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Investing

Investing should always be tailored to achieve your personal objectives whilst operating within the constraints of your risk profile and capacity for loss.

Typically, our clients seek advice on investing to achieve:

  • capital growth e.g. pension funds,
  • income e.g. pensions or other invested assets
  • inheritance tax planning.

You need to consider how long you wish to invest. As a rule of thumb:

  • Short term (less than 5 years) – usually cash deposits, National Savings & Investments, Cash ISA’s etc.
  • Medium term (5 to 10 years) – you can use real assets for investment returns including equities (stocks and shares), fixed interest, property, alternatives and cash.
  • Long term – (10 years plus) – you now have a good timeframe to invest and you may choose to invest more in equities for better long term returns.

Whatever your objective is, investing in today’s market can be complex.  The Brexit vote and other world events such as the Italian constitutional referendum, the US presidential election and ongoing conflicts are likely to lead to heightened volatility in markets. We expect lower investment returns for longer but equities (selectively) still offer the best potential returns for the long term.

In order to reduce risk of loss, your investment needs to be diversified in line with your objectives – a range of assets, geographically spread. What type of fund management suits your objectives?

  • The difficulty is that the market outlook is constantly changing and a static investment portfolio needs to try and take into account what might change.
  • A better investment solution may be to have an actively managed investment fund or a tactically managed portfolio of investments. These options try and take account of the risks and opportunities in the market and position their invested assets accordingly.

In an actively managed multi asset fund, the assets can be positioned tactically but with a long term investment focus.  We are talking about investing – not trading.

A tactically managed investment portfolio is likely to be a Managed Portfolio Service; a lower-cost form of Discretionary Fund Management.  This means that you have given the Discretionary Fund Manager the right to alter their asset allocation and buy and sell funds on your behalf at their discretion. You are using their expertise in a complex arena – this will enable the investments to be kept up to date with the current market outlook.

Both actively managed multi asset funds and tactically managed investment portfolios could be good solutions given the current market outlook. Contact us to discuss your investing objectives.

 

Steve Speed 26/09/2016