Written by:
Alex Chappell
Investment Manager at Amber River DB Wood
It is of course healthy to consider these risks, and indeed as a team we discuss and develop our views here on a daily basis.
The term a ‘healthy correction’ is often banded around in the financial press – the concept being that sometimes a pullback or fall in markets is no bad thing, as it means investors are also thinking about the risks.
We wrote in October that recent market behaviour felt speculative, and hence we were positioned defensively. Timing the market is notoriously difficult, though we then did see most equities markets fall into the middle of November, by c5-10%.
The surrounding narrative was two-fold. Firstly, it became clear to investors that AI spend is now very circular (the large tech businesses are all investing with each other), so if just one cog falters, the whole engine stalls. This was reinforced by a swarm of newsflow surrounding OpenAI, the business responsible for the infamous ChatGPT. This highlighted the gap between their $1 trillion in spending commitment over the next decade, and their current revenue stream of c$10bn per annum (or 1%).
The second risk that started to be appreciated more was the chance that US economic data continued to slow. Investors had been gladly blinded by the government shutdown in the states, which disrupted the usual flow of data releases. But as the government shutdown ended, they were once again forced to consider the situation where the next data set paints a negative picture.
It is of course healthy to consider these risks, and indeed as a team we discuss and develop our views here on a daily basis. The fact that investors are more aware of these risks, even if markets have since recovered most of the losses, is a positive. In addition, the volatility provided us with an opportunity to use our defensive stance to our advantage, and we put some of our cash to work.
Another key event in November was the UK Budget, with Rachel Reeves walking a tightrope that was trying to keep markets and her party happy. She largely achieved that, even if it lacked any initiatives to try to improve the forward growth outlook for the UK. Bonds, UK equities and the pound were largely muted afterwards.
From our perspective the biggest investment implication for 2026 is that inflation is likely to now fall more quickly. The OBR estimates that the measures announced, such as the freeze in fuel duty, will cut 0.4% off UK inflation in 2026. Expectations are for inflation to fall back into the high 2’s reasonably quickly in Q1, and close in on 2% as the year progresses.
So moving into 2026, we look forward to taking our client assets through the £1.5 billion mark of savings and investments.
This would give the Bank of England more room to cut interest rates, benefiting UK government bonds in particular, where we have a strong allocation. For those with mortgage exposure, fixed rates should look increasingly better value into the first half of 2026.
From a returns perspective, the low risk portfolios were flat on the month, supported by our bond bucket which performed well, and the high risk portfolios slightly negative. Year to date returns sit between 7.06% (Very Low Risk) and 13.16% (High Risk), gross of advice and platform fees. In this respect it is worth remembering that in March the global economy came very close to a recession as tariffs escalated, so to be where we are going into the last month is a very positive outcome.
In January we will release our next quarterly investment update, which will include an outlook for the year ahead. In the meantime, suffice to say that the underlying investment landscape of gradually reducing interest rates, stable and reducing inflation, and economic growth which is low but holding up, is not a bad combination. As always there are risks which require constant attention, but at least in the short term, investors are now more cognisant of them thanks to November’s pullback.
Moving into 2026, we look forward to taking our client assets through the £1.5 billion mark of savings and investments. Our team has grown in size from 35 to 55 over the last 3 years, and we have invested significant resources into our back office systems to enhance client security and future service with a view to delivering our continued improvement plan. We are of course nothing without our clients, whom without their support we would have nothing to get passionate about. We love what we do, as with life in general, things don’t always go exactly to plan, though our experience tells us that if you keep trying to do the right things you get pretty good end outcomes.
So, as this will be our closing blog of 2025, thank you for reading and engaging with our investment and topical updates throughout the year. We are delighted that our blog readership continues to break record levels which is great news. As ever your feedback is important to us, so if there’s something you would like more or less of in 2026 please drop us a line at questions@amberriverdbwood.com
In the meantime we wish you a very happy Christmas and from all the team here, our best wishes for a healthy 2026.
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Our team at Amber River DB Wood includes Chartered financial planners who look after clients across the East Midlands and beyond.
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