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The Moneysprite Monthly Investor Update - March 2017

Submitted on Tue , 07/03/2017

The FTSE 100 ended February at 7263.44, which was 2.3% higher than the January closing figure of 7,099.15. During the month, the FTSE 100 enjoyed 13 positive days compared to 7 negative days and the daily movements were much less extreme than we have been used to recently with the biggest daily swing taking place on 3 February, where the index increased by 0.67%.

This positivity was not restricted to UK Equities as the Dow Jones Industrial Average, which is the blue chip index for US Equities set a new closing high during the month for the ninth day in a row, marking the longest record-setting run in three decades. US Equities have been positive since Donald Trump clinched the election in November 2016, with the Dow having rallied by 13.3% over that time period.

In terms of £ Sterling, it ended the month at 1.2381 US Dollars, which was 2 cents lower than the end of January. Following the 0.63% increase on 1 February, £ Sterling has steadily fallen back and the last three days of the month saw a collective 1.39% fall following reports the Scottish National Party (SNP) is preparing to demand a second referendum on Scotland's independence in the near future.

It was a slightly different story for £ Sterling against the Euro, closing February at 1.1705 Euros, which was slightly lower than the rate at the end of the January which was 1.1648 Euros.

The Bank of England maintained the base rate at 0.25% again. However, inflation, as measured by the Consumer Prices Index (CPI), rose from 1.6% in December 2016 to 1.8% in January 2017 on the back of rising oil prices and the weakness of £ Sterling.

This prompted a number of media reports about the poor value that is being received by bank and building society savers who are losing money in real terms when you consider the rate of savings interest compared to the rate of inflation.

In fact, research was published which suggested that savers who have put their money into Cash ISAs over the past 10 years will have missed out on £100 billion of pounds in returns. The report from Royal London, which was called the Curse of Long Term Cash, found if all the money invested in cash ISAs over the past decade had been invested in a multi-asset fund then it could now be worth around £360 billion, instead of the £250 billion currently held in cash savings accounts. 

The research indicated if a saver put £1,000 into a deposit account 10 years ago then it would be worth less than £900 in today’s money.

The news was even worse for savers when National Savings and Investments (NS&I) announced that it is reducing interest rates on four of its variable rate products. This follows reductions in interest rates across the savings market after the Bank of England’s reduction of the base rate by 25 basis points, to 0.25% in August 2016.

Variable rate changes will apply to Premium Bonds, Direct ISA, Direct Saver and Income Bonds, coming into effect on 1 May 2017.

The Omnis Managed funds and Openwork Graphene Model Portfolios provide you with a diversified asset allocation in line with your Attitude to Risk, investing in Developed Market Equities, such as UK, US, Europe and Asia Pacific as well as Emerging Market equities. Cautious and Balanced investors will also have significant holdings in UK and Global Bonds, as well as Alternative Strategies.

We believe this multi-asset approach aims to give you the best opportunity for the highest level of return for your stated level of risk.

Past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you originally invested.

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