March 2008 – investing in a volatile market

In our January Newsletter we talked about stock market volatility, the need for calm and the benefits of a balanced portfolio. In reality not much has changed since then as we have seen further fallout from the credit crunch and Northern Rock fiascos with the market remaining as volatile as ever.

During these difficult conditions we continue to review our investment strategy to ensure that your portfolio has the right asset allocation and funds for your circumstances. We remain committed to the concept of not having all of your eggs in one basket and to ensuring that the balance of your portfolio is maintained at your Annual Review.

We routinely do tests on samples of client’s portfolios to check how our balanced approach compares with an index such as the FTSE 100. This is always interesting because our portfolios have usually no more than 60% exposure to the world stock markets and yet the evidence shows that we consistently produce a better return than this index. You can see from the following graphs that our balanced approach has given lower volatility and superior returns to the FTSE 100 over the last few months.

Given that no two Argyle portfolios began on exactly the same date this data is unlikely to exactly match the performance that you have personally seen in the last 6-12 months or so. However we think you will be pleased to see how our investment process has compared with the FTSE 100 during recent times.

The first chart shows how a model Argyle portfolio would have performed over the last 6 month using our current preferred funds compared to the FTSE 100. As you can see there have been ups and downs but our portfolio is not as volatile largely because of the combination of assets.

The second chart shows the 12 month story and again you can see the volatility quite clearly but also our ability to handle it through our investment process.

Your Annual Review becomes very important in difficult times, such as we are currently experiencing, as this is when we ensure that your portfolio contains the best mix of assets and funds to meet your circumstances. Your Annual Review helps us to keep your portfolio up to date although we do take action aside from your Review if we think it necessary. You may recall that we were fortunate to limit the effects of the downturn in property by reducing the amount in your portfolio last year.

We will be working harder than ever to make your Annual Review as effective as possible. Please do your best to work with us and hopefully we can get through this difficult period happier than most.

www.argylefinancialgroup.co.uk