How US equities might fare under Biden
On 20 January 2021, Joe Biden will be inaugurated as the 46th president of the United States. One...
At the end of each year, Oxford Languages releases their ‘Word of the Year’ – either a word or an expression that has generated a lot of attention over the past 12 months. The word is debated and “judged to reflect the ethos, mood, or preoccupations of that particular year and to have lasting potential as a word of cultural significance.”
Looking back over the past 15 years, it’s interesting to see what has been selected: ‘bovvered’ in 2006, credit crunch in 2008, squeezed middle in 2011, selfie in 2013 – 2015 was an emoji and 2018 was toxic.
Perhaps unsurprisingly, 2020 couldn’t be seemed up into a single word, so instead a ‘Words of an Unprecedented Year’ was released which included reports on the language of Covid-19, remote working and even social movements.
There’s no debate 2020 was – for lack of a better word – unprecedented. And yet, as I’m looking back, reflecting on the good parts, it’s pretty humbling to see that while it has been difficult and it has been treacherous, the last year truly hasn’t been all bad. Some fun things have happened, and certainly, a few treasured memories have been made (like welcoming a new dog to our family!).
But while we’ve entered a new year, 2020 certainly isn’t behind us, as evident by the newest national lockdown in England. So, while the Oxford Dictionary chooses their words in refection, I’ve decided to look forward to choose my ‘word of the year’.
“The desire to create is one of the deepest yearnings of the human soul.” — Dieter F. Uchtdorf, German airline executive
The practice of choosing a “Word of the Year” is an alternative to setting a lot of different New Year’s Resolutions. You select one single word to be your focus for the next 12 months. Last year my word was ‘simplified’, as my overarching goal was to focus on what matters and stop trying to do it all…little did I know just how simple life would become. This year my word is ‘create’. After what feels like a lost and exhausting year emotionally, I’m ready to create again: crotchet, learn to sew, re-plant our garden in the spring… the list goes on.
The idea of a word of the year of course is to set goals or intentions for each area of your life but have them all tie back to the single word. By tying all of your goals back to your overarching word, it is easy to keep them front-of-mind. So how does ‘create’ influence finances and investments?
Since I can’t just create new money – although that would be nice – I had to get a little creative – pardon the pun – with how my word of the year ties to our financial goals. Ultimately, I’ve decided, it’s about creating more investment opportunities and recognising them when they come up.
For example, going through our budget I realised what a shocking amount we had spent on takeaways in the last few months of 2020. It also meant we wasted a lot of food from our weekly shop. Cutting back on takeaways not only saves us calories but it means we can put an additional £100 a month into our ISA. By setting this up as a Direct Debit, the option for spending that money simply disappears. In doing so, I’ve created an investment opportunity and an opportunity for more healthy eating. But there’s only so much you can cut and find in your budget month to month. To carry forward my intentions I looked to funds that I felt were “creating” themselves so my £100 a month is going further.
Creating a cleaner future. The Pictet Global Environmental Opportunities fund actively invests in companies actively contributing to solving environmental challenges. The managers look to target less obvious themes, with 15% in pollution control, 8% waste management & recycling and 6% sustainable agriculture & forestry*. Co-manager Luciano Diana told us more about niche areas in sustainable investments in a recent video interview.
Creating time – outsourcing your portfolio management. If you are looking to create more ‘me time’ or just spend less time behind a screen, you could consider a multi asset fund which takes the thinking out of investing. One idea in the sector is Premier Miton Multi-Asset Growth & Income fund, run by a team of managers with decades of experience. It’s also a ‘fund of funds’ with underlying holdings in other Elite Rated products for an added level of peace of mind.
Creating peace of mind and a better future. The Liontrust Sustainable Future Managed fund marries the multi asset approach with a sustainable process. Every investment has to meet four set criteria: thematic drivers, sustainable credentials, good fundamentals and attractive valuation. Top holdings include familiar names Alphabet, Ecolab, Visa and PayPal*.
Read more about what Ecolab is doing in the water technology space.
Creating chances for the little guys. I’m a big fan of smaller companies and, throughout the pandemic, I’ve seen so many people start businesses out of their home in either a desperate need for income, or simply a distraction. Either way, they created something. But smaller companies can be riskier investments and best left to the professionals in many cases, especially in the early years. Peter Ewins, manager of BMO Global Smaller Companies, recently joined us on the Investing on the go podcast to discuss whether smaller companies could outperform in 2021?
*Source: fund factsheet, November 2020