We keep ourselves informed of the landscape, legalities and legislation surrounding investment, working in a collaborative environment where knowledge is shared. We openly share this knowledge to empower those that seek it to make the most informed decision. Below we share our library of educational resources, informative media and transparent FAQs.
We aim to achieve clients’ investment objectives within the timescale and benchmarks defined by the risk tolerance agreed. Verifiable benchmarks help to measure progress.
Many portfolios will be compared to the Growth, Balanced and Income benchmarks defined by PIMFA who oversee the MSCI WMA Private Investor Series. PIMFA were previously known as the WMA (Wealth Management Association). Other portfolios will have a composite benchmark agreed at inception.
When clients wish us to have market-linked performance benchmarks, these are generally monitored on a three year rolling basis, and not based on shorter term criteria.
We have the flexibility to use actual weightings that vary from the benchmark weightings and at times these variances may be significant.
Private individuals have to pay capital gains tax when gains realised are in excess of their annual allowance, and thus are sometimes loath to take profits. This may not be right for their investment portfolios. Having more of one’s money in pooled funds allows the deferral of crystallising capital gains, because the funds are unlikely to be traded as frequently as shares.
Risk warning: Each individual client may have differing tax positions and requirements. The tax reliefs and allowances available to clients may vary from time to time.
Funds offer the most efficient way for our clients to change asset allocation.
We invest in unit trusts, investment trusts, OEICs (Open-Ended Investment Companies) and offshore funds, which together encompass thousands of funds.
When selecting them, we focus upon people rather than products, and how they manage their funds, rather than only looking at the results they get.
We use external research to identify a small pool promising managers, then reduce this to a recommended list managers through qualitative analysis based upon personal knowledge, interviews, references and style assessment. The result is exposure to an eclectic mix of managers who should outperform their peers over an investment cycle.
Academic studies typically show that employee-owned, smaller businesses perform better than other companies. This is because:
As well as having the advantages conferred by being an employee-owned investment management boutique, we can also offer you something extra:
We believe that investment portfolios should be diversified not only across different stock markets but also into commercial property, hedge funds and private equity. Investments will normally be effected through collectives such as investment and unit trusts.
Once funds have been committed to the relevant asset classes, the portfolio will generally remain largely invested. The most important aspect of investment in equities is the dividend, and the ability of a company to increase this at a higher rate than inflation. The expected return on an equities portfolio over the long term can therefore be seen as the dividend yield plus the expected growth rate of dividends. The latter can be represented by the growth rate in nominal GDP (the sum of real growth plus expected inflation).
Cash may be an alternative to fixed income.
Some clients are concerned that funds may not pay dividends when they need the income. We can operate a system of paying income to our clients by monthly standing order so that they receive a consistent level of income throughout the year, regardless of the timing of dividend payments.
Risk Warning: You should be aware, if you select a higher level of income than that generated by the funds, that this may dilute the capital value of the funds.
Household names, such as M&S, Shell, GEC/Marconi and Sainsbury, long beloved by private investors, have sometimes proved to be very disappointing investments, and large company shares have become as volatile as those of small companies. We all hate to see big losses in our portfolios, and buying individual shares increases the chances of having the occasional disaster.
Risk warning: You should remember that the value of investments and the income derived therefrom may fall as well as rise and you may not get back the amount that you invest. Past performance is not a guide to the future.
Our larger clients may have some direct UK equity holdings. We do not have a strong, distinctive style approach, but are flexible in looking for:
We also use funds to diversify the styles of equity selection within the portfolio.
Investment managers need intellectual more than financial capital:
The above being true, such businesses should be employee-owned.
We know from experience that no two clients will ever be quite the same, and this recognition of the need for individual attention is at the heart of how we operate. Everyone’s investment objectives are different and change over time, so to start with, we assume nothing. We take the time to discuss with you your objectives and individual needs. Then we assign you a portfolio manager who will be responsible for the day-to-day management of your portfolio, and to whom you will have direct access at all reasonable times.
Normally, two managers are assigned to each account, so that there will always be at least one other member of staff familiar with the account and able to answer questions. We also explain the risk element in any investment, and the reporting and control structures we have in place – an essential part of our approach to establish a high level of trust with all our clients.
After assessing your overall requirements, we make careful and selective investments to meet your needs for growth and income, and attitudes to risk. We look for the best investments to satisfy these, using our long collective experience and extensive knowledge of people and markets. We aim to make returns that will achieve your personal investment objectives within the timescale and risk tolerance agreed. On the way, we plan for the long term, and seek to keep returns positive rather than relative.
We encourage regular meetings to discuss how we are managing your portfolio, and any changes in your investment objectives. We aim to have a formal meeting at least once a year, but we are always available at short notice to attend to any immediate concerns or change of plans.