Our investment strategy
The management of money and how to invest it lies at the heart of financial planning. It is the key element of the service we have been providing to our clients for the last four decades. Our strategy is suited to the needs of all clients yet bespoke in its approach to take care of the difference that arise in each persons situation.’ Our specialist investment team recommends the most suitable type of investment for your specific objectives.
Asset Allocation
What a world we would have if there was just one investment to suit all – a steady ten percent return say, with no risk – how good would that be. But as we know the world is not like that. There are hundreds of thousands of investments and each of them comes with their own make-up, potential return and associated risk – more than a bit confusing – we make sense of this for you.
Fortunately, nearly all of these investments fall within the major asset classes and there are only four of them – Cash (such as building society deposits), Bonds (representing money borrowed by Governments and other organisations), Shares (representing part ownership of companies), and Property (from warehouses to private residential and everything in between).
In any period, this is where our analysis begins, leading to a view of the prospect for assets in the period ahead and the division within these assets e.g. our view of say, European shares verses UK Shares. (Our latest ‘Prospect for Assets report’ is available in ‘Our Thinking’ Section of the website).
The extent to which this matters i.e. choosing the right balance of assets in a portfolio is illustrated in the table below showing the performance of some major assets over the last ten years (up to 9th November 2023).
Asset Performance Table |
9th November 2023 |
||||
Asset |
Index |
1 Year |
3 Years |
5 Years |
10 Years |
Cash |
Money Facts 90 Days Notice 10K in GB |
3.95 |
4.68 |
5.87 |
7.68 |
UK Corporate Bonds |
IBOCC UK Sterling Corporate All Maturities TR in GB |
5.34 |
-13.06 |
-0.54 |
21.14 |
UK Commercial Property |
FE UK Property Proxy TR in GB |
-5.66 |
1.98 |
-1.51 |
37.61 |
Global Shares |
MSCI World TR in GB |
4.78 |
13.60 |
41.40 |
117.72 |
*Figures from FE Analytics **Data provided by FE fundinfo. Care has been taken to ensure that the information is correct but it neither warrants, represents nor guarantees the contents of the information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. FE fundinfo Limited Registered in England and Wales (03672592). Registered office: 3rd Floor, Hollywood House, Church Street East, Woking, Surrey, GU21 6HJ. Telephone 0207 534 7600 Website www.fe-fundinfo.com
Our process continues with and analysis of the client’s attitude to investment risk in particular, their comfort level with personal gain or loss.
Investment Risk
“What you don’t know can’t harm you” – wrong – when it comes to investing, what you don’t know can definitely harm you and on occasion it will.
We cannot eliminate risk for our clients but we can take the greatest of care to ensure that you:
- Understand the risk of investing
- Understand and are comfortable with your own attitude to investment risk
- Understand and are comfortable with your own selected portfolio
In simple terms, risk attitude translates as “in looking for a greater potential return on your money, how willing are you to risk a less favourable outcome?”. Of course, ups and downs are the nature of the investment world and so, the time that you set yourself to achieve your original goals is also important.
There is no single approach or formula that will provide a comprehensive and guaranteed result but we will do our best to assess your risk tolerance based on your financial situation, investment goals, timeframes and comfort levels. Then we will plan together to reach a solution that suits you.
The graphs below are a good illustration of investment risk over time showing the difference in performance for clients of our own Portfolio Service over the last ten years.
There are five portfolios available within the low to high risk range Whilst clients in the high risk portfolios achieve the best results over the period, you can see that there were times when a new high risk investor would have suffered a sudden and substantial loss at outset. For the low risk investor progress was steadier, losses less dramatic. There is no right or wrong about which level of risk you choose. It’s all a matter of what is suitable in a given situation.
Overall, the high-risk portfolio has delivered the best performance over the decade down to the low risk with the lowest performance. But this would not always be so. As always, we add the caution that past performance is just that and no more, it does not tell you what will happen in the future.
The graphs represent the performance of our risk rated portfolios since they were established in 2009. This performance is net of all charges (for a £100,000 investment). But does not include any initial charges which could be up to 3%. They do not form a recommendation but are shown simply to illustrate how investment risk impacts on investment performance.
The portfolios are only one possible solution to investing over the medium to long term. They will not be suitable for all clients.
Fund Selection
There are many renowned Investment Companies in the City of London and elsewhere whose business is managing funds in any asset, market or sector you care to think about.
This is the last piece of our jigsaw once we have established the client’s circumstance and understanding of assets and risk. We select from this universe of companies and funds with a mixture of research, analysis and straightforward years of experience to get the best fit.