Annual Client Letter 2026

28/02/2026

As always, your financial plan — and therefore your portfolio — continues to be driven by those goals rather than by forecasts about the economy or short-term movements in markets. That has been the case throughout the past year, and it will remain so in the year ahead and beyond.

It’s worth briefly restating the core beliefs that guide our planning and investment approach.

We are long-term, goal-focused, plan-driven investors. Our role is not to predict what markets might do next, but to help you achieve what matters most to you by remaining invested in well-diversified portfolios of high-quality global assets.

We do not believe that the economy can be forecast reliably, nor that markets can be timed consistently. History shows no dependable relationship between economic news and market outcomes. As a result, we do not react to headlines or attempt to anticipate short-term events. As long as your long-term goals remain unchanged, so too does the plan designed to achieve them. And as long as the plan remains consistent, your portfolio does as well, aside from routine rebalancing.

We also believe deeply in the power of long-term compounding. Equity markets will always experience periods of volatility — sometimes sharp, sometimes uncomfortable — but these have historically been temporary interruptions rather than permanent setbacks. Capturing the long-term return from equities requires staying invested through those periods, not trying to avoid them. As Charlie Munger famously observed, the first rule of compounding is never to interrupt it unnecessarily.

Against that backdrop, 2025 was another strong year for global equity markets. It marked the third consecutive year of double-digit returns for many major indices, driven by resilient economic activity and continued growth in corporate earnings.

In the United States, the S&P 500 finished the year up approximately 18 %. Here in the UK, the FTSE All-Share rose by close to 20 %, while the FTSE 100 delivered a particularly strong return of around 21.5 %, its best annual performance in many years. Importantly, returns were broad-based across regions rather than concentrated in a single market, reinforcing the value of global diversification.

Your own portfolios reflected this positive environment. These outcomes were achieved without deviating from the long-term strategy, chasing trends or increasing risk unnecessarily — exactly as your plan intended.

Looking ahead, analysts expect further earnings growth over the coming years, although forecasts will inevitably change as circumstances evolve. What remains constant is that, over time, earnings growth is the fundamental driver of equity returns. Businesses have once again demonstrated their ability to adapt, maintaining healthy profit margins despite higher costs and inflationary pressures.

While there has been some cooling in global labour markets, this has been accompanied by improvements in productivity. Rising productivity allows wages to grow without reigniting inflation and is a quietly supportive force for long-term economic stability, even if it receives far less attention in the headlines.

Central banks have begun easing monetary policy following a prolonged period of higher interest rates. As always, the effects of these changes take time to work through the economy, and their full impact is felt gradually rather than immediately.

It’s also worth acknowledging that much of the financial news you encounter will feel persistently negative. This is not accidental. Negative stories attract attention far more effectively than steady progress or resilience. In our experience, this bias is one of the greatest challenges investors face, and one of the main reasons discipline and perspective matter so much.

Every year brings its own “burning question.” Recently these have shifted from fears of recession, to interest rates, to concerns about market concentration and artificial intelligence. History suggests that these questions are usually distractions for well-diversified, long-term investors. Markets adapt, leadership changes, and unexpected events occur. The next market shock will almost certainly come from an unforeseen direction, just as they always do. When it does, it will have little relevance to your long-term plan other than, potentially, as a rebalancing opportunity.

We continue to follow an approach that has worked for patient investors over many decades. We do not believe that “this time is different,” whatever “this” may happen to be at any given moment. We do not move to cash during periods of fear, and we do not abandon discipline in pursuit of the latest narrative or technological promise.

Finally, as we move toward the end of the UK tax year, this is a natural time to reflect on whether available allowances are being used efficiently. This may include ISA allowances, pension contributions, capital gains allowances or other planning opportunities depending on your circumstances. We will, of course, discuss these with you at your next review, but please do get in touch if you would like to explore anything sooner.

We wish all our clients and friends a healthy, happy and prosperous year ahead. As always, we are here to answer your questions and to provide perspective when markets feel uncomfortable.

Thank you for the trust you place in us. It is a privilege to work with you.

Warm regards,