Monthly Roundup 26/3/11

It's been a while since we have had such a lot of troubling news happen at the same time. The Japanese earthquake/tsunami/radiation, together with the widepread protests in the Arab states and the war in Libya, not to mention fresh worries about Portugal and the Euro, have all conspired to unsettle investors. So far, however, the effect has been fairly muted and, after a downturn last week, the mood has stabilised somewhat. Despite, also, the bleak economic outlook in the UK and the constrained Budget, rising profits and dividends for the past financial year have helped to counteract negative sentiment. Overall, however, there is a bit more FUD around. A big correction seems to have been postponed for now, but there is still plenty of scope for surprises.

On the month, Sterling fell from €1.1700 to €1.1391 and from $1.6094 to $1.6023. UK 10 year gilt yields fell from 3.71% to 3.58%. Gold has climbed again from $1402 to $1436 per ounce. Brent Crude future has risen further from $111.64 to $115.85 per barrel and copper rose from $9697.50 to $9722.50 per tonne. The FTSE100 fell from 6001.20 to 5900.76 but the FTSE250 rose slightly from 11608.97 to 11629.31.

Equity Portfolio (+0.09% on year, FTSE all share -1.25%)
The mid month market dip was neither long enough nor deep enough for me to make any substantial bargain purchases. I topped up on specialist insurer Catlin (CGL) to bring my consolidated buying price to £3.52 and also the general and life insurer Aviva (AV.), although my timing was not too good here. Both these companies offer an excellent yield of 6-7%, but they are not without some risk to future dividends. My main purchase, however, was the consumer products conglomerate Unilever (ULVR) bought for £18.42. This was in part a defensive play (based on the assumption hope that input costs are nearing a peak) and a feeling that the company has sufficient growth prospects in emerging markets to offset domestic gloom. They have a yield of 3.8%. It's not going to be a flyer, but that's fine with me. This is one for the long term, inflation-proofing plus a small real return.

The chancellor's unexpected raid on North Sea oil profits (reversing an incentive put in place by Labour) hit my small investment in EnQuest (ENQ), the producer recently offloaded from Petrofac, by some 12%. Time will tell if the indignation of the smaller oil companies who have facilities there is grounded in economic fact or whether they can pass on the costs. For those with an appetite for risk and a liking for the long view, buying the likes of Enquest, Valiant or Xcite might prove a winner if a future administration once again decides to encourage the exploitation of our local assets.

We are currently in interesting times. World events are more unpredictable than usual, but the markets are suspended in a field of opposing forces, being neither oversold nor overbought. My feeling is that this should be a quiet time for investing, with some trading after due research, but no extravagant gestures.