We work constantly on your behalf to micro-manage every aspect of your finances. It only takes small differences, applied consistently (plus the benefit of compounding) to make a huge difference to your returns. Attention to detail – that’s what sets us apart from our peers.
Even if you feel that your assets are performing reasonably for you right now, we should be able to increase your returns by 2% per annum. This is a high target but just a 0.5% difference in each of the areas of costs, risk, returns and tax can make that goal achievable.
Costs
Costs are a major drag on returns, which is why we always aim to reduce them. One of the ways we do that is by making passive funds and exchange traded funds core portfolio holdings: the costs of these types of funds is as low as 0.1% per annum. We will however use active funds where we are confident that their potential returns more than negate the higher costs. Pooling our clients funds also helps us to negotiate discounts that are normally available only to big institutional investors or ultra wealthy individuals.
Risk
To our way of thinking, excess risk is pointless risk. We promise to take no more risk than is absolutely necessary to generate the returns you require to meet your goals. And minimising losses in falling markets is as crucial as maximising returns.
Returns
Whilst it’s true that correct asset allocation can produce around 90% of all returns, there’s more to asset allocation than simply apportioning a percentage of capital to cash, equities, property and fixed interest investments. Within each asset class there are sub sets of assets such as European or UK equities, gilts or corporate bonds, commercial or residential property – the list goes on. When you take those factors into account, you can see why we spend 90% of our research time on asset class analysis.
Then there’s the no small matter of fund selection, which is something we’re rather good at. Of the funds we recommended in 2008, 85% were above their sector averages a year later; of the funds we switched out of, the replacement fund outperformed 100% of the time.
Tax
Despite the fact that most people don’t like paying tax, it’s amazing how many of us cough up far more of it than we need to. Some of the more basic mistakes include incorrect allocation of assets between spouses, not utilising capital gains or failure to claim capital losses.