we have a deep understanding of our client’s overall financial position, their attitude to risk, their core objectives, and any other requirements they may have...

In the Cambridge office of Charles Stanley, we have a collaborative approach. All the investment professionals work together as one team to help manage client portfolios, with a lead point of contact that has overall responsibility for ensuring the portfolio meets your requirements. Our investment style is a preference for good-quality ‘growth investments’ where there are structural drivers of long-term returns, with some ‘value investments’ in cheaper, perhaps overlooked assets held for diversification. We invest in direct shares and various collective investment vehicles - funds, investment trusts and Exchange Traded Funds (ETFs). We invest in both active and passive strategies, but we only pay for the typically higher costs of active management where we believe it adds value. The result of all this is a well- diversified and balanced portfolio.

How we navigate the current climate

When it comes to investing, the saying ‘it’s a marathon, not a sprint” certainly comes to mind. It is important to have a long- term time horizon and ride out any storms along the way. We haven’t strayed too far from our core belief in quality growth investments but as the value style tends to outperform in periods of high inflation, we have slightly increased our exposure to these types of investments over the past year. The key is ensuring any portfolio is well diversified but not overexposed to any single asset type, geography (country), style or individual investment, and is built for the long term.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Inside the mind of an Investment Manager, Alex

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