Market Alert - Selling 5% Position in EU Aggregate Bond Fund

On Friday 16th November I sold the 5% allocation to the EU Aggregate Bond Fund ETF in the Active Asset Allocator Strategy at €119.30, increasing the cash position for the strategy by the same percentage. This ETF holds a mix of EU government (73%) and corporate (27%) bonds and pays an annual distribution yield to investors of 1.1%. However, with stock markets rolling over and credit spreads starting to widen across the globe, the increased risk of holding a position in corporate bonds is no longer justified.

The Active Asset Allocator is now positioned 5% equities (GDX) / 20% EU government bonds / 15% inflation linked bonds / 30% precious metals / 30% cash.

At Secure Investments, I advise individual clients on their pension and non-pension fund investment portfolios. To learn more about my Active Asset Allocator and Gold Trader  investment strategies, please get in touch at brian@secureinvestments.ie or 086 821 5911. If you are reading this via LinkedIn, why not visit Secure Investments and subscribe to get exclusive content for free. No spam, ever. Just great stuff.

Disclaimer

The information contained herein should not be taken as an offer of investment advice or encourage the purchase or sale of of any particular security or investment. It is provided for information purposes only. Secure Investments and its content providers makes no representation or warranty of any kind with respect to the services described, analysis or information obtained arising from use of the pages on this website. Information provided is obtained from sources deemed to be reliable and is provided solely on a best efforts basis. Secure Investments and its content providers do not guarantee the completeness or accuracy of such information and do not accept any liability for any loss or damage arising out of negligence or otherwise as a result of use or reliance on this information, whether authorised or not. The use of the website is at the user's sole risk. Not all recommendations are necessarily suitable for all investors and investment policy must be tailored to suit the circumstances of the individual. We recommend that readers consult their professional adviser before acting on any advice or recommendation on this website. The value of any investment may fall as well as rise and you may not recover the full amount originally invested. Past performance or simulated performance is no guarantee of future investment returns. The value of your investment may be subject to exchange rate fluctuations which may have a positive or adverse effect on the price or income or the securities.

Market Alert - Buying a 5% Position in Gold Miners ETF

A brief note to let you know that I am taking a 5% position in the Gold Miners ETF in the Active Asset Allocator strategy.

During the 2011-2016 correction in the gold market, the miners dropped sharply. Gold bottomed in 2016 and then rallied $300 from $1,100 to $1,400. During that time, the miners almost tripled in price. Both metals and miners have consolidate those gains over the last 18 months and I am expecting the next move up in both metals and miners to start shortly. I think the miners could be explosive on the upside once again. Note that the gold miners have not declined this year despite the recent drop in the USD price of gold. This is an early indicator of strength in the sector.

 
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At Secure Investments, I advise individual clients on their pension and non-pension fund investment portfolios. To learn more about my Active Asset Allocator and Gold Trader  investment strategies, please get in touch at brian@secureinvestments.ie or 086 821 5911. If you are reading this via LinkedIn, why not visit Secure Investments and subscribe to get exclusive content for free. No spam, ever. Just great stuff.

Disclaimer

The information contained herein should not be taken as an offer of investment advice or encourage the purchase or sale of of any particular security or investment. It is provided for information purposes only. Secure Investments and its content providers makes no representation or warranty of any kind with respect to the services described, analysis or information obtained arising from use of the pages on this website. Information provided is obtained from sources deemed to be reliable and is provided solely on a best efforts basis. Secure Investments and its content providers do not guarantee the completeness or accuracy of such information and do not accept any liability for any loss or damage arising out of negligence or otherwise as a result of use or reliance on this information, whether authorised or not. The use of the website is at the user's sole risk. Not all recommendations are necessarily suitable for all investors and investment policy must be tailored to suit the circumstances of the individual. We recommend that readers consult their professional adviser before acting on any advice or recommendation on this website. The value of any investment may fall as well as rise and you may not recover the full amount originally invested. Past performance or simulated performance is no guarantee of future investment returns. The value of your investment may be subject to exchange rate fluctuations which may have a positive or adverse effect on the price or income or the securities.

Sprott Physical Gold and Silver Trust Starts Trading

Following the acquisition of Central Fund of Canada by Sprott Asset Management in October 2017, the Fund began trading this week and has been renamed Sprott Physical Gold and Silver Trust. This Fund trades on the New York Stock Exchange (Symbol: CEF) in US dollars and on the Toronto Stock Exchange (Symbol: CEF) in Canadian dollars.

The launch of Sprott Physical Gold and Silver Trust marks the completion of Sprott’s acquisition of the common shares of Central Fund of Canada. Sprott will administer and manage the Central Fund of Canada’s assets and Central Fund of Canada’s class A shareholders are now unit holders of the Sprott Physical Gold and Silver Trust.

Some of the advantages of holding Sprott Physical Gold and Silver Trust include:

  • fully allocated precious metals
  • redeemable for physical metals
  • trustworthy storage
  • easy to buy, sell, and own
  • liquidity

For more information on the Sprott Physical Gold and Silver Trust, please follow this link.

Market Alert - Buying 10% Allocation to Inflation Linked Bonds

I have added a 5% allocation to US inflation linked bonds and a 5% allocation to UK index linked gilts in the Active Asset Allocator, funding both positions from cash. The cash weighting moves from 20% to 10% as a result. The bond market is pricing in almost no inflation in our future and I believe that is a mistake. Printing money always leads to inflation, eventually. We have experienced 7 years of asset price inflation (rising equity and property prices) and are starting to see increasing signs of wage inflation this year. In the United States, while inflation linked bonds continue to underperform Treasuries, technical signs of a change in trend are at hand. Relative strength (RSI) and momentum (MACD) indicators are improving in favour of inflation-linked bonds and price should follow suit later this year.

 
 

Inflation linked bonds are also rallying in the United Kingdom and the recent 15% drop in GBP should accelerate this trend. Falling unemployment, wage inflation and continued loose monetary policy by the Bank of England should provide an additional tailwind.

 
 

Central banks have already driven government bonds yields to zero or below and are now examining alternative ways to distribute a continuing flow of newly printed money. Accelerated fiscal spending and/or direct payouts to the public (helicopter money) are potentially on the cards. I expect the bond market to start pricing in a more inflationary outlook and inflation linked bonds should be a beneficiary. The Active Asset Allocator continues to hold a 20% allocation to fixed interest rate bonds, but the clock is ticking on this trade. The 35+year bull market in fixed interest rate bonds is in its final innings and I have one eye on the exit door. 

To learn more about the full range of investment services available at Secure Investments, please contact Brian by email at brian.delaney@secureinvest.ie or at 086 821 5911.

Market Alert - Selling Bonds, Buying Gold

Following a strong performance from bonds this year, the time has come to start reducing the interest rate sensitivity of the bonds we hold in the Active Asset Allocation model. As a result and as noted in our December 2014 Investor Update posted last week, we are making the following changes to the model portfolio:

  • Reducing the allocation to 5+ Year EU government bonds from 30% to 20%
  • Adding 5% allocation to EU aggregate bonds
  • Adding 5% allocation to EU inflation linked bonds

We are also reducing the allocation to  absolute return bonds from 30% to 20% and increasing the allocation to gold from 20% to 30% ahead of what we expect will be a strong period for precious metals in the months ahead. Our Active Asset Allocator is now positioned 20% equities / 50% bonds* / 30% gold. (Bonds now include euro government, corporate, inflation linked and absolute return bonds).

 
 

To learn more about the full range of investment services available at Secure Investments, please contact Brian by email at brian.delaney@secureinvest.ie or at 086 821 5911.