During the chaos of the past few months with changes to proposed Trump (and reciprocal) tariffs often hard to keep up with, equity and bond markets alike reacted negatively – and investors sought refuge in alternative assets.
Gold, the subject of the Prospects editorial, has recently experienced a surge in value per troy ounce that surpassed even prices seen during the pandemic. Willam McCubbin explains why after millennia of use as an asset class, demand for gold among investors as a portfolio hedge is stronger than ever. Speaking of haven assets, the previously close correlation between the dollar and US bond yields has unravelled since the initial unveiling of US tariffs on April 2nd. Could this be a sign that bond markets are playing a role in curbing the more erratic side of US foreign policy? Sir John Royden argues here that ‘vigilante’ bond investors wield the ultimate power in keeping government actions in check by drawing a metaphorical line in the sand, beyond which they will no longer buy government bonds.
As investors have veered away from US equities amid the Trump tariff drama creating possible trade barriers, other markets are coming to the fore as alternatives. After years in the wilderness, Japanese equities are having their moment in the spotlight thanks to a series of factors including corporate governance reforms – more on this in our Collectives Commentary.
Did you know that a staggering one in eight people globally now find themselves exposed to conflict? As the relative stability of the past century appears to be dissipating, clear strategic planning is vital for governments and organisations alike, according to Major General Felix Gedney. Bringing the benefit of a nearly 40-year Army career at the helm of national security and strategic leadership to our guest editorial here, he gives his viewpoint on the current state of global political affairs and explains why a defined strategy is the most effective tool to cut through bureaucracy and inertia.
As life expectancies and home values are both rising, equity release products have once again come into the spotlight as a possible source of retirement funding. While lending on equity release mortgages has grown recently, these products can come with sizeable caveats including high costs and erosion of value that is passed on to loved ones: Wealth Planner Charles Barrow explores the merits, drawbacks and possible alternatives here.
Also linked to the subject of succession planning, outright lifetime gifts (potentially exempt transfers) provide an increasingly popular way to try to circumvent or reduce liability for inheritance tax. A potential sticking point with this approach however is that wealth gifted to children could form part of a divorce settlement in the event of a relationship breakdown. Law firm Boodle Hatfield identify prudent measures to mitigate against this risk in our Independent View.
Planning to bolster the UK’s current lacklustre GDP growth is a focus for the UK government – and it is considering the role that the finance industry can play in driving the economy forward. As part of this, it has appointed industry body PIMFA to actively engage with wealth managers, including JM Finn, to hear their views on how the sector can best support the growth agenda. In his new quarterly Perspectives column, JM Finn CEO Hugo Bedford discusses his recent involvement in the consultation to ensure that our clients’ interests are represented.
Lastly, I hope you enjoy reading this issue of Prospects.
If you have any questions or comments, please feel free to get in touch.
Carrie Lennard
Editor