May 2017: Markets voting against the UK

The punning opportunities last month are almost behind us.

In fact election polls have suggested that even May might be behind us. The Prime Minister that is. If she ends up with a reduced majority, or even just a marginally higher majority, then she’ll have the Tory attack dogs at her heels in no time.

The big news in geo politics was Macron winning the French Presidential election. Markets had mostly priced this in, but the Euro climbed slightly and the Eurozone equity markets rose over 2% too.  Over two months a Brit investing GBP in Eurozone equities has returned almost 10%, including currency movements.

In the meantime, with Labour’s goalkeeper being almost absent from the pitch, Theresa ‘week and wobbly’ May has suddenly looked like she could even miss an open goal. Markets have marked the pound down.  For FTSE-100 this has been a bonus, as it has heavy exposure to the Eurozone, so FTSE-100 is up 4.4% on the month, reaching record highs.

In other news Australian equities continued their slide. And Fixed Income had a slow and steady month – as it often does.

The markets, weighted according to my target exposure, rose around 2.7% in their local currencies. And the currencies, again weighted to suit my target, generally rose against the pound too – by 1% on average.  So my market benchmark was up about 3.7% in total, measured in GBP.

Against that, how did I actually do?  My investment portfolio gained about 2.2%.  This lagged the market by over a point; largely, I believe because I didn’t capture much of the FTSE-100 4.4% increase.  But I can’t complain about over 2% up in a month.

My one year returns are over 25%.  A lot of this will drop out soon because the Brexit referendum provided, with the drop in the pound, such a large one-off spike in the value of my non-UK holdings.  But with Trump / Macron / May for different reasons all providing me with a tail wind, I’m not complaining.

I haven’t got a lot else to report for May, the month.

My portfolio loan held steady, despite a fair bit of effort trying to find Sell opportunities in the leveraged portfolio. With the portfolio gaining in price, my Loan to Value has dropped to its lowest level since I took it out, but I still have further to go.

I still haven’t completely deployed my 2017/18 ISA allowance but with markets at record highs I’m happy to keep a bit of cash on the sidelines for the moment.   In June I am hoping to find ways to move more funds into Mrs FvL’s portfolio, make a dent in the portfolio loan and maybe even find an opportunity to nibble away at my equities exposure.