Pensions Archives - HBFS


Can we save you money … ?

Posted by | Investments, Mortgages, Pensions, Retiring | No Comments

Can we save you money on your current life assurance?

Can we help with your investments?

Can we help you plan for your retirement?

Can we help you set up a regular savings plan?
Without Doubt.

Can we help get you a competitive mortgage?

Please call us if you have an existing policy or would like to discuss life or critical illness cover for yourself, your family, your business or to cover a loan or mortgage.

t: 01534 754444


Solar Eclipse Don’t Get Left In The Dark

Posted by | Investments, Pensions, Review | No Comments

This Friday will see a solar eclipse visible in many parts of the UK and Western Europe. Although scientifically interesting there is another side to the story – don’t get left in the dark. Book a financial review with HBFS to get a clearer picture of your finances.

Enjoy the eclipse this Friday!

Below is an extract from an interesting article by Jamil Hussein, Digital News Editor of The Weather Network.

Solar eclipses have been observed throughout history. And they were often seen as omens, both good and bad, for many cultures and civilisations. Ancient folk believed the Sun was being devoured by various monsters – demons in India, Dragons in China, frogs in Vietnam or even a vampire in Siberia! Here we look at some of those myths, legends and stories.


Eclipses were believed to be a bad omen for kings. Babylonians put “stand-in” kings during solar eclipses so the real kings would avoid the bad luck. In the UK, the eclipse in 1133 AD was known as King Henry’s Eclipse. Henry I died shortly after the eclipse reaffirming the belief amongst many people that it was a bad sign for rulers. In ancient China eclipses were bad news for emperors, therefore predicting when they occurred was of high importance. So when two Chinese astrologers failed to predict the solar eclipse on 22 October 2134 BC the very predictable happened – they got their heads chopped off. It was one of the earliest eclipses recorded in history.


Gospels say the skies darkened during Jesus’ crucifixion and Christian historians saw it as a miracle and a sign of dark times to come. Historians are unsure which eclipse it refers to – either 29 AD or 33 AD. In Hindu mythology, it was believed the serpent demons Rahu and Ketu caused eclipses by swallowing the sun. They were thought to suck away the light that gives life and poison the waters. The eclipse of 27 January 632 AD coincided with the death of Prophet Muhammad’s son Ibrahim. Islamic scholars say people started to speculate that it was a Godly miracle to mark the death but Muhammad clarified that eclipses were not omens that signal the birth or death of anyone.

Modern superstitions

Solar eclipse superstitions are still prominent in many cultures. A popular one is that it is dangerous to pregnant women or will result in babies being born deformed. Pregnant women are advised not to watch, stay indoors or even touch their bellies during an eclipse. Abstaining from food and drink is another superstition that holds traction in certain quarters. People fast during eclipses while others fear food could become poisonous.

In some Asian countries people still greet eclipses with a throng of noise. Banging of pots and pans or lighting firework is common practice to scare evil spirits away.

And the moral of the story – don’t be in the dark, book a financial review with HBFS – contact us NOW

Fireworks 20


Posted by | Investments, Pensions | No Comments

Fixed Interest has a place in every portfolio, but like many we have concerns with the sector that has done so well since 2009. All it will take is a sudden interest rate hike in the USA to start the rolling thunder of fixed income prices falling.
Saying that, within our portfolios we have some excellent active managers who are preparing for these eventualities, so please do not worry unduly.
There should be some good returns from equities this year, but we believe a need to be careful and take profit when we can and reduce overall risk in case the world markets run into further problems.

Download our newsletter to read more



Posted by | Investments, Pensions | No Comments

A further rough year for commodities, with many a negative figure for year end. However, during the year we did see at times pleasant rebounds from which we were able to secure some profit and also during reviews we looked to buy the discounted value of these funds.
In some ways rather than discounted value the commodities sector looks like it is flat on its face.

The oil price has had a rather shocking and drastic cut, although strangely pump prices (retail petrol and diesel) have reduced they certainly have not halved in cost?
The price has fallen from its height in June of $115 per barrel to less than half and at the time I am writing this even further to less than $50 per barrel. This in turn is wreaking havoc on oil producing countries such as Russia and Venezuela.

For much of this decade oil prices have been high, bouncing around the $100 per barrel since 2010, due to soaring oil consumption in countries such as China and conflicts in oil nations such as Iraq. Oil production just couldn’t keep up with demand.
The higher price per barrel spurred many companies to start drilling for new, hard and expensive to extract crude in shale (horizontal drilling) and fracking. At the same time demand for oil particularly in Asia was tapering off due to economy slowdown across the globe. On top of that countries like Iraq started producing more oil!
Towards the end of 2014 world oil supply was on track to rise higher than demand. As the price started to fall investors watched to see if OPEC (the world’s largest oil cartel) would cut back on its production to prop up prices (many OPEC states need high oil prices to balance their budgets). However, OPEC did nothing at its meeting in November.
So now the oil price crash is affecting the global economy, with ramifications for every country in the world. Great news for oil consumers in Japan and USA, but a differing story for nations reliant on oil sales, like Russia and Venezuela.
Will the oil price rise?
Yes, but when? There are many variables here, demand, production and conflict! I could provide more detail but I think you get the picture. It will happen and I think if you have a reasonable medium term time horizon buying now will reap rewards later. So once again notwithstanding losses I believe this is a buy sector.
As political and financial issues turn up the heat, Nick Price discusses the strategy for the Fidelity Emerging Markets fund.

Download our newsletter to read more


Fourth Quarter 2014

Posted by | Investments, Pensions | No Comments

Well the final 3 months of the year proved to be very trying times indeed, causing a few sleepless nights, the FTSE 100 was bouncing around like nobody’s business, with huge drops one day and dramatic climbs back up a day or two later. Immediately we launched into this third quarter the FTSE 100 went into a downward spiral, dropping -5.51% in the first 16 days, rising +5.66% by the end of October. November, thankfully was somewhat flatter and calmer rising steadily by 1.68%. December however, started off aggressively falling by -7.12% by the 15th December, regaining +6.2% before year end.

What did World Markets do in 2014?


A mixed bag as you can see above, the real surprise, Japan! This positive return was only copied by a very few of the sectors fund managers.
With regard to India, this huge return was mainly due to the election of the new Prime Minister Narendra Modi. You may remember we commented on the potential for super returns in our post early May. These returns came through for our investors in this volatile region.
After many years of steering clear of the USA our choice of a few years ago to reinvest in the USA really paid off, with investors reaping the benefits.
Thankfully the UK equity funds that we were positioned in for 2014 fared very well and produced solid positive returns, busting the argument for passive index trackers and ETFS. So we were delighted with this result.
Latin America, however, became our thorn in the side, with continuing negative returns, I did read an excellent article to look at Latin America as a contrarian view and invest. I’m afraid that at this point I am not totally convinced.

Download our newsletter to read more

Manage the Headlines

Manage the headlines

Posted by | Investments, Pensions, Retiring | No Comments

The temptation for many when confronted by negative sentiment is simply to exit the market. Recent events in Russia highlight how swiftly an indiscriminate sell-off can take place. However, acting on sentiment would be doing our clients a disservice. Every position we hold in our portfolios is there for a reason and is subjected to ongoing reassessment. Unless macroeconomic or political shocks severely impact the long-term operating environment of a company, we will stay true to the conviction that made us invest in the company in the first place.

So continuing with Russia as an example, we have held a residual overweight position for a long time in the Fidelity Emerging Markets Fund. The country is renowned for a plethora of cheap companies, but many of them are cheap for a reason – there are political and corporate governance risks that you assume when investing in Russia. Most of our Russian holdings are supported by a very attractive dividend yield which delivers a significant proportion of our total shareholder return to us in cold, hard cash. Indeed, compelling dividend yields, coupled with recent valuation compression, can provide a sound footing for generating future shareholder returns.


Stashing Your Cash: Mattress Or Market?

Posted by | Economics, Investments, Pensions | No Comments

When stock markets become volatile, investors get nervous. In many cases, this prompts them to take money out of the market and keep it in cash. Cash can be seen, felt and spent at will, and having money on hand makes many people feel more secure. But how safe is it really? Read on to find out whether your money is safer in the market or under your mattress.

All Hail Cash?
There are definitely some benefits to holding cash. When the stock market is in free fall, holding cash helps you avoid further losses. Even if the stock market doesn’t fall on a particular day, there is always the potential that it could have fallen. This possibility is known as systematic risk, and it can be completely avoided by holding cash. Cash is also psychologically soothing. During troubled times, you can see and touch cash. Unlike the rapidly dwindling balance in your brokerage account, cash will still be in your pocket or in your bank account in the morning.
However, while moving to cash might feel good mentally and help you avoid short-term stock market volatility, it is unlikely to be a wise move over the long term.

A Loss Is Not a Loss
When your money is in the stock market and the market is down, you may feel like you’ve lost money, but you really haven’t. At this point, it’s a paper loss. A turnaround in the market can put you right back to breakeven and maybe even put a profit in your pocket. If you sell your holdings and move to cash, you lock in your losses. They go from being paper losses to being real losses with no hope of recovery. While paper losses don’t feel good, long-term investors accept that the stock market rises and falls. Maintaining your positions when the market is down is the only way that your portfolio will have a chance to benefit when the market rebounds.

Inflation is a Cash Killer
While having cash in your hand seems like a great way to stem your losses, cash is no defense against inflation. You think your money is safe when it’s in cash, but over time, its value erodes. Inflation is less dramatic than a crash, but in some cases it can be more devastating to your portfolio in the long term.

Opportunity Costs Add Up
Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, opportunity cost refers to the benefits you could have received by taking an alternative action. In the case of cash, taking your money out of the stock market requires that you compare the growth of your cash portfolio, which will be negative over the long term as inflation erodes your purchasing power, against the potential gains in the stock market. Historically, the stock market has been the better bet.

Time Is Money
When you sell your stocks and put your money in cash, odds are that you will eventually reinvest in the stock market. The question then becomes, “when should you make this move?” Trying to choose the right time to get in or out of the stock market is referred to as market timing. If you were unable to successfully predict the market’s peak and sell, it is highly unlikely that you’ll be any better at predicting its bottom and buying in just before it rises.

Common Sense is King
Common sense may be the best argument against moving to cash, and selling your stocks after the market tanks means that you bought high and are selling low. That would be the exact opposite of a good investing strategy. While your instincts may be telling you to save what you have left, your instincts are in direct opposition with the most basic tenet of investing. The time to sell was back when your investments were in the black – not when you are deep in the red.

Buy and Hold on Tight
You were happy to buy when the price was high because you expected it to go higher. Now that it is low, you expect it to fall forever. Look at the markets over time. They have historically gone up. Companies are in business to make money. They have a vested interest in profitability. Investing in equities should be a long-term endeavor, and the long term favors those who stay invested.

Nerve Wracking, but Necessary
Serious investors understand that the markets are no place for the faint of heart. Of course, with private pension plans disappearing and the future of Social Security in question, many of us have no other choice.

The Bottom Line
Once you’ve faced the facts, you need to have a plan. Figure out how much money you need to amass to meet your future needs, and develop a plan to help your portfolio get there. Find an asset allocation strategy that meets your needs. Monitor your investments. Rebalance your portfolio to correspond with market conditions, making sure to maintain your desired mix of investments. Once you reach your goal, move your assets out of equities and into less volatile investments. While the process can be nerve-wracking, approaching it strategically can help you keep your savings plan on track, despite market volatility.

Lisa Smith


Managing risk to enhance returns

Posted by | Investments, Pensions | No Comments

Protection strategies are an important source of risk-adjusted return for multi asset portfolios. Like mountain biking, the end result is a function of the conditions you need to manage en route to the finish line.

Mountain biking is a thrilling, but risky sport. It takes in steep climbs and more perilous descents, generally taken at speed while negotiating various obstacles along the way. Yet a growing number of people overlook or even embrace these risks to participate in the sport. Clearly it is not the prospect of bodily damage that pulls them in, but rather the lifestyle aspects, the competitive nature of the races and the sheer thrill of participation.

One can draw many parallels with managing multi asset portfolios. It requires a clear focus on managing risk. Riders ensure that they have a good understanding of what lies ahead of them, to the extent of walking tracks where practical to assess how best to approach it. Even trails which are well known require continuous evaluation and reassessment. Nothing can be taken for granted if you are to limit the chance of any nasty surprises.

The right equipment is important. Bikes have heavy treads designed to provide more grip; over-sized brakes to provide more efficient braking in wet or muddy conditions; and front and rear suspension that allows the bike to adjust and absorb uneven ground.

Like mountain biking, investing is about positioning yourself and adapting for the terrain in front, knowing you have protected yourself as best you can. It is not all about how talented or skilful you may be, it is as much about being prepared in case something goes wrong. No one layer of protection can save you, but all of them working together can make a significant difference to the condition in which you finish the race.

It is about preparing for the unexpected, with a ‘just in case’ mindset.
Similarly, our active investment approach, in adding various layers of protection to our multi asset portfolios, aims to provide a level of comfort that is designed to result in bumps and bruises rather than something far more serious. Risk management is a necessity, not a luxury. For that reason, managers of our multi asset portfolios are as much risk managers as they are portfolio managers.

Following the traumatic events of 2008, risk and its management have become the most visible subjects for asset owners. The global financial crisis of 2007-08 was remarkably severe, not only in the magnitude of drawdowns suffered by individual asset classes, but also the drawdowns experienced by portfolios thought to be well diversified. As part of the management of risk, hedging has taken centre stage.

Protecting portfolios involves a multi-layered approach. A multi asset manager’s first line of defence is asset allocation, then diversification, and once efficient, various levels of protection may be added.

Asset Allocation

The conventional manner of protecting portfolios is the use of “traditional” asset allocation techniques, and to complement it with hedges in a variety of markets.

As multi asset managers, our methodology for applying protection in our portfolios is three-fold:

simply reduce the risk in asset allocation (an extreme measure would be to move to an all cash portfolio);
create diversification via instruments negatively correlated to existing portfolio positions (it is not always easy to find true diversifiers);
complement dynamic asset allocation with several protection techniques (both direct and indirect across all asset classes).

The investment manager’s first tool to curb tail risk is typically to diversify among asset classes with low correlation. However, simply diversifying global equity with fixed income, for example, does not always do enough to limit downside risk. A portfolio with a traditional 60% equity, 40% fixed income allocation may derive over 90% of the entire portfolio risk from the equity component alone.

A further limitation to the diversification approach is that asset class return correlations tend to rise in times of crisis, which underscores the challenges when using diversification as your only protection tool. Finding truly uncorrelated asset returns is difficult, and many non-equity asset classes are positively correlated to equities. Furthermore, correlations rise just when they are needed most and your multi asset portfolio could end up behaving like a single asset.

Hedging Risk

Typically, it is only when markets experience large losses that hedging comes back into fashion, leading to a surge in demand for derivative strategies that drives up volatilities across all asset classes. This, in turn, can reduce the overall effectiveness of protection techniques, emphasising again that proactive consideration and allocation to risk strategies needs to occur on an ongoing basis.

The goal of protection techniques should be to support the portfolio when asset prices fall or rise unexpectedly and should not compromise or undermine the goals of the portfolio. Behavioural economics suggests that investors will overweight the probability of rare events, for example equities falling an extreme 30% in one month, and underweight the probability of more likely or common events such as equities falling 5% or 10% in any given year. Bearing this in mind, multi asset portfolios need to consider forms of ‘just in case’ protection to help enhance risk adjusted returns.

Traditional diversification strategies may help weather a normal bear market, but protection for risk management purposes could help prepare for other situations; not just to mitigate their effects but ultimately to benefit from them.

Not only can protection mitigate losses in a significant downturn, but appreciating value in the protection portfolio has the potential to provide greater liquidity in the portfolio that may allow the portfolio manager to be a buyer when others are forced sellers.

Hedging strategies further add value by allowing for a more aggressive portfolio, tilted towards more attractive risks, since steps have been taken to help cushion the downside exposure.

Even though the ‘crisis’ is now over five years old, memories of risk-management mistakes are fresh in investors’ minds. Quiet markets, low volatility and a lack of visible risks on the horizon can lead to complacency and increasingly overweight positions in riskier assets. In doing so, these conditions could set the stage for the next cycle of deleveraging and potential losses in portfolios. With market volatility currently at historically low levels, this is a key area of focus within our investment process.

Andrew Wolfson
Multi Asset Solutions Specialist, Ashburton Investments

HBFS Financial Advisers

Holding Cash Can Seriously Damage Your Wealth

Posted by | Investments, Pensions | No Comments

Detrimental Effects of Inflation 

If one was in any doubt as to the detrimental effects of inflation, click on the following web link and activate the inflation calculator.

It is frightening to see how quickly inflation reduces the purchasing power of money, even when set at a relatively low rate…

Click on the image or the Inflation Calculator to see how dramatic the effect can be.

Savers have little choice but to invest their ‘rainy day’ cash into something that at the very least will have a realistic chance of preserving future purchasing power.

We have a number of tailored investment solutions to suit all investors and as well as being cost effective and tax efficient are purposefully designed to manage investment volatility within defined risk parameters.

Call us to find out ‘how best to invest’ and keep inflation at bay…

More news and posts on our HBFS Facebook Page

Chinese Year of the Horse

Posted by | Investments, Pensions | No Comments

Chinese Year of the Horse

It’s the Chinese Year of the Horse and we believe this will be a relatively short term pain for the longer term gain and the office general consensus is more positives to come, equities making money, buy discounts. At HBFS Limited we have something to offer everyone from cautious to bullish investors, come and talk to us.