Crypto Currency - Don't believe the hype


Digital or crypto currencies such as Bitcoin, Ethereum and Ripple have been causing a financial frenzy over the past months. Bitcoin is the oldest and best-known crypto currency created in 2009 by an unknown person using the alias Satoshi Nakamoto.

Transactions are made with no middle men – this means there’s no bank, regardless of the hype around getting rich by trading it. The frenzy was sparked by bitcoin soaring to more than 1,900% in 2017 to around $20,000, before falling to around $14,000 in February this year at the time of writing this article.

Separate components

There are two separate components. You have bitcoin-the-token, a snippet of code that represents ownership of a digital concept – or a virtual IOU. Then you have bitcoin-theprotocol, a distributed network that maintains a ledger of balances of bitcoin-the-token. Both are referred to as ‘bitcoin’. Crypto currencies can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Some people just buy crypto currencies as an investment, hoping that they’ll increase in value.

Private transactions

Though each transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for some people online buying drugs or other illicit activities. There are now hundreds of other such currencies that can be traded – and new ones are regularly being created. For some investors, one attraction of crypto currencies is the ability to participate in an initial coin offering, or ICO. Investors jump in, hoping to get the digital currency at a low price, and then profit as it rises. But ICOs are far riskier than stock initial public offerings (IPOs) and have other key differences.

Imperfect information

Crypto currencies are very risky investments because the technology is new and unproven, and prices have been extremely volatile. Many experts are sceptical about bitcoin as an investment primarily because there is nothing for them to analyse, so people are investing with imperfect information and joining the herd of speculators. Aside from the operational issues of trading in crypto currencies, there is also a high risk of fraud. There is still a good deal of misinformation and lack of clarity regarding bitcoin trading, and fraudsters have taken advantage of this to launch Ponzi schemes, which promise ‘guaranteed high returns’. Some companies claim to double the initial investment within a very short period of time. The growing use of virtual currencies in the global marketplace makes it easy for miscreants to lure investors into Ponzi schemes. Investors should be careful to steer clear of such unrealistic promises. For any investor looking to take the plunge and buy crypto currencies, it is essential they make sure it’s a very small part of their diversified portfolio – and that they can afford to lose their investment.




News Summary - September 2017


September was dominated by political events: The German Bundestag elections, Brexit, the calling of a snap election in Japan and the ebb and flow of US/North Korean tensions. Theresa May made her all-important speech in Florence to try to re-start the stalled Brexit negotiations, whilst, elsewhere in Europe, Germany became the latest EU nation to see an increase in the populist/nationalist vote, although Angela Merkel’s CDU did retain its position as the largest party. Sorting out a new coalition without the SDP, CDU’s former partner, may be a long job, and may introduce some uncertainty into German politics. Japanese centre-right Prime Minister, Shinzo Abe, saw a sharp bounce in his hitherto poor approval rating as the opposition fell into disarray, and took the opportunity to call a snap election on 22nd October. Equity markets across the world were mostly positive, with the notable exception of the UK, where sentiment is increasingly being affected by the weak position of Theresa May as Prime Minister and the lack of progress over Brexit, with the uncertainty that this generates for businesses. Meanwhile, a generally more hawkish tone from central banks saw fixed income markets weaker during the month.

Portfolio Summary - September 2017


The Affinity passive portfolios ranged from -0.65% (RP1) to -1.86% (RP7) The BGL active portfolios ranged from 0.00% (RP1) to -0.60% (RP7) and the Growth Strategy returned -0.50%.

Benchmark Returns:
FTSE World -1.95%
Barclays Global Aggregate -4.82%

The portfolio returns were fairly mixed during the month of September, with the Affinity Active models outperforming the benchmarks. In particular the Core portfolio gained 0.05% whereas the Barclays Global Aggregate index was down 4.8%.

The Active satellite segment also performed well in comparison to the FTSE world benchmark (-1.95% return), whereas the passive range was in line with market expectations. The key funds that contributed to portfolio returns were the Neptune Japan Opportunities fund (5.85% return), Legg Mason Opportunity X fund (4.37% return) and Schroder European Alpha Income Hedged fund (2.75% return).

These funds ability to hedge against currency movements has worked favourably last month, as Sterling gained over 5% against the yen, 3.5% against US Dollar and 4% Euro. Overall equities within those regions had a strong positive month, however unhedged share classes had been significantly impacted.

The main portfolio detractors impacted by the above were the iShares Emerging Markets Equity Index (-4.84% return), HSBC Pacific Index Accumulation fund (-4.02% return), L&G Global Tech Index fund (-3.33% return).


Life after exit


Introduction by Andrew Beeney

For every entrepreneur who embarks on the journey of building a business of their own, a successful business exit represents a high point in their career.

While this is rightly a cause for celebration, it also represents a step into the unknown. For some, the transition into this new phase in their lives is a straightforward one. But for others, dealing with the combination of wealth and long-awaited freedom ends up being far harder than they imagined.

Although all but a small minority of entrepreneurs ultimately end up enjoying life after exit, reaching a place where the balance of activities matches the fulfilment experienced in running a business, can take longer than expected.

I hope you enjoy reading this report and that it adds insights which help you with your own planning.

Andrew Beeney, Investment Director

News Summary - August 2017


August is a traditionally quiet month in terms of news, with many market participants absent. Last month saw broadly neutral returns from equities. Bond markets were able to offer positive returns, in light of relatively benign economic data. The major themes of Brexit and US/North Korea were largely ignored by investors. The Jackson Hole Economic Conference produced no headlines and, thus far, the forthcoming German election looks set to go in favour of the incumbent Christian Democrat party. Japanese economic data exceeded expectations and inflation achieved a small, but welcome, tick upwards, offering hope that Abenomics is indeed starting to work.

Portfolio Summary - August 2017


The Affinity passive portfolios ranged from 0.53% (RP1) to 1.55% (RP7)
The BGL active portfolios ranged from 0.17% (RP1) to 1.11% (RP7), whilst the Growth Strategy returned 1.33%.

FTSE World - 2.65%
Barclays Global Aggregate - 3.33%

The portfolio returns were positive during the month of August and in-line with market expectations. Overall performance was contributed by both the satellite and core segments, with an outperformance from index linked bonds and cautious multi asset strategies. The key funds that contributed to the portfolio returns were the Legg Mason Japan Equity fund (8.2% return), where small / mid cap equities were supported by further strengthening of the Yen, putting pressure on large cap Japanese companies.

Also adding to performance was the Blackrock Gold and General fund (6.1%), the strong fund performance came from the recent turmoil involving the U.S. and North Korea, which had a significant impact on the Gold price (up 4.24%) as investors flocked to safe haven style assets. Finally MI Somerset Emerging Markets Diversified Growth fund (3.84%), the fund continued to perform well supported by strong returns from Asian technology, mining and industrial sectors.

Should you require any further information then please do get in touch.

UK General Election – June 2017 – Result update. What happens next?


Theresa May’s political gamble hasn’t paid off. She called the snap election with the aim of increasing her majority, to provide the Conservatives with a “strong and stable” mandate to proceed with Brexit negotiations. The electorate voted otherwise.

The Conservatives did increase their share of the vote, coming in at 43% which was in line with the opinion polls. Labour also had a strong night, receiving over 40% of the vote, which was higher than polls had predicted. Both parties increased their vote at the expense of UKIP, the SNP and the Liberal Democrats. However, for the Conservatives, this resulted in a reduction in the number of MPs and ultimately the loss of their majority...

What the new Inheritance Tax rules mean for you


The changes to the Inheritance Tax (IHT) law that were announced in the 2015 Budget - where from 2020, homeowners will be able to pass on £500,000 worth of property, tax-free, to direct descendants – is positive news, especially with ever increasing house prices.

Good news
Last year the then-Chancellor George Osborne announced that he would raise the inheritance tax threshold due on property, increasing the allowance from £325,000 per person to £500,000, in the form of a family home allowance, with the increase being phased in from 2017-2020.

Peer to Peer lending: an alternative investment option


Peer to peer (P2P) lending is an alternative way to make your cash workharder for you than the more traditional savings and investments products with their typically low interest rates - but does comes with risks.

Investors looking for alternative finance options, however, appear to take these risks on board, with expectations that the sector will continue to double in size every six months going forward.

Why consider taking a transfer value out of a final salary pension scheme


There has been a surge in the number of over 55’s cashing in all or part of their final salary pension scheme, due to the so-called “Brexit bonus”, with cash transfer valuations hitting record highs. According to the Financial Times, in some cases, cash sums equivalent to more than 30 times the projected annual income on retirement have been offered to pension scheme members.

Integrated Financial Planning

All of us have things that we would like to achieve in our lives, whether two, five or ten years down the line, or perhaps we may want to leave a legacy of some kind. But in order to realise these dreams, we need to be both focused and financially organised. 

Wealth Management

Our team of experts will provide you with a high-level professional service, taking a holistic approach in co-ordinating all areas of financial management, planning and investment advice, to ensure your wealth is always working for you.


At Affinity Integrated Wealth Management we always encourage feedback from our clients as their opinions on our work are of paramount importance to us. Please take a look at our testimonials page to read some of the comments that we have received.