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No battle plan, so the saying goes, survives first contact with the enemy

This old adage has proven astonishingly true in 2022. The year begun with high hopes that the global pandemic was over and that we could return to a more prosperous and enjoyable world.

However, in reality we have spent the year grappling with the largest inflationary shock for 40 years and the consequences of Vladimir Putin’s invasion of Ukraine.

Inflation, like war, does not resolve itself overnight. For the former it must be brought to an end by the relentless pressure of higher interest rates. For the latter it can only come to an end as a result of the relentless determination of the Ukrainian people. As investors, this scenario has been hugely testing. When inflation rises sharply and surprisingly, all asset classes fall together.

This rare and unsettling phenomenon means that even very cautious investors have had a challenging year. We have worked hard to cushion as much of this pain as possible whilst also ensuring portfolios are ready for the recovery to come. Because of course recoveries do ultimately come.

In our view, it is already clear that in the world’s largest economy, the United States, inflation has peaked.

Our peak here in the United Kingdom will come later, but it will come. As inflation falls, it will be possible for governments and central banks to begin to support the global economy and move us out of the recession that is coming.

Yet as we enter 2023, we know that for many ordinary people there is still recessionary pain to come.

Whilst we will all have to tackle this in our daily lives, we can hopefully take some comfort that much of the pain has already been felt in our investment portfolios. As we enter 2023 we are optimistic, and we believe that returns over the coming years could be among some of the best we have seen in the past decade.

For all of us this recovery cannot come too soon.

May we wish you all a very happy and prosperous New Year.

Charlie Parker

Managing Director



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