Investments

Welcome to this month’s edition of Specialised Investments Simplified, designed to provide financial advisers with the latest insights and actionable updates on key investment topics. This edition covers developments in inheritance tax (IHT), Venture Capital Trusts (VCTs), Enterprise Investment Schemes (EIS), emerging markets, and the strategic role of gold for 2025.

IHT Receipts Soar to £6.3 Billion – A Record Year Ahead

With IHT receipts hitting £6.3 billion, the Treasury is set for a record-breaking year. The frozen nil-rate band and rising property values continue to leave clients exposed to increasing IHT liabilities. Additionally, the industry warns that IHT on pensions could create “significant problems” for clients who have relied on these assets as part of their estate planning strategy. Now, more than ever, robust estate planning advice is essential to help clients mitigate their exposure.

Explore the IHT trends further here.

VCTs: Beyond Size and Age

As Venture Capital Trusts celebrate their 30th anniversary, their relevance remains strong. While the size and age of a VCT often influence client confidence, advisers should note that success increasingly depends on the expertise of the management team, the quality of deal flow, and portfolio diversification. With tax-efficient opportunities still in demand, VCTs offer a compelling solution for clients seeking growth-focused investments.

Learn more about what makes VCTs successful.

Review 30 years of VCT progress.

Is EIS the Right Fit for Your Clients in 2025?

Enterprise Investment Schemes (EIS) continue to provide tax-efficient growth opportunities, particularly for clients willing to embrace higher-risk investments. With Income Tax relief, CGT deferral, and potential Inheritance Tax benefits, EIS may present a timely solution for clients seeking diversification while optimizing their tax position.

Read why EIS could be a strong addition to client portfolios.

Navigating Emerging Market Volatility Driven by US Policy

Global Emerging Markets (GEMS) remain under pressure due to U.S. policy-driven volatility. Shifts in monetary policy, geopolitical tensions, and trade dynamics are creating challenges—but also opportunities. Advisers should carefully evaluate how these trends could impact client portfolios and whether exposure to GEMS remains aligned with their risk appetite.

Dive deeper into the implications of US-driven volatility on GEMS.

Gold in 2025: A Strategic Anchor for Portfolios

Gold remains a strategic asset in uncertain times, offering diversification and a hedge against volatility. The World Gold Council’s 2025 outlook emphasizes gold’s continued relevance for client portfolios, particularly given macroeconomic uncertainty and shifting market dynamics. For advisers, gold can provide an effective way to mitigate risk while enhancing portfolio resilience.

Explore the latest research on gold’s role in 2025 portfolios.

Supporting Your Clients in 2025

The evolving investment landscape presents both challenges and opportunities. As advisers, ensuring clients are informed and well-positioned to navigate these developments will be key to delivering value. Whether it’s addressing IHT exposure, exploring VCTs or EIS, or rebalancing portfolios with gold and emerging markets, staying proactive will set you apart.

We’d love to hear your thoughts or questions—join the conversation on our LinkedIn page.

How Can We Complement?

Welcome to this month’s Esoteric Products newsletter. December is proving to be an eventful time for financial and investment markets, with a host of new developments that could significantly affect wealth management strategies. From inheritance tax (IHT) implications to the evolving dynamics of venture capital and crypto, here are some of the most noteworthy updates.

UK’s Wealthiest Face Record IHT Bills Amid Policy Shifts

Recent changes in the UK Budget have brought inheritance tax (IHT) into sharper focus, with estimates suggesting that the country’s wealthiest could face bills exceeding £9 million. These changes primarily affect pension savers and farmers, among others, by tightening reliefs and exemptions. For those navigating estate planning, it is critical to evaluate strategies that reduce IHT exposure, particularly as we approach the implementation of new rules in April 2027. Read more here.

The latest adjustments highlight the importance of long-term planning. Tools like trusts, life insurance options, and charitable giving can help lessen tax liabilities. As we’ll explore below, new products and strategies are emerging to address these challenges.

Royal London’s Second Life Cover: A New IHT Planning Tool

Royal London has introduced a second life insurance option aimed at helping families tackle inheritance tax obligations. This innovative solution ensures a payout occurs only after the second policyholder’s death, offering a cost-effective way to manage substantial IHT liabilities. Explore more details here.

This product reflects a broader trend towards personalised financial solutions that cater to complex family dynamics and significant estates. Financial advisers should consider this as a key recommendation for clients with large assets who wish to protect their wealth for future generations.

Venture Capital Trusts: Unlocking Portfolio Potential

Venture Capital Trusts (VCTs) continue to stand out as a dynamic investment vehicle, offering significant tax benefits and the potential for high returns. Recent analysis highlights their growing appeal, particularly as traditional investment avenues face increased scrutiny. Learn more about VCTs here.

By investing in smaller, high-growth companies, VCTs allow investors to diversify portfolios while benefiting from tax reliefs. However, these vehicles are not without risks, including the inherent volatility of early-stage companies. For experienced investors looking to complement their portfolios, VCTs represent a compelling, albeit specialised, opportunity.

The Role of Active ETFs in Modern Portfolios

Active Exchange-Traded Funds (ETFs) are gaining traction, blending the low-cost benefits of traditional ETFs with active fund management’s potential for outperformance. Unlike passive ETFs, which track indices, active ETFs enable fund managers to pivot based on market conditions and emerging opportunities. Discover how active ETFs work.

Recent developments, such as Pictet Wealth Management’s decision to shift ETF coverage to active fund analysts, illustrate the growing interest in this space. As the investment landscape becomes increasingly complex, active ETFs offer a flexible and strategic approach for those seeking both growth and stability.

Budget Impacts on AIM Shares: What Investors Should Know

The UK Budget has also introduced changes affecting AIM (Alternative Investment Market) shares, a popular option for growth-focused investors. While AIM shares offer certain IHT reliefs and opportunities for high returns, the recent policy adjustments may alter their attractiveness. Read the full analysis here.

Investors should review their exposure to AIM shares, balancing the potential for tax-efficient growth against the risks associated with smaller, less liquid companies. Diversification and a clear understanding of the new rules will be critical for maintaining robust portfolios.

Gold ETF Flows: November 2024 Trends

Gold continues to shine as a haven amid market volatility, with November data revealing net inflows into gold ETFs. This trend reflects investors’ growing preference for stable assets during uncertain times, particularly as central banks adjust monetary policies globally. Check out the latest gold ETF data.

Gold ETFs offer an accessible way to gain exposure to this precious metal without the challenges of physical ownership. For those seeking to hedge against inflation or diversify their portfolios, gold remains an essential component.

Deregulation and Crypto: Big Changes at the SEC

The cryptocurrency landscape is poised for transformation as the US Securities and Exchange Commission (SEC) embraces deregulation and innovation. These changes aim to foster growth within the crypto industry, signalling a shift in how digital assets are governed. Find out what’s changing at the SEC.

For investors, this opens up new opportunities but also demands vigilance. The regulatory environment will play a crucial role in shaping the future of crypto investments, making it essential to stay informed and adaptable.

The Case for CLO Equity in Diversified Portfolios

Collateralised Loan Obligation (CLO) equity is gaining attention as a valuable complement to private equity investments. Offering attractive yields and a different risk profile, CLO equity provides a unique avenue for diversification. Learn more about the benefits of CLO equity.

This asset class is particularly appealing to experienced investors seeking to balance the high growth potential of private equity with the steady income streams associated with debt instruments. As with any complex investment, professional advice is recommended to navigate this space effectively.

As 2024 draws to a close, the financial landscape is marked by rapid changes and emerging opportunities. Whether it’s adapting to new IHT rules, exploring innovative investment vehicles like active ETFs and VCTs, or staying ahead of shifts in the crypto market, now is the time to reassess strategies and align portfolios with future goals.

We encourage our readers to reach out for personalised guidance tailored to their clients unique financial circumstances. Here’s to navigating 2025 with clarity, confidence, and success!

This week’s blog reflects on some of the key developments in the financial services and investment world, drawing insights from major recent events. From the PFS National Conference in Manchester to the impact of the US election and the resilience of the Magnificent Seven stocks, the focus is on understanding trends and their implications for advisers and investors alike. Written by Paul Kenworthy, this post highlights both technological advancements and market dynamics shaping our industry.

Timeline and Platform 3.0

On 12th November 2024, Amy North Nicola Porter, and I attended the Personal Finance Society National Conference in Manchester. This event brought together industry professionals, providers, and innovators to share insights and shape the future of financial services. Among the standout speakers was Abraham Okusanya, Founder and CEO of Timeline, whose insightful session focused on “Maximising Client Success: Building a Future-Ready Tech Stack for Financial Advisers.”

Using efficient and integrated technological solutions not only enhances operational efficiency for advisers but also significantly improves the overall client experience. The ultimate goal, he emphasised, is to achieve better client outcomes through streamlined, innovative systems.

A key highlight of his presentation was the discussion around Timeline‘s new Platform 3.0. This innovative system is designed to work seamlessly with Timeline’s existing suite of tools, including letters of authority, fact-finding, cash flow modeling, and fund analysis. Abraham described how Platform 3.0 represents a state-of-the-art approach to managing the entire advice process, ensuring that advisers can deliver a more efficient and effective service to their clients.

US Election

As regular readers of this blog will know, we have been following the US election closely over the last few months to see how the outcome might affect the markets.

Donald Trump was elected the 47th President of the United States, securing a majority of 312 electoral votes compared to Kamala Harris’s 226.

It appears that President Trump’s victory will bring positive news for stocks and shares, while government bonds are expected to fall (at least in the short term).

In their latest market update, M&G Wealth made the following predictions:

• Stocks: US equities are likely to perform well over the long term, due to potential reductions in corporation tax.
• Government Bonds: These are expected to perform poorly in the short term because of higher levels of unfunded borrowing by the new government, which will push up bond yields and reduce prices.
• The US Dollar: The dollar is expected to strengthen against other currencies, which could lead to reduced performance for emerging market stocks and bonds. However, it might improve the performance of US stocks for UK investors due to sterling-dollar movements.

Summing up their views, M&G Wealth stated the following:

“We think the outlook for government bonds is negative with Trump in the White House. Trump will continue to borrow, and the debt trajectory will worsen compared to Vice President Kamala Harris’s policies. If Congress is divided, spending plans may be more limited.

While elections and policy matter, the economy and business cycle are more important to market performance in the long run. With the election concluded, we expect attention to return to assessing the outlook for company profits, the global economy, and inflation.”

Source: M&G Wealth

Magnificent Seven

The Magnificent Seven stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) experienced a fall of around 17% in August due to concerns about the sustainability of their spending on AI. This led to a significant sell-off.

However, these stocks have quickly recovered and are once again achieving positive performance.

In his recent market update, Guy Monson from Sarasin & Partners stated: “An index of MAG7 stocks tumbled 17% from its peak in August, following an impressive 37% gain earlier in the year, while US equity volatility nearly quadrupled.

Yet, just six weeks later, these same stocks had clawed back roughly three-quarters of their losses, and volatility had eased. The rebound was driven by the realisation that, despite their towering valuations – MAG7 stocks now account for 28% of the S&P 500’s capitalisation – these companies deliver profits, cash flow, and R&D spending in nearly equal measure. Unlike the dot-com bubble of 1999-2002, today’s AI-linked stocks are underpinned by robust earnings and extraordinary cash flow.”

Source: Sarasin & Partners

It appears that the Magnificent Seven will continue to dominate the markets for years to come. We will keep a close eye on these developments and provide regular updates.

As we look back on a week filled with valuable insights and market-shifting events, it’s clear that innovation and adaptability remain critical for success in financial services. Whether through embracing cutting-edge technology like Timeline’s Platform 3.0 or navigating the ever-changing global markets, staying informed and proactive is key. We’ll continue to monitor these developments and bring you regular updates to support informed decision-making in this fast-evolving landscape.

Welcome to this month’s edition of Specialised Investments Simplified! This November, we’re diving into the evolving landscape of specialised investments, with insights on ESG-linked innovations, disruptive ETFs, collateralised loan obligations (CLOs), and the persistent dangers of crypto fraud.

The Rise of ESG-Linked Investments

Environmental, Social, and Governance (ESG) investments have become a cornerstone of sustainable financial strategies. A standout example is Société Générale Private Banking’s Cristal Solidaritéstructured product, a 10-year initiative integrating social and environmental impact into returns. By allocating a portion of investment gains to philanthropic causes, it demonstrates how structured products can align profitability with purpose.

In private equity, ESG-linked subscription lines are transforming financing approaches. These innovative loans align funding structures with measurable sustainability KPIs. For example, Bridgepoint Credit rewards diversity in management teams and incentivises renewable energy transitions.

However, navigating ESG investment products comes with its challenges. Financial advisers must contend with varying global standards, ever-changing regulations, and the need for adaptable KPIs. Tools such as Bridgepoint’s ESG framework and third-party certifications are becoming essential in ensuring credibility.

💡 Advisory Opportunity: Looking to include ESG investments in your advisory services? We Complement provides guidance and resources to integrate sustainable solutions into your practice effectively.

Crypto Fraud: A Sobering Reminder

Innovation in the financial sector often comes with risks, as illustrated by a recent UK case involving a £1.5 million crypto fraud. Using professional websites and cold calls, two fraudsters duped over 65 victims with promises of high returns.

The Financial Conduct Authority (FCA) has been at the forefront of combating such scams through initiatives like ScamSmart, which offers tools for identifying fraudulent schemes. Steve Smart of the FCA advises:

“If you’re contacted out of the blue about an investment opportunity that sounds too good to be true, then it probably is. If in doubt, don’t invest.”

For financial advisers, staying informed about emerging scams and educating clients is crucial. Building awareness around resources like ScamSmart can help protect your clients from becoming victims.

💡 Protecting Your Clients: Enhance your fraud prevention strategies with expert support from We Complement. Let us help you build trust and security in your advisory services.

ETFs Disrupting Structured Products

Exchange Traded Funds (ETFs) have redefined traditional investment strategies and are now challenging the dominance of structured products. Buffered ETFs, which provide downside protection, and covered-call ETFs, which offer income generation, are prime examples of this innovation.

Matteo Andreetto of State Street Global Advisors predicts a future where structured product benefits, such as capital protection, will be fully integrated into ETFs. These products promise not only cost efficiency but also enhanced transparency, making them attractive alternatives for wealth managers and financial advisers.

With structured product issuance reaching $80 billion annually in the US and Europe, the emergence of bespoke ETFs is a sign of adaptability in the financial sector. These tailored solutions offer financial advisers a way to meet client-specific needs more effectively.

🔗 Discover the future of ETFs

State Street Global Advisors gears up for new ETF disruption

💡 How We Can Help: Explore ETF trends with We Complement, and learn how to incorporate these solutions into your client portfolios.

Collateralised Loan Obligations: Liquidity Meets Complexity

Collateralised Loan Obligations (CLOs) are gaining traction in Europe, marked by the debut of the Fair Oaks AAA CLO ETF. While CLOs have a strong foothold in the US, where they attracted $8.3 billion in inflows during the first half of 2024, their complexity has historically limited their reach in Europe.

CLOs pool corporate loans into tranches, offering varying levels of risk and return. Despite perceptions of complexity, AAA-rated CLO tranches boast an unblemished record, with no defaults since their inception in 1997.

The ETF structure makes CLOs more accessible to financial advisers and institutional clients by offering liquidity, transparency, and lower minimum investment requirements.

🔗 Learn more about CLO ETFs

Europe’s first collateralised loan ETF listing overcomes concerns

💡 Empower Your Practice: Interested in introducing CLOs to your offerings? Let We Complement guide you through the nuances of these sophisticated asset classes.

Digital Assets in Structured Products

The digital finance revolution continues to expand, with Hong Kong’s Victory Securities receiving approval to market virtual asset-linked structured products. As the first broker licensed by the Securities and Futures Commission (SFC) for such offerings, Victory Securities caters exclusively to professional investors, signalling a growing regulatory focus on high-net-worth clients.

Elsewhere, UBS Asset Management has launched a tokenised investment fund, showcasing how blockchain-based assets are reshaping the investment landscape. Tokenisation offers significant potential to improve liquidity, transparency, and efficiency in traditional finance.

🔗 Stay informed about digital asset trends here.

How We Complement Supports Financial Advisers

From ESG-linked investments to ETFs and digital assets, navigating the complexities of specialised products can be daunting. That’s where We Complementcomes in. We partner with financial advisers to simplify investment strategies, empower your team, and help you deliver exceptional client results.

📧 Get in Touch

• Email: hello@wecomplement.co.uk

💡 Let’s Collaborate: Ready to expand your knowledge and enhane your practice? Contact us today to see how we can support you!

Welcome to this month’s edition of Investments Matter, written by Paul Kenworthy, where we explore the key events shaping the financial markets. In this issue, we delve into the latest developments in the US, China, and the UK, examining their potential impact on investors. From the Federal Reserve’s unexpected interest rate cut and the upcoming US presidential election to China’s economic instability and the much-anticipated UK Autumn Budget, we provide insights into what these events could mean for your clients investments. Stay informed with our market analysis and expert perspectives as we navigate the evolving financial landscape.

The financial markets have performed well over the last few months, with both equities and bonds generally delivering positive returns. Below, I will discuss recent market events that may affect the markets in the coming weeks:

US Interest Rate Cut and Upcoming Election

The US Federal Reserve recently announced a 0.50% cut to its benchmark interest rate, which was higher than the expected 0.25%. This was notable as it marked the first rate cut since the start of COVID-19 lockdown measures in March 2020.

The reduction contributes significantly to the formal target for interest rates in the US. In their statement announcing the rate cuts, the Federal Open Market Committee noted:

“Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee’s 2 percent objective but remains somewhat elevated.”

The US Presidential Election, scheduled for Tuesday, November 5th, will almost certainly impact the markets (and quite possibly interest rates) in the short and long term.

Recent reports indicate that Kamala Harris is slightly ahead in the run-up to the election, but approximately 5.50% of voters have yet to decide whom they will support.

China’s Economic Instability

Chinese equities have been extremely volatile recently. A few months ago, they were performing well following a number of economic policy announcements made by the government. However, this performance could not be sustained, and equities have now begun to decline, with some falling as much as 10%.

In response, further measures were recently announced to stabilise the economy, including cuts to the reserve requirement ratio, policy rates, mortgage rates, and liquidity injections.

In a recent market update, IBoss Asset Management observed:

“While these new announcements are positive, they are not game-changing enough to suggest a sustained turnaround. However, they do signal the leadership’s understanding of the gravity of the situation, particularly in light of growing discontent over property valuations and general economic performance.

Source: IBoss Asset Management

UK Autumn Budget

Chancellor Rachel Reeves is set to deliver the Autumn Budget—Labour’s first in 14 years—on Wednesday, October 30th. She has warned that it will involve “difficult decisions.”

Some announcements have already been made. The winter fuel payment will be restricted to those receiving pension credit or other means-tested benefits, a decision that has drawn heavy criticism. Additionally, VAT will be added to private school fees from January 1st, and some private schools will lose business rates relief.

Rumours about possible budget announcements are making many investors nervous. Speculation includes potential increases in Capital Gains Tax, Inheritance Tax, and changes to pension taxation.

Many clients have been contacting their financial planners, worried that the government may reduce or even abolish the tax-free cash allowance from pensions. This has led to a significant increase in the number of people accessing their pensions prematurely.

The Financial Times reported that “a number of wealth managers told the FT they had contacted the Treasury to warn Chancellor Rachel Reeves that people were pulling their money out of their pensions early due to the ‘uncertainty.’”

Source: Financial Times

Times like this are when a financial planner can provide significant value to clients, helping to reassure them and advising against panic until official announcements are made.

We will closely monitor the Budget announcements and provide our thoughts and feedback in the coming weeks.

Welcome to the October edition of Specialised Investments Simplified! As the year winds down, now is an ideal time to assess new opportunities that could benefit your clients’ portfolios. This month, we’re diving into the potential of US mid-cap equities, exploring the strategic advantages of real estate debt, and examining the factors behind gold’s recent performance. Each of these investment themes offers potential avenues for adding value to your clients’ strategies, and we’re here to break down how.

US Mid-Cap Market: A Potential Opportunity for Client Portfolios

With US mid-cap stocks trading at significant valuation discounts compared to large caps, now might be an opportune time for financial planners to consider adding exposure to this segment. Bob Kaynor, manager of the Schroder US Mid Cap fund, recently shared insights on why these companies—often referred to as the “heartbeat of the US economy”—are poised for growth. Given the current market environment, mid-caps offer a compelling blend of value and potential upside for client portfolios.

Key Considerations for Financial Planners:

• Valuation Entry Point: Mid-caps are currently trading at a 15-20% discount to the S&P 500, offering a lower entry point at a time when earnings growth is expected to accelerate. This could serve as a tactical allocation to enhance portfolio returns.

• Economic Sensitivity: Mid-cap companies derive around 84% of their revenues from the US, making them more directly impacted by domestic economic conditions. With fiscal stimulus on the rise, this sector may provide clients with targeted growth exposure.

• Risk Management: While mid-caps can bring additional volatility, the current discount in valuations may help mitigate some downside risk. This presents an opportunity to balance growth potential with risk management across your client base.

For planners looking to diversify clients’ equity exposure or tap into US economic growth, mid-caps could be a valuable addition to portfolio strategy.

Listen to Bob Kaynor’s Interview on Mid-Cap Opportunities

Real Estate Debt: A Strategic Diversification Tool

Real estate debt can offer an attractive risk/return profile for clients seeking income without the responsibilities of direct property ownership. For financial planners, this asset class allows for tailored strategies that align with clients’ financial goals, risk tolerance, and time horizons.

Why Financial Planners Should Consider Real Estate Debt:

• Enhanced Income Potential: Investing in real estate debt allows clients to earn steady income through interest payments, which may offer a more predictable cash flow than traditional equities or direct property investments.

• Risk Mitigation: Real estate debt can help diversify client portfolios, providing lower correlation with other asset classes. This can be particularly valuable during periods of market volatility.

• Accessible and Flexible: The ASK model enables a tailored approach that suits clients with varying levels of risk aversion. For clients concerned with managing real estate directly, this option presents a lower-maintenance, time-efficient alternative.

Incorporating real estate debt into a client’s strategy could be a savvy way to achieve diversification while still tapping into the property market’s potential returns.

Gold’s Rally: What It Means for Portfolio Hedging

Gold has gained 4.6% in September alone, driven by a weaker dollar and ongoing geopolitical tensions. For financial planners, gold remains a classic hedge against market uncertainty, with its role in portfolios serving as a buffer against volatility and economic downturns.

How to Position Gold in Client Portfolios:

• As a Hedge Against Inflation and Uncertainty: Given the recent Fed rate cuts and rising geopolitical risks, gold can act as a safe-haven asset to protect against downside risks in other markets.

• Diversification Benefit: Gold typically has a low correlation with traditional equities and bonds, making it an effective component for reducing overall portfolio risk.

• Liquidity Considerations: Gold-backed ETFs can provide liquidity and flexibility, making it easier for financial planners to make tactical adjustments as market conditions evolve.

• Gold’s continued rally underscores its strategic importance in comprehensive portfolio management, especially as global uncertainties persist.

Looking Ahead

With the final quarter of the year underway, now is the time to reassess client strategies and explore new avenues for growth and risk management. Whether it’s considering mid-cap equities for value opportunities, real estate debt for income generation, or gold as a protective hedge, this edition provides actionable insights to guide your planning.

Thank you for reading the October edition of Specialised Investments Simplified. We aim to support you in navigating the evolving investment landscape and achieving your clients’ goals. For deeper insights, check out the links below.

Stay informed and keep empowering your clients to make the most of market opportunities. See you in the next edition!

As the global conversation around sustainability intensifies, the role of financial advisers in supporting climate-positive initiatives becomes more crucial than ever. This month, our team had the opportunity to attend Goodstock, a pioneering event focused on sustainability and positive social impact. It brought together passionate individuals and thought leaders working to combat climate change, including those of us in the financial planning industry. In this edition of Investment Matters, Paul Kenworthy will be sharing insights from the event and exploring how Financial Planners can help bridge the gap between wealth and impactful climate solutions.

The first-ever Goodstock event was held on the 19th of September at Dynamic Earth in Edinburgh. Amy North and I were able to attend, and all I can say is that it was a brilliant event, full of people passionate about sustainability and making a positive difference in the world.

Firstly, I’d like to applaud NextGen Planners s for organising the event, and I look forward to attending more of their events in the future.

There were a number of great speakers and participants at the event, each with different ideas and philosophies but sharing one collective goal—combating climate change.

In this post, I’d like to highlight some points raised by Jack Chellman (Chief Project Officer at the Global Returns Project). He spoke about Green Philanthropy and explained the untapped potential for Financial Planners to work with high-net-worth clients who want to gift some of their wealth to help tackle the climate crisis.

One of the key issues raised in Jack’s speech is that many of these people don’t know where to turn when they want to make such gifts, and a number of Financial Planners are unable to assist their clients with these needs.

This is where the Global Returns Project comes in. They are creating systemic change to fund the highest-impact climate charities at unprecedented speed and scale. Their mission is to make high-impact climate philanthropy normal and easy in financial planning, investment management, and corporate social responsibility.

Clients are increasingly concerned about climate change and biodiversity loss. While sustainable investing is important, its overall impact is limited. Many critical climate solutions do not deliver financial returns.

Meanwhile, philanthropy offers fast and tangible climate impact, yet less than 2% of global philanthropy goes toward climate mitigation.

The Global Returns Project currently works with over 20 different client-facing Financial Planners, and this number will hopefully continue to grow. They can hold direct conversations with clients about the charities they support, or they’re happy for Financial Planners to facilitate these discussions.

Using a proprietary methodology, they have identified a portfolio of six different climate charities that clients can donate to. These charities are: Global Canopy, Rainforest Trust, ClientEarth, Whale and Dolphin Conservation, Blue Marine Foundation, and Trillion Trees.

These charities are reviewed regularly (at least every six months), and they will be replaced if they no longer meet the stringent criteria.

Donors can choose to support all of these charities or select a particular one if they prefer. 100% of the proceeds are passed on directly to the charities without any deductions. After making a donation, clients will receive impact reports from the charities every six months.

For large donations, the charities may provide specific literature detailing how those funds have been used and the positive impact they have achieved.

The Global Returns Project is doing valuable work in helping to mitigate the climate crisis, and we feel they can help bridge the gap between Financial Planners and clients who want to donate money for the good of the planet.

They allow you to have in-depth discussions with your clients about how they can make a positive difference, helping to demonstrate the value Financial Planners can provide.

At We Complement, we believe in aligning financial goals with positive global impact. As financial planners, it’s time we expand our role beyond just managing investments and start offering solutions that truly make a difference.

If you’re interested in exploring how Green Philanthropy can complement your financial services, get in touch with us today. Together, we can help your clients achieve their financial goals while contributing to a sustainable future.

Welcome to this week’s Specialised Investments newsletter, written by one of our fantastic team members, Lucy Wylde. In this edition, Lucy delves into the latest market developments, providing valuable insights on structured products, cryptocurrency trends, and the impact of recent economic events.

August began with disappointment and panic amid fears that the US economy could fall into a recession, rather than “achieving the soft landing investors have been banking on,” according to Angharad Carrick of This is Money.

Concerns about a US recession were stirred by data showing that far fewer jobs were created in July than estimated, while the unemployment rate continued to rise. This was compounded by the Federal Reserve’s decision to hold interest rates steady, whereas other central banks, such as the Bank of England, cut interest rates for the first time in more than four years.

Globally, stock indices plummeted, with Tokyo’s Nikkei index taking the brunt of the dip, plunging over 12%—the index’s largest crash since 1987’s ‘Black Monday.’

The above, along with increased violence seen across the UK in early August, had a knock-on effect on the FTSE 100, which closed below its near-record high value of 8,000. That said, overall in 2024, the FTSE 100 has averaged a monthly value of 8,253.97, according to structuredproductreview.com.

It is therefore unlikely that most investors in UK retail structured products will have been phased by these events, due to the defined contractual returns, longer-term durations, and built-in protection.

With that in mind, let’s recap the latest maturities of 2024.

Structured Products Maturities – The UK Retail Sector

When considering the maturity results in recent months, August recorded a total of 73 structured product maturities, 72% of which were linked to the FTSE 100.

Furthermore, the majority of these maturities triggered early, thanks to elevated stock market levels, while only 5 autocalls in August matured on their final observation date.

Focusing on capital-at-risk autocalls, the average annualised returns were 7.18% over an average duration of 2.63 years.

Autocalls linked solely to the FTSE 100 or FTSE CSDI outperformed the sector by 0.65%, returning 7.83% over an average term of 2.58 years.

No deposit-based contracts matured last month.

The outstanding maturities, with final gains of 80%, 73.50%, and 60% respectively, were the Tempo Structured Products FTSE 100 FDEW Long Growth Accelerator Plan August 2019 – Option 1, FTSE 100 FDEW Long Kick-Out Plan August 2019 – Option 3, and the Mariana FTSE 150 Kick Out Plan August 2020.

Despite the FTSE being slightly below its recent all-time highs, it is expected that September will bring further generous maturities.

Cryptocurrency

Following the Federal Reserve’s decision to hold interest rates earlier in the year, the reverberations of its latest move to cut interest rates are also being felt throughout the world of cryptocurrency.

According to CNBC, despite rising by 12% in the past week, Bitcoin’s value is now fluctuating between a 1% gain and a 1% loss following the news of the rate cuts, while Ether has fallen by almost 2% (as of 18th September 2024).

Data has also shown that it is becoming increasingly difficult to make money from crypto mining, partly due to the all-time high hash rate (the combined computing power of all miners within the Bitcoin network).

As a result of the significantly increased presence of crypto miners, since Bitcoin has become a more established—arguably mainstream—part of the economy, the investment banking company Jefferies Group reported that mining was considerably less profitable in August. According to Jefferies Group, the “average daily revenue per exahash, or income per miner, fell by 11.8% from the prior month.”

In potentially better news, US asset manager Janus Henderson is preparing to become the latest large asset manager to experiment with securities tokenisation by assuming management of the Anemoy Liquid Treasury Fund. The Anemoy Liquid Treasury Fund is an open-ended, British Virgin Islands-domiciled fund that invests in short-term US Treasury bills. The fund, launched in December, is open to non-US professional investors.

This move sees Janus Henderson following in the footsteps of BlackRock, Fidelity International, and Franklin Templeton, all of which are already running tokenised Treasury or money market funds on public blockchains.

Finally, after more than a month of vague descriptions and promises from former President Donald Trump and his family, new details have been released about the family’s new crypto venture, World Liberty Financial.

The launch event, held on X (formerly Twitter), suggested that World Liberty Financial will be something akin to a banking platform, where the general public will be encouraged to borrow, lend, and invest in cryptocurrency.

It was announced that 20% of the project’s tokens will be allotted to the founding team of World Liberty Financial, while 17% of tokens are to be set aside for user rewards, and the remaining 63% of the coins will be made available for the public to purchase. There will be no pre-sales or early buy-ins, however.

As the financial landscape continues to evolve, staying informed is essential. If you’re looking to optimise or review your Centralised Investment Proposition (CIP) or Centralised Retirement Proposition (CRP), our team is here to support you. We specialise in helping firms create and refine these strategies to ensure they align with both regulatory requirements and your clients’ needs.

Contact us today to see how we can help enhance your proposition and deliver better outcomes.

In this week’s Investments Matter, Paul Kenworthy covers essential updates for financial planners, including the latest changes to Prudential’s PruFund range, an exciting industry event focused on sustainable investing, and what to expect from the upcoming UK Autumn Budget. These developments could have a significant impact on your clients’ portfolios, making it crucial to stay informed and prepared.

PruFund Updates

Prudential have released their latest quarterly Expected Growth Rate (EGR) and Unit Price Adjustment figures for their PruFund range.

As part of the smoothing process, Prudential set EGRs. These are the annualised rates that an investment would normally change in line with. The EGRs reflect Prudential’s view of how they think each PruFund fund will perform over the long term (up to 15 years).

Although Prudential use a long-term view of performance to set EGRs, they also have to take into account shorter term performance. On a daily basis, if the shorter-term performance differs too much from the current EGR, Prudential would have to amend the value of the fund up or down to ensure they are not returning too much or too little. These are the UPAs.

In this recent announcement, Prudential have confirmed that the EGRs have decreased by 0.30% for the following funds: PruFund Risk Managed 4 & 5 and PruFund Planet 4 & 5, whereas the EGRs have decreased by 0.40% for the following funds: PruFund Growth, PruFund Cautious, PruFund Risk Managed 1, 2 & 3 and PruFund Planet 1, 2 & 3.

An upward UPA of 2.19% has been applied toe the PruFund Cautious and Protected Cautious (Dollar) funds for the following plans, International Prudence Bond and International Investment Bond.

Goodstock Conference

On 19th September 2024, NextGen Planners will be presenting the Goodstock Conference at Dynamic Earth in Edinburgh.

NextGen have called this event ‘The first-of-its-kind Conference for Financial Planners who are passionate about investing for good.’

However, this is not just a sustainability conference, it is a long term project to change the way that financial planning conferences are held in the UK.

All proceeds from this event will to towards Lauriston Farm, which is an urban farm in North West Edinburgh which grows food for people and Wildlife.

Myself and Amy North will be attending the Goodstock Conference and we will be providing our insights in the days following the event.

The agenda and speakers have been announced, and it sounds like it will be a very exciting and informative event.

If anyone reading this is attending and would like to catch up with us, either contact one of us in advance, or just come and say hello to us on the day.

UK Autumn Budget

The new Prime Minister Sir Keir Starmer has stated that the Autumn Budget (due to be delivered on October 30th) is going to be ‘painful’. He stated that “we have no other choice given the situation that we are in”, clearly laying the blame entirely on the previous Government.

The Prime Minister and Chancellor have both committed to the previous pledges to not increase National Insurance, Income Tax and VAT, along with protecting the State Pension Triple Lock.

This has lead to much speculation that some of the areas of focus in this Budget will be Inheritance Tax (IHT) and Capital Gains Tax (CGT). This could come in the form of increased levels of taxation, or in the reduction of the allowances / exemptions.

The CGT annual exemption has been reduced significantly over the last few years, from £12,000 on 2022/23 to £6,000 in 2023/24 to the current amount of £3,000.

The amount of IHT that was collected in the 2023/24 financial year was a record £7.5bn, with it being expected to reach around £10bn by the end of the decade.

The Office for Budget Responsibility has estimated that a total of £15.2bn will be raised in CGT in the current tax year. This represents 1.3% of all receipt and is equivalent to £530 per household and 0.50% of national income.

Source:

Capital gains tax Office Of Budget Responsibility

We will be keeping a very close eye on the announcements made in the Autumn Budget, as it will likely affect a large number of investors. The potential changes to Inheritance Tax and Capital Gains Tax, in particular, could have significant implications for the financial planning strategies you offer to your clients. As financial planners, it’s crucial to stay informed about these developments so that you can provide timely and accurate advice that aligns with your clients’ best interests.

At We Complement, we understand the challenges that financial planners face in adapting to an ever-changing fiscal landscape. Our service is designed to support you in delivering the best possible service to your clients by offering resources, insights, and tools that complement your existing expertise.

If you’re looking to deepen your knowledge, streamline your practice, or simply stay ahead of the curve, We Complement is here to help. Connect with us today to explore how our solutions can enhance your service offering and keep you prepared for the changes ahead.