The SFO are investigating the Bank of England, says David Cowell of Myddleton Croft Investment Managers. Who in the banking world can one trust? Perhaps politicians should take over the banking sector? Er, wait a minute….


Hot news from Reuters – Residents of Habankingmburg’s St. Pauli’s nightclub district are getting their own back on late-night revellers who urinate on public buildings, with a new high-tech paint that sends the spray bouncing right back at them. Putting up signs that say: “Hier nicht pinkeln! Wir pinkeln zurueck” (Do not pee here! We pee back!).



myddleton croft

Old Mutual Wealth chief executive Paul Feeney said: ‘During 2014 we made great progress in aligning our business to what we believe customers need to help them secure their financial future.  Increasingly I believe advisers and their clients will be looking to source those elements in one place, via companies that can offer an integrated proposition efficiently and cost effectively.  That is what we are aiming to achieve and we will continue to work with advisers to build new products and services that they and their clients need.’


So advisers are likely to put themselves out of a job are they? Doubt it. Being as ancient as I am, I have seen this rotation at least three times and reinventing the wheel usually ends in failure.


It’s obvious why most players use 5 years as the ‘long term’ performance. We haven’t had a major upset since 2009 which would make a goodly number look decidedly less than average. As most bull markets last between 5 and 8 years, perhaps one ought to be looking for something for clients which has the capability to defend. Something sadly lacking in England’s batsmen. We started our ‘Balanced Moderate’ model just over 7 years ago and the chart below shows how we minimised drawdown in the bad times and outperformed in the good:


MC chart March 2015


‘ECB will reduce interest for cash deposits to minus 3% and the dollar [will] appreciate by 20%, reaching parity with euro in 2015′. So says JP Morgan. Bring it on, says me. We have been positioned for this for a while and portfolios have already benefited.



ECB President Mario Draghi said asset purchases amounting to 60 billion euros ($66 billion) a month would start next week as the central bank institutes quantitative easing to choke off deflation. The ECB also raised its outlook for growth in 2016. National central banks will focus exclusively on buying on their domestic bond market – a move aimed at calming the concerns of Germans worried that pooling risks could leave them to foot the bill for any losses.

Another concern is whether the ECB will find enough bonds to buy. The market is flush with uninvested cash while banks are under obligation to hold top-tier assets, mainly government debt. “There may be complexities. We think they are not relevant,” Draghi said, noting that more than half of euro zone sovereign bonds were held outside the currency area. Sorry? I must be too simple to follow his complex logic.


China’s Fosun International has bought a 5 percent stake in Thomas Cook Group. Presumably one of its attractions is that the title doesn’t contain either and ‘L’ or an ‘R’.

We understand that the FCA is currently having a thematic review on adviser platform due diligence. That should be very interesting, especially to see how many are still demanding ‘pay-to-play’. We update our very comprehensive due diligence document annually and post it on the website so you can view it at any time and present the evidence to FCA:

The Morningstar co-head of investment consulting and portfolio management says that using volatility as a risk measure is “stalked by trouble due to its changeable nature.” “Volatility is not a stable measure, it’s cyclical. So at any time your portfolio will undershoot or overshoot the target. The problem with volatility is that it doesn’t fully take into account the total risk.” A severe market shock is likely to create potential losses well beyond what the volatility immediately preceding it would imply, he explains, stating that when advisers are building portfolios and selecting funds they need to look beyond standard volatility measures. I have never been able to work out why the asset allocation recommended by one widely-used piece of software merely increases the allocation to emerging market equities as the risk number increases. Perhaps someone will explain?


The Government’s cuts to regulation since 2010 have led to savings to businesses worth £2.2 billion a year, according to the regulatory policy committee (RPC) quoted in the Times. However, the RPC has also calculated that new EU rules have imposed £2.3 billion in net costs to businesses since 2013. I wonder if the figures include financial regulation?

This missive will be the last for a month. I became a grandfather once more about two months ago, but the snag is that my new granddaughter resides in Melbourne, Australia. Oddly enough, so do her parents. On the way we will be dropping off in Dubai to pick up the frankincense and myrrh. We thought that there should be enough gold already there. I know that babies can look a bit – you know – odd, but this one has a distinct look of Barry Humphries. No, seriously, she looks a little beaut.

(Congratulations, David! Have a great trip down under. And may you find a Coolibar under every tree. Editor.)

Many a true word is spoken in ignorance. Being inside the head of the marker of the religious education exam paper who read this answer would have been interesting:

Christians have only one spouse. This is called monotony.


Have a good month and Easter. If the budget’s bad I’ll be staying in Oz.


David Cowell


For and on behalf of Myddleton Croft Investment Managers

1 Woodside Mews

Clayton Wood Close


LS16 6QE

Tel:        0113 274 7700

Fax:       0113 274 7711

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