Investment Portfolio Service

Investment Portfolio Service

In 2012 we launched our hugely successful Managed Portfolio Service.

The Managed Portfolio service has quickly become our core investment offering, consisting of a range of seven portfolios made up of a blend of different asset classes and actively managed funds from across the market.

In 2020, we extended the range of portfolio to include five additional portfolios run along similar lines, but which use Index funds as their building blocks.

Below you will find factsheets for the portfolios.

Managed Portfolios

Managed Low Risk

Managed Lowest Medium

Managed Low Medium

Managed High Medium

Managed Highest Medium

Index Portfolios

Low Risk Factsheet

Lowest Medium Risk Factsheet

Lowest Medium Risk Factsheet

High Medium Risk Factsheet

Highest Medium Risk Factsheet

The factsheets show the performance of the underlying portfolios and actual client returns may differ slightly depending upon investment platform and advice costs applicable in each individual case.

 

Why were the portfolios created?

The Managed Portfolio service was set up to address a key challenge which many advisory forms still struggle with today, namely how to deliver a consistent investment process to our clients whilst at the same time being able to tailor the risk/return characteristics of recommendations to their individual needs.

The service consists of a series of risk-targeted portfolios which blend together a mix of different asset classes (UK and Overseas Equities, Bonds, Property, Alternatives and Cash) and funds from a wide range of fund managers. The Managed Portfolios are made up mainly of actively managed funds but where it makes sense to do so, index funds may also be employed. The Index Portfolios use a similar mix of asset classes and sectors but, the building blocks of the portfolios are low cost Index Tracker funds.

 

How will they typically be invested?

Each of the portfolios consists of a blend of asset classes including cash, bonds, property and equities and the blend of these assets is determined by where it sits on the risk scale. The higher the risk, the more the exposure to equities and the lower the risk the greater the exposure to cash and bonds. This is true for both the Managed Portfolios and Index Portfolios.

 

How do you operate the portfolios?

The portfolios are constructed with the assistance of a third-party actuarial model which aims to establish the optimum blend of assets for a given risk profile by running thousands of simulations which take into account different economic conditions. We take these models and populate them using in-house research which screens based on a range of quantitative and qualitative criteria. This is true for both the Managed and Index Portfolios. In the latter case, the focus is on the method of index replication, ability to accurately track a relevant index and costs of doing so.

The Managed Portfolios are reviewed on a quarterly basis from an asset allocation, and investment funds point of view. We will actively swap out under-performing funds and seek to identify those funds which in our view offer the best prospects for future returns.

As part of the quarterly review each portfolio is also measured from a risk/return point of view against the model and benchmark to ensure they continue to meet their objectives.

Following each quarterly review, all of our clients who invest in the service receive an email advising them of any changes that we recommend. For both Managed Portfolio and Index Portfolio investors, this will include rebalancing of the portfolio back to the initial asset allocation at the start of the quarter, a process which is designed to ensure the risk of the portfolio doesn’t drift over time as a result of the different performance of the underlying assets. For Managed Portfolio investors, this quarterly notification may also include fund switches if we recommend replacing a fund or manager.

Index Portfolio clients will be automatically rebalanced each quarter, except in quarter four each year, when we may choose to swap out underlying funds. If that is the case, rather than an automatic rebalance, clients will be asked to agree to the rebalance and any fund changes.  Managed Portfolio clients, who may also be advised to change funds, must reply to the email to agree to any changes including the rebalancing each quarter.

 

Why did you introduce the Index Portfolios?

The Index Portfolios were introduced to give options to our clients. We recognise that actively managed funds can be expensive, and that lots of active managers fail to deliver the out-performance their fees suggest they should. There have also been some high profile failures by managers in recent years and we wanted to introduce an option which removed manager risk and put the portfolio focus back on the underlying assets themselves. That’s not to say we don’t think active managers can earn their money and deliver superior returns; we very much do believe this and our in house research process is designed to identify these and ensure they are part of the Managed Portfolio service, but we recognise that there is a place for Index funds too.

 

How can I invest in the Managed and Index Portfolios?

The portfolio service is available through most major platforms and your adviser will be happy to discuss with you what needs to be done to move into the Investment Portfolio Service.

 

What else do I need to know?

The aim of the portfolios is to bring together a mix of investment funds, active or index, to deliver superior returns for our clients in the long term considering the amount of investment risk they are willing and able to take. Because we offer a range of portfolios, they are suitable for clients with a wide range of risk appetites and should that change over time, it is a simple process to switch between them.

It is important to note that these are “fully invested” portfolios and are very likely to remain fully invested at all times. This means that whilst quarterly reviews of the portfolios will take place, it is highly unlikely that we will make significant changes to the asset mix of the portfolios and are very unlikely indeed to raise cash levels with the portfolios to anything other than a very modest level even in times of market turmoil/distress. Clients who wish to reduce their level of market exposure can do so either by partially or wholly exiting a portfolio or by switching from one portfolio to another.

The Managed Portfolio Service can be used through a wide range of investment wrappers and including SIPPs and SSAS, ISAs and unwrapped investment accounts and via a wide range of investment platforms. It is important to note that switches and rebalances rely on our ability to execute trades through the relevant product/platform and it is not always possible to implement instructions immediately.

It is the overall portfolio that we seek to match to an investors risk profile and components of each portfolio, when viewed in isolation might be considered to be higher or lower risk than an individual’s risk profile may suggest as suitable.

Whilst we strive to include the best performing funds in our portfolios, we do not get every fund pick right, which is why it is important to view the portfolio and its performance as a whole.

The factsheets, which can be accessed through the links above, show information about each portfolio including how they are invested and their performance. This information relates to the core portfolio and assumes all switch and rebalance recommendations are accepted and implemented each quarter on the specified date. This may not always be possible if there are existing transactions waiting to be processed – for example, withdrawals, transfers, re-registrations and encashments for fees or income. The performance data for the portfolio and any benchmark used do not consider product or advisory fees and the actual returns clients will see may differ from those shown. For the Index portfolios, past performance prior to 1st July 2020 is based on shadow portfolios that we have operated in the background for testing and analysis purposes.

Please note, past performance and risk data is not a guide to the future and the value of investments can go down as well as up. An investor may not get back the sum originally invested even if they invest for the long term.

Further information on the portfolios can be found in our guide which is available below

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