Investing

Cash ISAs were, for a long time, seen as an easy way to put aside moneyandearn a return from a generous interest rate. However, over the last ten years we have seen interest rates drop significantly, to the current record low of 0.1% and the Bank of England has made clear it is not ruling out the prospect of negative interest rates – meaning you could have less money just by keeping it in the bank.

We recently added gold to our managed portfolios, including our socially responsible portfolios. As an investable asset gold is unique in being able to provide a “safe haven” during times of turbulence in the equity markets, while also being seen as an inflation hedge and as a potential alternative to bonds during low yields. However, as a mined commodity, it is naturally exposed to environmental, social and governance (ESG) risks. This is particularly true in regions of conflict and exploitation, where regulation and scrutiny have little traction.

We’ve made some changes to Nutmeg’s fully managed portfolios in recent weeks, adding to our equity market exposure, and introducing a small holding in gold.

We recently started a gold position for a number of our portfolios, replacing some of our treasury inflation protected bonds (TIPS). Here we’d like to provide further explanation on how we understand gold in the current environment.

Gold is unique. It’s not really a commodity, not really a currency and not really a fixed income as it doesn’t generate any yield. Despite all of this, gold has historically been a much valued asset, especially during times of crisis. 

We’ve been very forthright about why we think Socially Responsible Investing (SRI) is the future. We believe this now more than ever. The advent of the ‘new normal’ emphasises the imperative for changes in finance and economics as much as it does for social interaction and transport.  

With yields on government bonds reaching all-time lows in recent weeks, we’ve added US Agency mortgage backed securities to our portfolios to further diversify our fixed income exposure.  

In a religious context, ‘a fallen angel’ refers to an angel expelled from heaven, one who has chosen to give up the righteous path for a life of sin. Similarly, in the global bond market, fallen angel is a term used for borrowers who once held coveted investment grade credit ratings, but who have now been downgraded to high yield status (i.e. carrying risk) based on the credit worthiness.  

A rise in coronavirus infections hit the headlines in the latter stages of July. But despite fears of a second wave, markets were buoyed by the continued stance of policy makers to do ‘whatever it takes’ to keep the economy afloat. Elsewhere, corporate earnings season revealed mixed results, with ‘big tech’ companies proving the big winners.

All eyes are on the second quarter earnings season. With profit reports from the likes of Facebook, Caterpillar, and Exxon released next week, we await key insights into how companies across the economy are faring amid the pandemic. We also provide an update on increased tensions between China and a number of major trading partners, while giving an overview of the ongoing Brexit negotiations.

Nutmeggers are a socially conscious bunch. That’s why you’ll find that socially responsible investing (SRI) is especially popular among them. In a series of blog posts, we’re asking why our team members chose this investment style.

Nutmeggers are a socially conscious bunch. That’s why you’ll find that socially responsible investing (SRI) is especially popular among them. In a series of blog posts, we’re asking why our team members chose this investment style.