Portfolio Management Service Update


Gavin Jones, Chartered


Financial Planner


The graph below shows the indicative performance of the Old Mill investment portfolios over the year to 12th May 2011*.


Global stock markets continue to be volatile and many financial commentators expect this to persist for some time. Economic factors in many countries are combining to make life difficult for both the consumer and the Central Banks, which have the unenviable task of setting interest rates. Rising inflation would usually mean rising bank base rates, but with the developed world still feeling fragile after the banking crisis there is political and social pressure for interest rates to stay the same.


The effects of inflation can plainly be felt whenever we fill up our cars with petrol or shop in the supermarket. The Bank of England is reluctant to raise interest rates,


Portfolio 2 3 4 5 6


1m (%) 2.04 1.70 1.59 1.36 1.19


3m (%) 2.97 2.48 1.97 1.65 1.37


despite a gloomy property market, until inflation falls back towards their target of 2%.


While it is difficult to accurately predict when economic conditions will improve it is worth remembering that in an inflationary environment money loses value very quickly. With inflation at 5% the buying power of each £1 is reduced to only 60p pence after 10 years.


These conditions make it necessary for investments to be made in assets such as stocks and shares that, historically, have grown faster than inflation. Our portfolios enable you to invest in these assets, but vary in accordance with your individual attitude to investment risk.


Overall we hope you have seen the results you were expecting with your individual portfolio. We have been pleased with the overall performance but rest assured we scrutinise the individual funds in depth regularly to ensure they continue to meet your expectations.


6m (%) 1.35 2.64 3.66 4.62 5.16


1yr (%) 5.89 7.69 9.04 10.42 11.10


3yr (%) 15.61 17.72 16.57 16.14 15.72


5yr (%) 24.99 28.41 26.74 26.81 26.42


*Performance net of fund management costs, but not charges levied by Ascentric or Old Mill. Your actual return will be dependent on the date of investment.


Monthly Tax Update


Every month we produce a tax e-newsletter which goes out to our clients, highlighting topical issues and updates as well as key dates.


Kim Lowe, Marketing Manager


13


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