Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In August 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-
20-Aug-2015 4¼% Treasury Stock 2036 £1,644.0950 Million
11-Aug-2015 0 1/8% Index-linked Treasury Gilt 2058 £681.9000 Million
04-Aug-2015 2% Treasury Gilt 2025 £3,000.0000 Million

When you add the cash raised:-

∑(£1,644.0950 Million + £681.9000 Million + £3,000.0000 Million) =  £5,326.00
Million

£5,326.00 Million = £5.326 Billion

On another way of looking at it, is in the 31 days in August, HM Government borrowed:-

£171 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2025, 2036 & 2058. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together…”

The HM Treasury backs National Savings and Investments

www.nsandi.com

Premium Bonds are the flagship product that offers the opportunity to win from £25 to £1,000,000 each month.

No interest is paid on the bonds held, instead the holders are offered the chance to win a “cut of the interest pot” and that pot is divided into prizes.

The Odds of winning are 26,000 to 1. (=1/26,000)

The number of prizes that are on offer: Sept 2015 are 2,131,445

With these two figures supplied by National Savings and Investments, one can calculate the total cash invested in Premium Bonds:-

Total Number of Prizes = (Total number of eligible bonds) / (odds for the draw)

Thus:

Total Number of eligible Bonds =  (Total Number of Prizes)  / (odds for the draw)

Thus total number of eligible bonds = (2,131,455) / (1/26,000)

= £55,157,570,000

That is £55 billion. Yes, £55 Billion invested by UK savers in Premium Bonds.

The Cambridge University Endowment Fund looks after the University’s long term investments.

[http://www.admin.cam.ac.uk/reporter/2014-15/special/06/06-FMI-2014-SectionN.pdf]

With £2,292 Million under management, that is £2.29 billion. (in 1990 it was £250 million)

The Cambridge University Endowment Fund long run objective is to achieve or exceed an average annual rate of total return (i.e. income and net capital gains), net of all costs and before distributions are taken into account, equal to RPI plus 5.25%,

Spread over 6 assets classes:

Public equity £1,451.0 million
Private investment £223.7 million
Absolute return £264.8 million
Credit £73.2 million
Real assets £241.1 million
Fixed interest/cash £38.2 million

8 Fund managers look after this portfolio.

Over the six years since 30 June 2008, the fund has an annualised return of 8.6%.

The income from its investments are incredible.

Net capital gains £202.7m
Dividends £16.6m
Rent £7.1m
Interest £2.1m

Total income £228.5m

Not bad when you consider it started in 1958 with £4.5m and today is £2,292m. Acorns and Oak trees springs to mind.

The UK has proven oil reserves of about 3,000 million barrels of oil. To put this number into context, the UK “owns” about 0.2% of world reserves

It is useful to know today’s value of the UK oils reserves.

3,000 x 1,000,000 = 3,000,000,000 barrels of oil

The price of Crude Oil is $48.55 a barrel.

Thus:-

3,000,000,000 x $48.55 = $145,650,000,000
That is £93,179,000,000

Or to simply say £93 Billion is the value of the oil in the ground in the UK

UK Mortgages Limited is a £262m investment fund. It was only recently launched in July 2015

It invests in a portfolio of good quality UK residential mortgages.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=41993839&record_search=1&search_phrase=UK mortgages]

Managed by Twenty Four Asset Management
[http://www.twentyfouram.com/]

It aims to deliver an investment yield of over 7%, and pay this dividend each quarter.

The reasons for this investment being an attractive offer to income seeking investors is that high quality mortgages are seen as a safe investment for the following reasons:-

-Secured lending against important personal asset (one’s home, people will pay the mortgage and go without other things, rather than loosing homes home)

-Very low default rates and lower loss rates relative to other forms
of debt
-Annual loss rate during 2008 credit crunch always below 0.2%
-Repossession process is transparent and predictable
-Loss only incurred firstly after default and then only if property
recovery is lower than value of mortgage loan

So one can see the potential upside on this fund.

Getting low cost exposure to international markets has never been simpler.

Investors want access to sectors such as:-
Financials, Consumer Goods, Industrials, Healthcare, Technology, Consumer Services, Oil and Gas, Basic Materials, Telecommunications (shares in world class players like BT Group PLC) Property and Utilities.

Also with this, investors want exposure to countries such as:-
The United States, Japan, Switzerland, Germany Canada, France, Australia, South Korea and The Netherlands.

These needs can be easily captured in ONE fund:

The Legal and General International Index Fund.

[http://i.legalandgeneral.com/consumer/investments/products-and-funds/index-tracker/investments-productsandfunds-indextracker-fund-internationalindex.jsp]

This fund gives exposure to these markets by tracking the performance of the FTSE World ex UK Index.

A £587 million fund. Its top 10 holdings are:-

Apple 2.12% of the fund
Exxon Mobil Corp 1.03% of the fund
Microsoft Corp 0.95% of the fund
Wells Fargo & Co 0.85% of the fund
Johnson & Johnson 0.79% of the fund
General Electric Co 0.79% of the fund
JPMorgan Chase & Co 0.74% of the fund
Nestle S.A. 0.68% of the fund
Novartis AG0.65% of the fund
Procter & Gamble Co 0.63% of the fund

Peer to Peer lending is becoming more and more high profile. As investors are looking for a new asset class with better returns, and also as banks shrink balance sheets, financing for Small and Medium Enterprises is getting harder and harder.

Thus we are seeing a real growth in peer to peer lending for businesses, and a high profile operation is Assetz Capital.

They have just launched a new fund called the Great British Business Account (GBBA)

https://www.assetzcapital.co.uk/our-investor-accounts/gb-account/

Yes, a return of 7% and back by a provision fund. Like any investment, there is a risk to one’s capital, but with Assetz Capital they take security on loans generates, and with this fund, an upfront provision fund has been set up to provide added security.

The UK has a very large energy industry. Electricity is a primary resource.

in 2014 the UK power generators (power stations) produced 335 TeraWatts hours of electricity.

335 TeraWatts Hours= 335,000,000 MegaWatts hours

Now to put a monetary value on this is quite simple. The average price for a delivered megawatt hour is about £100 per MegaWatt hour.
Yes £100 MW/h

Thus:-

335,000,000 Megawatts x £100 = £33,500,000,000

Yes, that is £33,500 million = £33.5 Billion.

That is equivalent to 2.23% of UK GDP.

On Wed 5th August 2015, the FTSE 100 insurance giant, Legal and General [www.legalandgeneral.com] published their half yearly results.

[http://www.legalandgeneralgroup.com/media-centre/press-releases/2015/grouppressrelease-2015halfyear-operatingprofitup18netcashup11roe19.html]

Legal and General a pioneer in low cost index tracking funds is now a massive player in the asset management industry.

The results are incredible.

Assets Under Management stand at £714.6 Billion.

To put that figure into context that is about 50% of the UK Annual GDP.

It’s major shareholders are:

Blackrock, Inc 5.1% holding

AXA 4.3% holding

The Capital Group Companies 5.0% holding

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10055&action=

A yield of over 4% on the stock for a company that effectively owns over 5% of every UK listed company.

As Iran is accepted back into the world community, this nation of incredible history has a huge untapped economic potential that could become a regional super power.

If one looks beyond the 1979 revolution, Iran’s history is amazing. The brilliance of Omar Khayyam is an example of the rich heritage.

[https://en.wikipedia.org/wiki/Omar_Khayy%C3%A1m]

Today’s Iran’s riches are based on its raw materials.

Reading the BP Statistical Review of World Energy

[http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf]

one can see the potential of Iran.

Proven Oil Reserves of 157.8 million barrels of oil, that is 9.3% to the world’s total reserves.

So if all the oil was extracted and sold today what would it be worth ?

157.8 thousand million barrels = 157,800,000,000 barrels

Crude oil today is worth $53.06 = £34.01

Thus:

157,800,000,000 barrels x £34.01 = £5,367,223,076,923

Yes, £5.367 Trillion. That is about 4 times the size of the UK annual GDP.

One can see the potential value of Iranian oil.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In July 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

15-Jul-2015 0 1/8% Index-linked Treasury Gilt 2026 £1,500 Million
07-Jul-2015 3½% Treasury Gilt 2045  £1,924.9690 Million
02-Jul-2015 2% Treasury Gilt 2020 £4,124.5670 Million

When you add the cash raised:-

∑(£1,500 Million + £1,924.9690 Million + £4,124.5670 Million) =  £7,549.536 Million

£7,549.536 Million = £7.549536  Billion

On another way of looking at it, is in the 31 days in July, HM Government borrowed:-

£243 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2026 & 2045. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together…”