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Our investment products can provide both individual and institutional investors with flexible investment vehicles, which can accommodate varying appetites for risk, asset exposure and capital protection.

It is important that you understand the risks attached to each of the investments. The key risk areas are summarised below, but please remember that these are general risks and those relevant to a particular product are set out in the product literature.

Meteor does not provide financial advice or guidance on tax issues and we recommend that you talk to a financial adviser if you are considering investing. Some products require you to seek professional financial advice. Such products will be highlighted on the website and in the brochure.

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Cancellation Risk – the risk that if you decide to cancel the investment after assets have been purchased you could lose some of your money if the market(s) or asset(s) to which your contract is linked have fallen since the purchase date.

Counterparty Risk   – the risk that a financial institution with whom we arrange the assets to provide investment returns does not, or cannot, pay the amounts due, which could cause you to lose some or all of your money and any investment returns that would have otherwise been payable.

Early Encashment Risk – the risk that if you decide to encash the investment before maturity you could get less back than you invested. Administration charges for early encashment will increase any losses.

Inflation Risk – the risk that inflation will reduce the real value of your investment over time.

Investment Risk – The risk that the market(s) or asset(s) to which your investment is linked fall in value, which could cause you to lose money.

ISA Transfer Risk – if you wish to transfer an existing ISA this must be done in cash, which means your existing ISA manager will sell your investments and you may be charged an exit or transfer fee. There is the potential for loss of income or growth if markets should rise while your transfer remains pending.

Liquidity Risk – the risk that you may not be able to immediately access the value of your investment.

Pricing Risk – the risk that a financial institution with whom underlying investments have been arranged may not be able to quote regular prices making it difficult to value your investment and delaying any early encashment request you may make.

Product Risk – the risk that the product design could produce a return that is lower than a direct investment in the market(s) or asset(s) to which the product is linked.

Tax Risk – The values of any tax reliefs will depend on your individual circumstances. You should note that the levels and bases of taxation could change in the future and these changes may be applied retrospectively.

It is important that you read any product literature carefully and in full so that you understand how the product works and can decide whether or not you are prepared to accept the risks and the possible consequences of investing in a particular contract, before proceeding with an investment.

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Meteor Insights

Inflated Inflation

According to the Office for National Statistics (ONS), the UK’s annual inflation rate as measured by the Consumer Prices Index (CPI) more than doubled in April

According to the Office for National Statistics (ONS), the UK’s annual inflation rate as measured by the Consumer Prices Index (CPI) more than doubled in April. The 12 months to April saw a rise of 1.5% compared to 0.7% in March with oil prices, energy bills and clothing highlighted as culprits. Not at all surprising given the reopening of bricks and mortar retail shopping.

Many commentators see inflation accelerating even further over the coming months as people start going out again. Cineworld, for example, reported a “strong opening weekend” in the UK when the lockdown was eased to allow movie-goers back into theatres. With increasing confidence in the vaccine rollout and the underlying public desire to satisfy pent-up demand, there should be plenty of reason to expect continued positivity.

With global economies taking their recoveries into second gear, much attention will be cast on central bank policy. At the beginning of May, inflation fears rocked investor confidence and shares (especially in tech) went red for a couple of days. Valuations have since steadied, suggesting investors might only expect a temporary period of higher inflation…for now. But do we need to be concerned?

Perhaps. But there’s no obvious consensus in the debate. The most direct aspect that could impact investors is that an overheated economy triggers central banks to reduce stimulus. Businesses get less support and fewer opportunities to expand – share prices would then probably react negatively. For a while now though, policymakers have insisted that inflation targets are less important than growth and recovery. Stimulus too, however, is a driver of inflation. The other consideration is the behaviour of businesses. If they think inflation is coming, they will adapt and increase prices.

One thing that is generally agreed upon is that runaway inflation would be pretty bad overall. Not many of us want to see our money progressively lose its worth over time. Knowing if inflation will be a problem is difficult enough, much less combatting it. However, one thing that people can do is invest. Commodities like gold, for example, are often considered a strong inflation hedge. Investors need to be wary of the volatility that commodities and other alternative asset classes entail though. Plain, old UK shares shouldn’t be forgotten either. There are sectors that traditionally perform well in a high inflation environment like energy, utilities and food.

Structured products as part of a diversified portfolio can work too. We currently offer a range of FTSE 100 linked products that have various rates of return. The FTSE 100 index (as of 24/05/21) contains companies that operate in the aforementioned sectors – such as Associated British Foods, BP PLC, Diageo, National Grid, Royal Dutch Shell and SSE.

This article is not a recommendation. Meteor Asset Management Limited does not offer financial, legal, tax or any other type of advice. We believe that it is important to seek professional advice before you invest, to ensure that you choose an investment that is suitable for you.

Posted: 25 May 2021
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