Investment Proposition
We strongly believe that every client deserves a bespoke portfolio based on their circumstances, needs and market conditions. Your fully documented investment proposition should be considered in every aspect.
Investment Proposition
If you believe that no two people are the same, then it is very easy to accept that every investor is different. We strongly believe that every client deserves a bespoke portfolio based on their circumstances, needs and market conditions. Regular long term interaction between client and investment adviser create a deep understanding of the investment process. This leads to a more relaxed client experience as investment markets move through their regular cycles.
Although we often don’t notice it we are all travelling through a cycle, The Cycle of Life. Every day our circumstances are changing little by little. The risk we are prepared to take as children diminishes as we grow older. Our need to save for a home or retirement becomes a need for income to pay for retirement and our long term care. We aim to provide a portfolio of investments designed to meet your changing circumstances. Our commitment to regular financial reviews ensures that your portfolio is structured to meet you and your family’s
ever changing needs.
Speak to our Exeter IFA team to find out more.
Planning out your retirement
Buying Quality
Our experience suggests that buying quality Shares, mutual funds, ETF’s, Bonds and Gilts with the view of holding them within diversified portfolio of investments improves chances of a successful outcome. Your investment strategy ultimately depends on the quality if the individual investments held within your portfolio. We believe that a long term approach to investing helps take advantage of potential growth and income without taking excessive risks.
What is Quality?
The credit rating agencies such as Standard & Poor’s and Moody’s provide guidance on the quality of fixed interest investments. We predominantly invest in corporate bonds and Gilts rated ‘’Investment Grade’’. When looking at shares, divining quality is harder. A long history of increasing profits and dividend distribution suggest quality. However, these need be accompanied by sound management. As the company grows and profits improve share holders can benefit from increases in value and dividend income. It should be noted that the value of share their dividends can also fall.
For collective investments [Mutual funds, ETF’s and capital investment bonds] we recommend funds that contain quality investments. We consider the value the fund manager is adding to the portfolio and the risk he takes to achieve the added value. Above average long term returns a maybe more suitable and less risky investment than a higher short term return. We recommend holding collective investments with a good track record for the long term. For more aggressive investors who wish to have exposure to Specified Sector’s, Markets, Countries, Currency and Commodities we would recommend using mutual funds and ETF’s. The exposure to Aggressive investments depends on each individual appetite to investment risk. This should range from no exposure for the cautious investor but not more than 15% for the highest risk portfolios.
Diversity
The main asset classes are Cash, Fixed interest, Shares, Property and Derivatives. Each of these assets classes move within their own cycle. Should the interest rates fall and you have all you money in short term cash investments, it would be fair to assume that although the value stays the same your monthly interest would fall virtually immediately. A fall in interest rates would affect the long term interest from fixed income investments but not so much the short term. It is also likely to have a positive effect on the movement on share and property values. Naturally the opposite is also true.
A diverse portfolio of negatively correlated investments helps reduce fluctuations in a portfolio as your investments go though their natural market cycle. We therefore seek to build a portfolio with range of asset classes.
Just considering diversity across the asset classes is not enough. Fixed interest investments should be diversified by holding short, intermediate and long term maturing bonds and Gilts. This improves access to funds without having to sell and helps maintain income was interest rates fluctuate.
Shares should be diversified across a range of sectors. Purely investing in banking shares could spell catastrophe if the financial sector failed. Diversifying with health care, utilities, and consumer staples and the other sector stocks will help reduce volatility in the portfolio. When buying individual stocks we advise that we build towards a minimum of 20 shares with no more than a 5% maximum exposure to one holding. Emotions pay a big part in managing an investment portfolio especially if you have a share that has done well over time. However a good return is no guarantee of continued good fortune. We recommend carefully maintaining and rebalancing portfolio’s on a regular basis through regular portfolio reviews.
Rebalancing
We feel that regular reviews will help identify investments that are working well and ones that are not working. In-depth research will help limited buying poor investments. It will not guarantee the performance of every investment. There may be times when an investment fails to perform as expected due changes in the investment or the wider markets. At these times you may be tempted to wait for recovery. We believe that addressing investments that are not working quickly. Getting into a lift that is going up may be better than waiting in the dark in a lift that is not moving.
Every individual has their own attitude and concern about investment risk. We believe in every investor holding a wide range of investments to help reduce the risk of a portfolio. We would expect that investments with the most risk to perform better over time. This is likely to cause the portfolio to pull out of balance. Leaving the investments to their own devises will increase the risk level within the portfolio. Bringing the portfolio back in line with the risk profile agreed at the outset will reduce the risk. These will mean selling some or part of the better performing investments in order to rebalance.
Tax
Rebalancing an investment that has grown well may cause tax issues depending on each individual’s personal tax status. Although we are not tax advisers, we try to use the most tax efficient products where ever possible including ISA’s, Pensions and capital investment bonds. Tax should not be the main driver for buying or selling investment. Holding on to the gains made should be high on the list of priority.
For complete tax advice you should contact an accountant. Similarly for legal advice you should contact a solicitor.
Diversity
We believe that quality shares will outperform quality bonds over time. Equity provides the opportunity for capital appreciation and a rising income over time. Investing in quality shares with a history of a rising dividend increases chances of success. A further boost could be received from reinvesting the dividends back into the shares. The growth and dividend potential from shares will provide a hedge against the effect of inflation over time.
Although we expect equities to outperform bonds over time, it is important to balance the portfolio with Cash and Fixed income investments. A well balanced portfolio including equity, bonds and cash will help reduce the risk profile without relinquishing too much upside.
Review
Regular financial reviews help ensure that your portfolio matches your needs through your Life Cycle. They are also a source of continued education about your portfolio. Markets change throughout the weeks, months and years. Listening to the news we hear about the economy, strikes, terrorism and other factors that may affect your judgement. All these things can stop you from entering the markets or cause you to exit. Timing the market is very difficult. Having a buy and hold, not buy and forget strategy, with regular review will stop small problems from becoming big ones.
Reviewing the investments and the investment strategy should be at regular intervals arranged from the outset. These will help you cope with short term market movements, improve your understanding and most of all, make investing fun.
Are you looking for an IFA in Exeter?
Speak to our financial advisors
Pick up the phone and speak with one of our Exeter based independent financial advisors today who will be happy to answer any questions you have. Alternatively, leave us a message and we will get back to you as soon as possible.
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