Investment Thoughts

The last two months have been a sanguine reminder of the difference between risk and loss. At the moment, we are all experiencing risk in our portfolios with values fluctuating. Unless we sell out, this is not yet a loss and with a very diverse portfolio of the type we build at GT those businesses within your portfolio that will inevitably fail will represent a very small percentage of the total, whilst in due course the majority will recover.

The key for all of us, therefore, will be to be careful about what we withdraw at this time by way of capital or income. There have been some very substantial dividend (income) suspensions/cuts by companies, particularly in the UK. Globally, this has been less of an issue which will help to maintain income.

This is the first time we have seen such quick and substantial action taken on dividends certainly in my career. There are generally two reasons for these cuts one, is basically a company taking a prudent view to conserve cash and the other represents serious trading problems in the business. With our emphasis on quality companies in your portfolio, we expect it to be the former, in most cases.

Therefore, we are closely looking at income levels for all clients and your consultant will discuss this with you in more detail at your next review. If you do not need the income at this time, it is clearly prudent to reduce or suspend it, to allow your portfolio the best and quickest chance of recovery as economies re-open.

Leave a Reply

Your email address will not be published.