HFS Milbourne & Evelyn Partners

HFS Milbourne & Evelyn Partners

For businesses and clients in and around Surrey, Evelyn Partners is the story of a merger and a rebrand. Yes, it is a new name but if you have worked with HFS Milbourne specifically, it is essentially the same trusted firm that has been helping law firms and clients make smart financial choices for decades.

As a local Surrey-based business, HFS Milbourne has been a leading financial and investment advisory firm for the last 15 years, with a heritage that stretches back to the mid 1980s. Having joined Tilney, Smith & Williamson early last year, the firm is now providing services as an integral part of Evelyn Partners.

It has clearly been a time of great change, and in the current market it is always reassuring to know that there are some constants. In fact, we believe that for our current and future clients we continue to offer the same full range of expected and valued capabilities along with an improved and complimentary range of services and expertise.

A revised outlook for 2022

Change everywhere is of course a constant. For investors, this was thrown into stark relief in April, as the IMF revised its 2022 growth forecast markedly lower. Rising commodity prices, supply chain disruptions, the impact of the war in Ukraine and a resurgence of COVID in China are all contributing to this forecast, though growth prospects for 2023 do still remain above average.

A buoyant labour market provides some hope for stock market investors, with jobless rates in the UK, Eurozone and US below pre-pandemic lows. The UK has seen the quickest labour market recovery in three decades. The latest UK CBI industrial trends survey also showed real appetite for capital investment from the corporate sector.

However, this needs to be weighed against the hawkish tone from central banks and persistently high inflation. Government bonds are now adjusting to the new environment, with a significant rise in yields since the start of 2022. There are signs that US inflation could be peaking, which could temper the need for the Federal Reserve to raise rates aggressively and help ease investor concerns.

Accommodating the changing market with right choices

Given the myriad risks facing investors, from elevated inflation to slowing growth and rising interest rates, coupled with the geopolitical uncertainty, we believe asset managers should be cognizant of the macro conditions.

That probably means tilting a portfolio more towards value-style stocks, which generally include energy, materials and financial companies. Equities in these sectors tend to do well when an economy moves towards a more inflationary environment. For example, year-to-date, the MSCI All Country value index has gained 3% in GBP total return terms, materially outperforming a 17% decline seen in the growth index.

Another consideration for investors is that there is increased risk associated with fixed income bonds. Among the significant financial sanctions against Russia has been the freezing of Russia’s overseas assets, including large bond holdings. This may encourage other major holders of US treasuries – such as China and Saudi Arabia – to recycle less of their country’s trade surplus into foreign bonds due to the fear that these holdings could be seized in the future.

It’s a reasonable assumption therefore to suggest that while we should expect high volatility across the different investment options, we might reasonably expect equities to outperform bonds.

Action versus inaction

Of course regardless of the investment choice, volatility can be unnerving for both experienced and new investors. For those who are already in the market, it is usually sensible to sit out the current uncertainty and wait for the situation to improve.

New investors may also be tempted to sit tight and wait for the ‘ideal’ time. But this carries its own risks. Being on the side lines means investors can easily miss upturns, with good news hidden behind grim headlines. In fact, many of the best periods for stock markets have occurred during periods of extreme volatility. So, while Brexit, the US/China trade war and the pandemic made many investors pause, they missed out on a 29% rise in global markets in 2016 and a 23.4% rise in 2019.

On the surface, that would seem to suggest that the old cliché ‘time in the market beats timing the market’ is a sensible choice. But that’s also not entirely accurate – timing the market does carry the risk of missing significant share price increases, but equally it can present good opportunities for investors following good professional guidance.

In summary, while steep falls in your investments can be unnerving, it’s important to bear in mind that short-term volatility is the price you must pay for the chance of higher long-term returns. Rather than try and second-guess market movements, a better strategy is to invest for the long term. Naturally the choice of portfolio should reflect individual circumstances, and that’s one of most important reasons to consult with an expert financial advisor or investment manager. ■

Edward Nice

Edward Nice

01483 468888

www.evelyn.com