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Our Investment Philosophy

Our beliefs and values underpin the investment advice that we provide to our clients. It explains the way in which we look after your money – a responsibility we take extremely seriously.

1. You are an individual – Your portfolio should be too

We will only make an investment recommendation after we have understood and analysed your personal needs. We will construct a portfolio to help you achieve your own goals and aspirations after taking account of your attitude to investment risk. For each individual we will start with a blank piece of paper when assessing the suitability of any proposed portfolio. It is your investment needs that drive this process, not any particular product or fund.

2. You should understand the investments that make up your portfolio and the reason why we have recommended them

Investment markets are increasingly complex and it is our role to cut out the industry jargon and present you with a clear, concise investment recommendation. We are keen to ensure that clients understand their investment recommendation and how this fits in with their personal goals and objectives.

We will have a thorough conversation with you before making an investment recommendation. This will include:

  • Your financial goals and objectives
  • Your need for capital security
  • Your required rate of return
  • The timeframe of the proposed investment
  • Any family commitments
  • The need to generate income or growth
  • The different types of financial risk
  • The impact of charges and any penalties on both existing and proposed plans
  • Your personal attitude to investment risk and your capacity for financial loss

When providing professional investment advice we believe the first and most important factor is a detailed understanding of what you are hoping to achieve and the level of financial risk you are prepared to take. Only after completing the above process will we begin to prepare your personal investment recommendation.

3. The cost of investing is certain – the returns are not. We will give cost our full attention

In an uncertain economic world one of the few certainties when investing is the costs levied by funds and platform providers. We aim to reduce costs where it is practical to do so and this will not inhibit portfolio performance.

There are a number of costs involved in investing, some of which are as follows:

  • Annual Management Charge (AMC) – A yearly charge levied by a fund manager. Normally expressed as a percentage of your fund value.
  • The Total Expense Ratio (TER) – This is the fund managers annual charge as well as other expenses such as legal, audit and depositary fees.
  • Trading Costs – These are the costs of buying and selling investments and include things like stamp duty and stockbroker fees.

Even the TER does not provide the full cost of running a particular investment fund. There are other costs, which are also levied on the fund. Despite this, the TER is a good indicator of a funds return to an investor.

Numerous research projects have shown that lower cost funds generally out-perform higher cost funds and as such, we always conduct a full analysis of the cost of any proposed investment . This forms a central pillar of our investment process.

4. Both active and passive funds have a place in our portfolios

While some commentators argue vehemently in favour of one strategy or another we believe that both active and passive funds can play a part in a successful investment strategy.

In an active fund the fund manager will make their own stock picking decisions to attempt to out-perform the wider market. They will generally charge a higher fee for this service.

In a passive fund the manager will simply mimic the return of an index or market, the FTSE 100 for example. While passive funds do not provide the opportunity for gains in excess of the market, they do attempt to limit underperformance as well. Passive funds generally carry much lower charges than those managed on an active basis.

We feel that both of these approaches carry merit and we will normally include an element of both in your portfolio. Our normal approach is referred to as a “core and satellite” strategy. We use lower cost passive funds to form the central “core” of your portfolio and then we use active “satellite” funds in more specialist areas where we believe an experienced fund manager can add real value.

For clients with smaller portfolios we may, on occasion, use a passive only investment strategy. This is appropriate where the costs of active management would be disproportionate to the size of a particular portfolio.

Our investment recommendations will always take into account your own personal needs and objectives and in some cases this will cause us to deviate from the above strategy.

5. The majority of returns come from good asset allocation

While there are numerous schools of thought on the precise amount of investment returns that are derived from the asset allocation selected, most studies place the figure at around 80-90%. Given that asset allocation is responsible for such a large proportion of investment returns we make this the first port of call when designing your portfolio.

Following a detailed conversation about your investment objectives and the level of risk you are comfortable with, we will go about selecting a suitable asset allocation for your portfolio. This will be the main focus of our attention when providing investment advice to our clients.

Only once we have built a suitable asset allocation, based upon both historic technical data and future projections, do we begin to select a range of suitable funds and investments to make up your portfolio.

6. Diversification reduces risk and volatility without damaging your prospective returns

Put simply diversification in an investment sense means spreading your funds across a number of different asset classes such as cash, bonds and equities as well as some additional investments in certain portfolios. The concept is that the returns from different asset classes vary over time. By holding a spread of investments across the different asset classes you have a higher chance of having investments in the best performing asset class.

It is important that your portfolio is diversified at two levels, both within asset classes and across asset classes. This means that when selecting the equity portion of your portfolio for example, we will ensure that you have holdings across a number of different companies, market sectors and geographies. In addition it is vital to get the correct spread of assets across the different asset classes to give your portfolio the best possible chance of achieving your objectives.

For many investors the correct level of diversification is most easily achieved by purchasing collective investment funds. These could take the form of unit trusts, open ended investment companies, investment bonds or investment trusts depending on your personal circumstances and investment objectives. A collective investment fund pools money from a number of investors so that a high level of diversification can be achieved in a single investment fund.

7. Time in the market is important – timing is not

We believe that trying to “time” the market is a highly risky strategy and one that should be confined to the trading floors of the big investment houses. Large market gains often happen very quickly and without notice and so trying to time your entry point is a strategy that is likely to fail. In addition the frequent trading of equities or funds will add significant cost to your portfolio.  As we have already mentioned, costs are one of the biggest factors in portfolio performance.

In our opinion it is your time in the market that will have the largest influence on your level of return. Numerous studies have shown that investors who take a long-term view will consistently outperform those who trade frequently and try to time the market. As such we will always take your investment timescale into account when recommending a suitable portfolio and encourage clients to take a long-term approach when making market linked investments.

It is also important to review your portfolio on a regular basis as your circumstances and objectives change. We will recommend suitable adjustments to your portfolio to ensure that you remain on track.

8. We will follow some simple rules to protect your investment

We have a simple set of guidelines that we follow to reduce risk within your portfolio. We will abide by the below process unless your circumstances specifically dictate otherwise:

  • We will only recommend FCA authorised investments.
  • We will not recommend single stock / bond holdings unless this forms part of a portfolio managed by a discretionary fund manager.
  • We will not invest your money in overly complex funds.
  • We will not use tax benefits as the main driver for an investment recommendation.
  • We will use the services of other investment professionals to assist us in building your portfolio.
9. All investments, including cash, carry risk – that risk needs to be managed

All investments carry a certain degree of risk. It is important that risk is understood and managed when looking after an investment portfolio. Some of the main risks inherent in all forms of investing are:

Shortfall Risk – The risk that the investment will not achieve a set goal or objective.
Income Risk – The risk that income taken from an investment can fluctuate over time.
Inflation Risk – The risk that inflation reduces the purchasing power of your capital over time.

As part of our investment recommendation service we will always explain any risks that could impact on your portfolio. As part of our on-going planning service we will manage these risks and report back to you at least annually.


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