Lowes Magazine Issue 129

COMMENT

FTSE 100 at 40

On the 3rd of January 2024 the FTSE 100 marked its 40th anniversary closing at 7,682 from an initial level of 1,000 in 1984. As long term investors will know, this has not been a linear rise. Stock markets reflect the sentiment of investors, who buy and sell both on news that might affect the price of companies, and the prospects they see ahead. There have been four times in the FTSE 100’s history when the index has fallen by more than a third. These were Black Monday in 1987, in 2009 following the global financial meltdown, when the Covid crisis occurred in 2020 and in the three years from the bursting of the dotcom bubble to March 2003, when the index declined by 53% from the peak to trough. The index’s high point, to date, was in February 2023 when it briefly rose above 8,000. However, sentiment around inflation and interest rates brought it back down again to the current level. This means following the index can make for a bumpy ride. It is why we prefer to utilise the expertise of professional investment managers, actively managing funds which are not tied to the companies in the index and can go where the best prospects lie. This is not to say following the index does not have a place in a portfolio. In tougher times, the larger ‘blue chip’ companies can be best placed to weather the storm. In particular, as many companies in the index are international operations, which means they derive their revenues from around the globe rather than being tied to, or reflecting, the UK economy. That said, less than a third of the companies in the index remain, or can trace their history back to the original 100 – Marks & Spencer, Prudential, Rio Tinto and NatWest are among them. It is also a reason we like the defined outcomes and protective qualities offered by structured products. Autocalls with the FTSE 100 as the underlying index on which returns are based, have performed very well for investors over the past two decades often outperforming the index by a good margin. That Lowes has been successfully investing for clients for thirteen years more than the UK’s iconic index has existed, I hope will help give our clients confidence in our ability to not only run a successful business, but also that we have the knowledge and experience to help grow and maintain their wealth through good times and bad. In this respect, while we see the positive effect that independent financial advice can have on individuals’, couples and families, on a daily basis, it is always gratifying when it is reinforced by external bodies. Studies such as that by the UK specialist think thank The International Longevity centre supported by Royal London, show that people who utilise independent financial advice personal to them achieve better financial outcomes than those that go it alone. The importance of personalisation has been further highlighted in a recent study by the Association of British Insurers, which showed that people made better financial decisions when the information they had was personalised to their individual circumstances, rather than generic, one-size-fits all.

Independent financial advice is about taking personal circumstances and finding the best solutions to deliver not only on what’s needed for clients’ financial and wealth goals but importantly, to give them support and peace of mind, especially when it is most needed. Or in other words: caring for personal finances personally. If you know someone else who could benefit from Lowes services, please do not hesitate to put them in touch. Ian H Lowes, Managing Director

Lowes.co.uk

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