After their efforts over the last year, the world’s central bankers are enjoying a rest but rather than languishing on the beach they have congregated in Jackson Hole to discuss global finance.

Two clear messages have emerged. First, there is broad consensus to maintain the monetary stimulus and, second, there is little danger of inflation returning and so interest rates are likely to remain at low levels for the next year or even two.

Maintaining the stimulus which has given heart to developed nations recently is very welcome. In Asia and the developing economies rates of growth are bounding back to normal as finance frees up.

The implication for private investors is this. First, the global economy seems set to pull out of recession. Government spending and the emerging markets’ recovery are pushing this recovery along. There is no doubt that the shell-shocked global consumer will soon need to join in but for now the worst is past. So, we can all take comfort from the assurance on high that the feared meltdown is over.

Second, if interest rates are to stay low then investors and savers need to move to or stay in real assets. But if you are anxious and prefer to stay in cash then do at least look around. It is possible to find over 3% for Sterling deposits – without going near a risky institution or country.

For those who held risk assets and stayed the course then your fortitude has been rewarded. Although the recovery in the world’s stock markets has been short and sweet – so far – history suggests that there is more to come. No doubt there will be a set back or two along the way but after a lengthy summer the water in the pool seems right for a dip.

Highlights for August 2009

• US Stockmarkets forge ahead on good second-quarter corporate results
• Unemployment continues to rise, clouding the outlook for retail sales and other areas of consumer expenditure
• Eurozone CPI falls to -0.6% while unemployment continues to rise
• Weak start to the month more than offset by later stockmarket rally on better-than-expected company earnings, demand for mining stocks and improved economic data
• Inflation falls below the Bank of England’s 2% target for the first time since September 2007
• Housing market shows further signs of stabilising
• Chinese second quarter GDP growth rebounds to 7.9% year-on-year (y-o-y), from 6.1% y-o-y in Q1
• Q2 GDP growth in Korea and Singapore also better than expectations
• Spreads on some sections of the market return to levels last seen before the Lehman Brothers bankruptcy. Across the spectrum credit markets are in positive territory YTD
• Sterling three-month interbank lending rates fall to the narrowest spread over Bank Rate since February

We are delighted to announce that our Select Cautious Return fund will shortly be available in Euros. We have decided to introduce this Euro denominated fund after calls from clients, given that there are very few similar offerings in the market.

Cautious Return has performed well during the last few months, and is currently offering a 4.2% yield. When you compare this to current returns for cash and corporate bonds, it is certainly worth considering what a low risk fund such as Select Cautious Return can provide.

The fund’s performance has been sound, but, as with all assets, the credit crunch, beginning with the collapse of Lehman Brothers, took its toll. Cautious Return has recovered, and performance is improving month on month. The latest fund fact sheet (available in our Library) shows longer term performance information since the fund’s inception.

Essentially, Cautious Return invests in a diversified range of fixed interest securities and currencies. It is designed to be an ‘all weather fund’ providing an attractive total return. The strategy is ideal for those seeking a higher return on cash deposits and as a more modern alternative to bond portfolios which carry the inherent risk of capital loss.

Select Cautious Return is an offshore fund, so does not suffer tax at source for UK non-residents. It is suited to low risk investors who are looking for capital preservation and long term income generation.

The new share class provides access to the underlying fund, but offers a Euro return for those who seek that.

We expect the new share class to launch in September 2009. If you would like more information about this investment opportunity please contact us.

Source: Financial Express Analytics, as at 29th June 2009. Performance quoted on a bid to bid, gross total return basis, in Pound Sterling. Past performance is not a guide to future returns. The price of units and shares and the income from them may go down as well as up and you may get back less than you invested. Exchange rates will also cause the value of underlying investments to fall or rise. The performance graphs show one year performance only. This is to illustrate how the funds have operated during the current difficult markets. Figures are also available on request for 3 years, 5 years and from outset of the funds. One year performance cannot be seen as representing longer term performance trends.