Successful investing can be one of the most difficult but rewarding aspects of managing your money, and will have a dramatic impact on your standard of living throughout life.
Risk assessment
One of the most important parts of our process is to understand your experience of investments and how much risk you are willing to undertake, which is done using psychometric profiling. We have found this to be the most reliable means of ensuring that we understand your views. This forms the basis of recommending suitable investments for you.
Selecting funds
With over 2,000 UK domiciled funds and 55,000 mutual funds to choose from globally the choice of funds is overwhelming. Selecting the best, consistent managers requires a full-time team of research analysts who look at the financial data and speak directly with fund managers to get to know their skills and style of investing. No single investment house has a monopoly of skills and using just one manager is inherently risky because most fund managers are not consistently good performers.
We have decided to use multi-manager funds: those that invest in a range of other funds controlled by different asset managers. The aim of these funds is to add an extra layer of diversification by segmenting a portfolio and outsourcing its management to individuals who have been identified as having proven experience in a particular area.
It is also vital that changes in the market or the fund's structure do not change the risk profile of the fund. You don’t want to see your cautious fund become more risky over time. For this reason we only choose funds that have a stated objective of controlling the risk at a specific level that we can match to your risk profile.
Active or passive?
Which is the best approach? We believe that both approaches have their strengths and weaknesses and so include both in our recommendations.
Active fund managers seek to identify opportunities to beat the market through carefully selecting assets that they hope will outperform. However in reality only about 20% of active funds are successful in this, yet amongst those that do there are some very accomplished managers.
Passive investing uses index- trackers whose objective is to mirror the performance of a given stock or commodity market index. Their managers will ensure that the fund they are constructing simply replicates the index that it is tracking. It is now possible to buy trackers for just about any stock, commodity or bond market. Passive portfolios are a great way of achieving diversification but at a much lower cost.
Choosing the right tax wrapper
This is simply about making sure that your money is held in the investment that will cost you the least in tax both now and in the future. For example if you save into a cash deposit account you can usually get a greater return by using an ISA. Well the same applies to investments and unit trusts and other collective funds can also be held in a range of tax free investments such as ISAs and offshore bonds. We understand and recommend the full range of tax wrappers to ensure that your money is working as efficiently as possible.
Larger investments
For larger investments (typically £250,000 or more) or those willing to pay for a more bespoke service we can recommend a portfolio manager who will operate a portfolio to your individual requirements. The portfolio will most likely include direct holdings of shares and Gilts as well as collective holdings like unit trusts.
Whichever option is right for you we will always offer you the option to keep your investments under regular review. You can take a look at our Service Options here.
Contact us now to find out about our investment strategies.
Please feel free to have a look at the guides below:
Download our investment process in detail
Overview of asset classes
UK Financial History 1950-2010
