We are one month closer to Spring, and one step closer to freedom from restrictions.
Shortly, we will be able to go out and enjoy a British summer, watch trees blossom, return to the gym and enjoy each other’s company in our local establishments.
This month’s newsletter will focus on our thoughts on recent events of interest and their potential impact on financial markets, how to preserve your wealth, and celebrating two Daintree members.
The month of February
The U.K. – Beer gardens, Gyms, and Green Investment.
Positive news for all of us in the UK, we have a timeframe of when we will be allowed to socialise and meet people in person again!
Boris Johnson announced on 22nd February 2021, assuming four specific conditions are met:
- The vaccine programme continues to go to plan
- Evidence shows vaccines are reducing deaths and numbers requiring hospital treatment
- Infection rates do not risk surge in hospital admissions
- New variants do not change the risk of lifting restrictions
As early as 12th April we will be free to meet in groups of up to six people in an outside public space including beer gardens. Importantly, for those whose mental wellbeing is benefitted from the gym, gyms will also be open on the 12th April.
From no earlier than 17th May, most legal restrictions on meeting others outdoors will be lifted – although gatherings of 30+ people will remain illegal. Indoors, the rule of 6 or 2 households will apply.
The next major date would be
21st June 2021, in which we would be free from restrictions, normality.
On the 3rd March 2021, Rishi Sunak announced the budget.
The budget covered:
- Support for businesses and families,
- Investment-led recovery as we recover from lockdown,
- Changes to public finances.
One theme of particular interest was the focus on green investments.
Over the last decade, we have seen significant growth in the interest of green investments, according to BlackRock ESG assets under management have grown from c. $330 Bn in 2010 to c. $850 Bn in 2019, BlackRock has produced a brilliant whitepaper on why this shift may have occurred (the full paper can be found by clicking here).
The movement is being perpetuated further by Rishi Sunak as the chancellor confirmed:
- We will be launching an infrastructure bank focusing on both public and private green projects,
- The issuance of a green gilt
- UK green savings bond for retail investors.
Although still in a relatively early phase, the movement of people using business and finance as a force for good and for positive change in this world is accelerated, and we at Daintree are all excited to see what the future holds.
The European Commission (EC) President Ursula von der Leyen admitted delays in the rollout of the vaccines. The goal is now to vaccinate 70% of the adult population by summer. In the meantime, many countries are extending selective lockdowns.
The European Parliament has approved the Recovery and Resiliency Plan. After ratification, individual countries will start to submit projects to the EC for final approval. A rapid implementation could redraw investors’ attention to Europe, after years of net equity outflows.
Near the end of February, concerns were raised that a rapid economic recovery would lead to the hasten of policy tightening, this rattled bond markets before rippling into equities.
However, fears receded, and US markets recovered.
Joe Biden has ramped up his coronavirus vaccination rollout and expects all adults to have access by the end of May.
We hope to see the US recover well and move forward in a positive manner for the remainder of 2021.
A year after the coronavirus outbreak, triggering widespread social and economic upheaval, Asia is emerging from the crisis stronger and with greater influence on the world stage. Many Asian countries have effectively contained the virus and as such are ahead in the economic restart, compared to many western developed countries.
Why does the bond market matter for investors?
One of the key props supporting the current high valuations of assets, and in particular equities, has been the exceptionally low level of sovereign and corporate bond yields. When yields increase, bond prices fall and this leaks through to the equity markets.
Government bonds saw a sharp sell-off in late February, with performance ranging as below:
Source: (FE Analytics, Accessed 3rd March 2021)
Having risen steadily on expectations of substantial US fiscal stimulus, government yields lurched higher late in the month (meaning prices fell), as a US Treasury bond auction saw muted demand.
Over the short to medium term, we see the sell-off as over-reactionary and remain neutral as government policy suppresses bond yields.
Preserve your wealth before the end of the tax year.
We are aware you have worked hard for the wealth you have created and ultimately, you would wish to preserve your wealth from the taxman as best possible.
There are plenty of tax wrappers available to help preserve your wealth.
A tax wrapper, in the case of ISAs and Pensions, allow funds that are held within them to grow free of Income Tax and Capital Gains Tax. Each tax year, you are entitled to an ISA allowance of £20,000 and a pension allowance potentially up to £40,000.
The current tax year ends 5th April 2021, if you are interested in learning more about potential tax savings and what you could do, please reach out to your adviser.
João’s time at Daintree & Richard’s birthday
Imagine your first year in a professional environment consisting of a pandemic (and the constraints of working from home), sitting professional exams (and passing two so far), supporting a new senior member of Daintree, taking on additional responsibilities, handling it all brilliantly and generally being a positive contribution to the team.
That was João’s first year, and we are all incredibly proud of him and looking forward to what his future holds!
When asking about how his time has been so far and what he is looking forward to in the future, João said:
“Although faced with many challenges, working with Daintree has led me to develop beyond expectations. By being part of a team of like-minded people focused on thriving at everything they do. This inspires a culture of self-development and dedication towards our common goal of helping clients achieve theirs.
Over the next year, I look forward to finishing my Diploma in Regulated Financial Planning and with the forecasted easing of restriction meeting our clients, face-to-face.”
From one anniversary to another, last month Richard To celebrated his birthday!
Richard has been with Daintree for a little over six months and we could not be happier he is with us!
Richard has added significant value to Daintree through his expertise and technical knowledge and improved our financial planning service for our clients.
Thank you both for being a part of Daintree Wealth Management!
This month Mark continues his discussion on Wim Hof breathing, his recent running habits, and several books he has been reading! If you’re interested, click here.
Thank you for investing your time and reading our newsletter, if you have any questions or thoughts, please feel free to share them with me!