Welcome to our December update, reviewing the performance of the markets and our suggested portfolio’s and keeping you informed of progress.

For more information on our current services and investment opportunities, you can visit our website or contact your advisor.

December was another strong month for investment returns from nearly all markets. The FTSE reaching a new 12 month high of just over 5440, but still some 23% off its all time high back in 2007. Having experienced a strong November, we had expected markets to suffer from some profit taking during December, but the ‘Santa’s Rally’ was a pleasant surprise and has benefited all portfolio’s.

Investment markets tend to recover before the underlying economy, sometimes up to 12 months in advance. With the lions share of the recovery growth probably already made, we cannot expect 2010 to produce significant stock market results and a change in Government will be challenging. We expect Commercial Property to be an excellent investment during 2010, whilst we remain concerned over long term Government Bonds (GILTS) and to a more limited extent corporate bond investments.

We remain a little bemused about the relative strength of the Euro, but if Dubai can have problems, we cannot expect it to be long before some of Europe’s less loved member states start to let the side down.

During 2009 stock markets across the globe suffered wild swings from profit to loss especially during the early stages of the year. The FTSE eventually finished higher by 27% from a year earlier, but suffered a loss of over 20% during the first couple of months. Whilst the US and UK remain supported by the Governments we will continue to recommend a sensible and cautious approach to the way in which we suggest your money is invested. But in light of a more stable outlook, investors with longer term investment horizons (i.e. 10 years) may want to consider more exposure to stock markets. We will be looking at your circumstances individually and recommend a change if necessary.

Following the alteration planned this month for the cautious portfolio and the alterations already pencilled in for the other portfolios, strategically we remain well positioned and comfortable that 2010 can be another successful year.

During 2009 each of the selected funds performed in line with expectations with the exception of the Barmac and JPM Funds. Although some funds finished lower then their pier group this was a result of risk based decisions rather than bad stock selection (Neil Woodford of Invesco Perpetual). Conversely where managers have significantly out performed the average return it has been achieved through higher risk positions (David Crawford of Octopus).

By replacing the Barmac and JPM Funds with the Scottish Widows and William Littlewood’s Artemis Strategic Assets Fund, we are extremely comfortable and looking forward to the continued stable and consistent returns we expect from our Cautious Portfolio during 2010.

Our Balanced Portfolio has started growing in popularity, especially for pension investors. We are planning on increasing the exposure to equities in this portfolio from February 2010. We will be in touch with investors shortly.

The Absolute Return Portfolio did exactly what it says on the tin. This portfolio is considered to be very low risk. We designed it to replace cash savings, which have been suffering during this period of low interest rates. The portfolio managed a very healthy 11.20% during 2009. Most of the gain fell into investors capital gains tax allowance, which for almost all investors resulted in a return without tax.

The Adventurous Portfolio has been our least popular portfolio during 2009, which is not surprising considering its 100% exposure to stockmarket-based investments. It did however produce the highest return for the year.

Adding a Specialist Investment

Many of our clients rely on Sterling to keep them updated on the most suitable investments and strategy to adopt. However, from time to time investments come along which you may want to consider to complement your existing portfolio, but would not ordinarily form part of your main strategy.

We do not want to make investing complicated and we are not going to bombard you with thousands of investment ideas to consider, especially if they are clearly not suitable. We just want to make sure that you are aware that we can access the entire investment market place and make it easy to arrange for additional investments to be included in your portfolio if required.

We will be adding several other more specialist investments to our monitoring approach and investors will have the opportunity to consider adding something a little different to their main portfolio. We will be starting with higher risk regulated investments funds specialising in Climate Change, Russia, China, Commodities and Precious Metals. These will tend to appeal to those who are happy to take a long-term view, who expect volatility and who can afford to take risk. Updates on these funds will feature at the end of the monthly update and further information will be available on our Website or from your normal adviser.