YOUR PORTFOLIO Hard times
RPI in the UK in the 1970s
30 % |
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22.5 % |
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15 % |
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7.5 % |
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0 |
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1970 |
1971 |
1972 |
1973 |
1974 |
1975 |
1976 |
1977 |
1978 |
1979 |
Source : Office for National Statistics
more growth-focused small-cap managers who may shell out more for the “ best ” companies .
Eggs in many baskets Equally , over-concentration is a risk . At a time of uncertainty , it helps if fund managers draw their underlying revenues from different countries and sectors . Widdowson says this is possible even for UK small-cap portfolios : “ Only 34 % of revenues for companies in my portfolio are from the UK . The pound has been weak , so overseas profits are more valuable .” The key lesson for any investor when going through a period of adversity is to stay calm and logical . Taylor says previous crashes have taught him “ this too shall pass ”. “ It ’ s not a pleasant thing to go through , but it makes you more rational ,” he says . Fund managers do not need to have experienced periods of high inflation and rising interest rates to see investors safely through this crisis . However , they should be humble and recognise the landscape has changed . It is also worth noting the 1970s wasn ’ t the last time we saw high interest rates . These hit double digits in the 1990s – a decade when the FTSE All Share made 300 %.
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