Richard Stroud
United Kingdom
24d
COPIERS AND FOLLOWERS UPDATE Hi everyone and Happy New Year to you all! Now all the festivities and celebrations are behind us, here is another update for you all as we start 2026. Firstly, a quick look back at 2025, which proved to be a much more positive and stable year for the portfolio now we are more positively invested. Our return from last came in at 16.93%, keeping slightly ahead of the S&P 500 which ended 2025 with a 16.39% gain. As I have previously said, our portfolio make-up is very different to the S&P 500, so it is actually not a particularly good index to compare with. The S&P has a much bigger concentration risk than we do, with the top 10 holdings, led by the magnificent 7, taking up between 38 and 40% of the entire index on average over the last few months. We also have a good portion of the portfolio invested in the U.K, which had a very good year last year, which gives us geographical diversification as well as a much more balanced mix of companies and sectors. So far, 2026 has been a whirlwind in terms of political events and announcements, so the U.S stock markets have been quite up and down. A few days ago President Trump announced intensions to limit credit card interest rates to just 10% for a year. The consensus is that this will be very unlikely to become law, but as always, it is fair to say that markets will never stay calm for very long, with political announcements continuing to come in thick and fast. Earnings' season is upon us, with U.S big banks traditionally starting things off. Despite announcing good earnings, bank stocks have declined in the last few days. The banking sector in general had a very good run last year, so despite good results the bar is now clearly set a fair bit higher in terms of results. The news of Fed Chair Jerome Powell being now under criminal investigation by the U.S department of Justice sent shockwaves through investors, although bond yields so far have not been particularly adversely affected. Trump has made no secret of the fact he thinks that the Fed should be lowering rates far more than they have, so this announcement is being seen as a political move to try and undermine the Fed's independence. U.S treasuries are something that will return to the portfolio, but I think for the moment they carry too much risk and the chance of inflation creeping up later this year is something that is on my mind, particularly once Trump's bills for stimulating the economy and business take effect. In contrast, inflation in the U.K is poised to fall further as we go into the year, so I would expect our U.K gilt holdings to further improve. Market broadening is a factor I thought would bear fruition in 2026 and it is proving to be the case so far. We do have a bit of excess cash left, so expect this to be allocated in the coming week to take advantage of an overall fairly positive environment. Of course, I will always keep you up to date of changes made to the portfolio. In the meantime, hope everyone has had a great start to 2026 and keep posted for more updates from me coming soon. Best wishes, Richard.
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