Do you remember Trumpton? The iconic children’s TV series from 1967 has now lent its name to the whole of the United States of America, under the leadership of Donald Trump.
As he navigates his way though his first month as President, Trump has already affected financial markets is a way which could potentially influence the personal finances of all of us. And not in a good way.
Since he announced his decision to stand for office as the Republican presidential candidate on June 16 2015, Trump’s rather punchy election campaign has shaken investment markets on six separate occasions.
These instances may not have major effects on us directly; I mention them only to show how one maverick politician can make investors and economists nervous. We remember the mantra of Swiss private banking: “Money is as timid as a deer.”
Trump has been credited or accused of sparking volatility in the gold market, and then, when he clinched the election, beating Hillary Clinton, the US dollar fell by over 2 per cent against the euro.
As he waged a war of words with the Mexicans, vowing to build a wall along their border which they would be forced to pay for, the Mexican peso plunged a massive 13 per cent to a record low of 20.7 pesos to the dollar.
Trump has even had a beneficial effect along the line as well; some days after his victory, four of the leading US equity indices sky-rocketed when he announced some very business-friendly proposals for corporate tax cuts and a plan to step up spending on infrastructure.
Now, however, the latest round of proposals under ‘Trumponomics’ is predicted to potentially wreak havoc on some of the big-ticket industrial stocks stateside. He has criticised major manufacturers such as Ford and Chrysler for moving jobs across the border and out of the US, and vowed to put a stop to this practice.
One aspect of this will be to impose high taxes on imports of goods, such as those manufactured in these plants, coming into the US.
However, one leading investment manager, Bill McQuaker of Fidelity International, has expressed concern that such protectionist policies could adversely affect and damage the global economy in that area.
This could have a knock-on effect on the performances of equities of the companies concerned, and potentially on the performances of funds with exposure to those equities.
So far, we have been talking about events on distant shores; however this is where, in the words of the great Sam Cooke, I ‘bring it all home to you.’
These are not simply remote events affecting only investments in the USA and points west.
The concern here, for all of us in Northern Ireland who have a pension, is that part of our money may well be invested in international funds which could be adversely affected, not only by Trumponomics, but at any time by the general ebb and flow of the global business environment, and the performance of individual funds from year to year.
In the UK, the best-known funds monitoring report is Bestinvest’s regular ‘Spot the Dog’ report. This highlights the number of major investment funds that have been under-performing in recent years.
The most recent edition identified 30 ‘dog’ funds – serial under-performers which included some of the most prestigious and well-known names, and had in total a massive £18 billion under management.
This shows each of us that, if you do not have your pension investments updated and monitored at least once a year, you could be exposed to the vagaries of localised global turbulences, and miss out on growth you would otherwise have got.
If we do find your pension scheme does currently have your money in these sluggish performers, all is not lost! The good news is that you don’t have to stick with them.
You can turbo-charge your return simply by having a good independent financial adviser switch your money into better performers.
Well, fans of the original Trumpton will remember fire chief Captain Flack’s famous roll call for his crack team of firemen: "Pugh, Pugh, Barney McGrew, Cuthbert, Dibble, Grub."
Are there any fires inside your pension scheme, currently hampering your savings growth?
If so, there’s ‘no time to lose’ in having your financial adviser take action to quell the flames!
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005
