Asset Management

For the majority of our clients investments we adopt a relatively conservative asset allocation approach.  What this means is that we produce an actuarial report based on the clients' attitude to investment risk, income needs (if any) and time horizon.  This report then recommends a certain amount of money to be invested in each of the four main asset classes available to investors which are as follows:

• Equities
• Fixed Interest
• Property (Commercial)
• Cash (Bank and Building Society Accounts)

The advantage of this asset allocation approach is that you use more asset classes and you invest a more appropriate sum into each asset class at each stage of the economic cycle.  What it means is that you do not have “all of your eggs in one basket”.  Research has proven that 91.5% of a long term investment portfolio’s returns are determined more by asset allocation than by the performance of individual funds.  To demonstrate what we mean by this, if you were to consider which asset class would have been more appropriate to invest in over the period 2000 – 2002 I am sure, with the benefit of hindsight, you would agree that UK residential property would have been a better asset class to invest in at the time.  However, today it may be equally argued that equities are a better home for investing in than UK residential property for example.  This demonstrates the advantage of an asset allocation approach.  What we also do with clients is we undertake an annual review and we rebalance the clients portfolios each year when necessary to ensure that the correct asset allocation percentage is applied to each of the asset classes.  Changes would also be required if any one or more of the three criteria of attitude to investment risk, timescale and income needs were to have changed during the previous twelve months.  What we have discovered since we have been using this system is that our clients are getting very pleasing, consistent and low volatility returns on their long term investment portfolios.  This is an approach which we feel would be very appropriate to you.

To add an extra layer of certainty to getting better returns on your investment portfolio we also use other techniques which are as follows:

1.       Follow the Fund Manager

We now track the individual fund managers performance on a monthly basis over rolling three year periods.  The reason for this is because 90% of fund managers change jobs at least once every five years.  So simply tracking the past performance of a fund in itself is not sufficient to ensure better investment performance.  The idea of “follow the fund manager” is that if a top fund manager moves from one fund management group to another we are likely to follow the fund manager rather than the fund and recommend a switch of funds to the new fund that the top fund manager is now managing.
 

2.      Fund Management Rankings

Another form of research we now use consistently is one of future, predictive performance of the fund management group itself.  There are rankings available which analyse, review and highlight the top investment management groups based on their team based approach and their likelihood of continuing to deliver top investment returns.  We consider this forward investment potential of a group as very important and more reliable than simply past performance which is purely historical.

3.      Fund Performance Rankings

Whilst the past performance of individual funds is probably the least important of criteria it nonetheless cannot be simply ignored so to back up our recommendations based on follow the fund manager and fund management rankings we also research and rank funds based on their past performance.

We have found that the combination of research methods outlined above for the asset allocation approach is very powerful and does indeed translate to very good investment performance.  This has been a radical departure for us because we and our clients have been frustrated for a number of years at investment companies lack of systems to deliver above average performance.  We have now taken control of the process and results have been very pleasing for clients in recent years.

Click here to Contact Us for more information or queries.