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The Financial Ironmonger Blog No 26/2019

The Financial Ironmonger Blog No 26/2019

Every week our guest blogger, David Oakes of Mosaic Money Management (aka The Financial Ironmonger), shares with us his take on some of the major UK and overseas macro and political events that shaped the previous week.

Please be reminded the value of investments, and the income from them, may fall or rise. The views expressed in this article are those of the author at the date of publication and not necessarily those of Chelverton Asset Management Limited or Mosaic Money Management. The contents of this article are not intended as investment or tax advice and will not be updated after publication unless otherwise stated.


Aristotle reckoned that “nature abhors a vacuum” whilst others concurred that any incipient void would be immediately challenged. Think of the dinner party bore, the greatest fan of their own voice. Welcome to the summer news cycle; I could well be wrong, but maybe it is weather related as the heat sweeps through NYC, DC, Madrid, Rome, Paris and London. Not to mention anywhere in India; I have been preaching for years that water is the new oil.

In to this vacuum, if you are with the thread, I give you the Conservative leadership contest, or the debate amongst some of the 23 Democratic candidates, (so far), for the Great Job. Better than that? OK, the thoughts of the Governor of the Bank of England.

The “contest” to be leader of the Conservative party, and therefore the Prime Minister of the fifth largest economy, globally, has fallen in to the vacuum, the media concerned only with a row, allegedly that frontrunner Johnson had with his girlfriend. No one has, yet, asked him how many children he has, but as the campaign descends in to the weeds, it is only a matter of time.

Both the participants reckon that they can secure a better deal by October 31st, although since Brussels is effectively closed till the autumn, this seems unlikely. I suspect that there will be some fudge on the Irish border issue, which will allow all parties to walk away with a degree of respectability. There is far too much at stake foe there to be no deal at all, but achieving compromise between vested interests, in a heatwave, could be the summer’s biggest challenge.

The Democratic debate was actually, split in to two sessions of ten contestants each; Elizabeth Warren was judged to have won the first, whilst Kamala Harris triumphed in the second. More importantly, she laid some serious blows on Biden, who has been around politics for such a long time that there is a stream of quotes from his past that are dragged out to haunt him. It is the beginning of the end of his campaign, worrying for his party, given that he leads the polls.

Back in the UK, the Governor of the Bank of England has waded in to the debate on the lack of liquidity apparent in some open-ended funds, that require daily dealing. He reckons that investors should not treat them as the equivalent of having cash in the bank, which displays a certain naivety. The basic banking model is extremely illiquid with short term deposits used to fund long term loans, a recipe for a crisis, which duly occurred in 2007/8, with many financial institutions going under.

This week marks the point 28 days after the Woodford Equity Income Fund was first suspended and is therefore up for review. The number of investors trapped in this fund is huge, one intermediary accounting for more than three hundred thousand. At the time in early June, the fund was valued at £3.7bn with subsequent sales of underlying holdings having raised less than 10% of that.

It is not known how large the redemptions will be when the fund reopens, but it will certainly be a sum much larger than the amount raised so far, potentially leading to its immediate re-suspension. Not a happy mess, which has yet to garner much serious press comment, so far.


David joined Manchester stockbroker Henry Cooke, Lumsden in 1977 and after becoming a member of the London Stock Exchange in 1984 held a number of senior positions within the firm including Managing Director of the in-house fund management company and member of the Executive Committee.

After senior appointments at Cazenove Fund Management and latterly Mercater Capital Management, David joined Mosaic Money Management in 2013. He has successfully managed private client and fund portfolios for over thirty years and has particular expertise in providing a multi manager service to his loyal client base.

The Financial Ironmonger is a hat-tip to Ironmonger Lane, the location of Chelverton’s London office.