Our content this month are as follows:-

• Turbulence in the Markets - Stay on Course
• Les and Noel visit Santa Monica
• Books We Have Read
• An Evening with Neil Warnock - For the Best of Causes
• Quote of the Month

For the first time for a few years we have had a sustained period of troubled markets. This has given rise to the usual multitude of different opinions as to what has caused it and where it will end. Here at Index we receive at least three opinions per day from different commentators, fund managers and the other usual suspects, many of them tracing the trouble to the US sub prime mortgage market, the overexposure of hedge funds and other speculators to this market and the prospect of increasing interest rates. Whatever the cause, this is how markets behave, and investors have to learn to live with these periods of uncertainty.

The reassuring thing for you, our clients, is that you do not have to react to these events; your portfolios are constructed in such a way that they are built at the outset to reflect your tolerance of risk and volatility and are engineered to reduce volatility as far as possible. Remember that most of our portfolios contain more than 10,000 different securities, diversified by style (large, small and value), internationally and by asset class, including high-grade short dated Government Bonds, again diversified internationally. All of this, combined with systematic rebalancing, ensures that whatever the swings of markets, everything possible has been done to reduce the volatility of your portfolio; we are seeing evidence of this in the comparatively small adjustments to portfolios over the past few weeks.

Many of us have experienced turbulence on an aeroplane, but it has not prevented us from reaching our destination. It is the same with markets; take the long view, keep your eye on the final destination and have faith in the pilot. Do not let your emotions overtake your intellect. The last thing you would do in the event of turbulence on an aeroplane is to leave it!

Santa Monica is the home of Dimensional Fund Advisors, the provider of most of the institutional grade funds that we use to construct client portfolios. Index are one of only two adviser firms in the UK invited to attend their International Advanced Conference in July. There were over 80 advisers in attendance, most of them from the US and Les and Noel took the opportunity to visit the offices of three American advisers whilst in California.


The conference was addressed by luminaries from the world of finance, such as Eugène Fama, known as the father of modern finance and the originator, with Ken French, (also a speaker) of the three factor model, the gold standard of investing in the US (and here at Index!).

Dimensional are now the 15th largest money manager in the United States, despite restricting investments to the Institutional market and 300 adviser firms (out of 400,000) in the US, along with approximately 30 in Australia and 30 in the UK. Over the past five years their funds under management have grown from $50 billion to an impressive $150 billion.

Les comments, "As well as having the opportunity to meet many very successful American advisers, it was gratifying to see the level of research and diligence Dimensional bring to the entire investment process. It is clear that this is an ongoing and integral part of their offering and greatly reassuring to us and our clients. We are confident we will remain at the cutting edge of investment practice for many years to come."

This month’s book recommendation is a book that Noel and Les came across in America, entitled "The Four-Hour Workweek", by Timothy Ferris.

This is a fascinating book, which advocates that we should all organise our lives in such a way that we work far less than we do currently. It tells the author's own story of how he spends most of his life travelling the world, learning to tango, excelling at martial arts and learning languages, at very low cost, whilst his business almost runs itself at home.

We would guess that very few people will or would wish to live exactly the same way but the book is packed with tips on how to organise yourself better, particularly using electronic communications and restricting amount of information we take in and probably never use. It is extremely thought-provoking and at the very least will help you to decide priorities in your life as well as being an entertaining read.

The book is not yet available at bookstores in the UK but should be on Amazon’s list; as usual if you have any difficulty finding it please contact jayne@indexfundadvisors.co.uk.

An evening with Neil Warnock; helping to support the Acorns Children's Hospice

Neil Warnock is one of football's most likeable characters as he is never short of something to say! His opinions have always made fascinating viewing from his times as Sheffield United Manager to his stint now as a BBC football pundit. Neil is the guest speaker at the a charity based Gala Events dinner at the Solihull Renaissance Hotel on Thursday 13th December 2007. Places are £55 pp + vat or £495 + vat for a table of ten. This also includes live comedian Lee Roberts, a three course meal and a charity raffle and auction. For further details, please contact Alan George on 07967 326 288 or sales@gala-group.co.uk

Alan is the son of long-time Index client, Will George, a former commercial director at two large football clubs and a first-class organiser of corporate entertainment. We are happy to support him for this fundraiser and hope you will give it some consideration.

"I studied the lives of great men and famous women, and I found that the men and women who got to the top were those who did the jobs they had in hand, with everything they had of energy and enthusiasm and hard work."
Harry Truman: 33rd President of the United States