Building investment portfolios

How does your financial adviser and investment specialist pick the funds to recommend for your investment portfolio?

Firstly you need to decide if you want to have a bespoke investment portfolio or a standard portfolio.  Most financial advisers who are not investment specialists will try and work with a bespoke portfolio.

Bespoke Investment Portfolio

It takes a minimum of 3 hours to properly research just one fund – even with the latest computer software!

If every client has a different investment portfolio, it is very difficult for the independent financial adviser to keep up to date with every single client.  Unless you have a portfolio in excess of £500,000, the adviser cannot afford to spend a lot of time managing your portfolio and give you bespoke investment advice.

Standard Investment Portfolio

In this case the financial adviser does the fund research on behalf of all their clients before even seeing you!  Ideally they will decide on about 15-25 funds and produce a ‘best buy’ list with a reserve for each fund picked.

It’s in the independent financial adviser’s interest to spend a lot of time fully researching the funds held in the investment portfolio as it contains the same funds (held in different proportions) for all of his clients.  If he doesn’t pick the ‘best of class’ no one will make money and the adviser will lose both clients and money.

Why should I use Bluebond to build my standard investment portfolio?

We use proactive investment management alongside Modern Portfolio Theory (MPT) to build investment portfolios for our millionaire clients.  This system uses the most up-to-date technologies to provide an integrated portfolio administration that streamlines investment management to make it easier for you.  It allows us to deliver reports and information to you in a straightforward manner, greatly reducing the need for you to deal with needless paperwork.

We build investment portfolios in a WRAP platform (the ‘supermarket’ for funds), as it makes it easier and cheaper over time to switch and buy funds.    This enables us to act immediately on your behalf if the fund underperforms or if the fund manager leaves.  It doesn’t wait a year until your next review as the funds are constantly monitored.

Once an investment is placed with us you can be certain it is being properly managed and action taken on an ongoing basis, with little work on your part.

How do you build a standard investment portfolio?

• We have three categories of funds, Growth (high risk funds), Balanced (medium risk funds) and Defensive (low risk funds).  Any fund we select is assigned to one of these categories depending on its volatility, underlying asset class and level of correlation to markets in general.
• We have six portfolios ranging from Cautious through Conservative (aims to provide steady growth with low volatility) and Confident to Intrepid (offers the potential for high performance and growth in return for taking greater risk).
• Our Investment Philosophy determines our choice as to the type of funds we aim to include, is one of adapting to market cycles as illustrated below:

 

When we perceive ‘the market’ as being in phases ‘late A’ or B, we focus on protecting your money.

When we perceive ‘the market’ as being in phases ‘late C’ or D, we focus on the growing your money.

Ideally the funds you choose with your independent financial adviser and Investment Specialist will be in individual asset classes.  Discuss ETFs (Exchange Traded Funds) with them – they are a low-cost method of investing in a specific type of asset class, such as oil or gold.  They are lower cost and provide access to most types of investment.

Remember, all our clients invest in the same high quality funds, albeit in different proportions according to their attitude to risk, so everyone benefits from the intensive research and experience that goes into the selection and proactive management process.

How is your research kept up-to-date?

We carry out a painstaking examination of all the available funds AND their managers using a highly detailed, daily-updated database from Financial Express (a leading supplier of Market Data to investment specialists).  We search and filter this data to eliminate approximately 95% of the ‘low quality’ funds before analysing the remaining funds in depth in order to pick the ‘best of this best’.  Currently we utilise around 15 funds and ETFs to build portfolios.  These 15 having passed our strict selection criteria and cover many different asset types.

Unlike nearly all other investment advisers, as part of our investment management service, we also proactively adjust portfolios to optimise returns according to expected market conditions.

Any questions on building investment portfolios?

However, if you are a small business owner or wealthy retired with a minimum of £100,000 to invest for at least 5 years and still have questions after that, please don’t hesitate to call us on 01582 839280 or Email us.