Investment & Portfolio Managment

Specialist Investment Management

The view of Sancus Retirement Planning is that most reasonably intelligent people, including most of our clients are educated enough to be able to manage their own affairs. However, taking into consideration all of the facets that make up good investment decisions requiring a great deal of time to monitor individual companies and markets all over the world (time our existing clients either do not have or with the time available, would rather being doing something else) prefer to appoint a third party to help grow their money. 

 

Whilst Sancus Retirement Planning have the personnel within the firm who meet the FCA criteria to manage money as recognised investment fund managers, in the new retirement landscape, maintaining in-house investment management is now a struggle to cope with when dealing with the increased burden of administration and the far more technically challenging client meetings of today. That is on top of the required rigorous investment research, constant portfolio rebalancing and not to mention the additional complexities of investing during uncertain times. It is taking all of this into account that we believe delegating this responsibility to a Discretionary Fund Manager is in our clients best interest long term.

 

As independent advisors we have access to all the fund groups that make up the UK Discretionary Fund Manager (DFM) market.  What is detailed below is an insight into what they do and the importance of getting the right manager for the right client strategy and plan. At Sancus Retirement Planning we have developed a sophisticated Centralised Investment Process, which includes outsourcing the investment management to a Discretionary Fund Manager.

 

With our own client portal we feel well placed to offer a comprehensive investment management service, working with our DFM partners, whilst providing every client access to their own portfolio on a daily basis, with confidence that the security of their data is well protected.

 

So what I am paying for when I appoint a DFM:

 

•  Portfolio Management

• Asset Allocation

• Diversification

• Rebalancing

 

Portfolio Management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation, for individuals and institutions, and balancing risk against performance. Portfolio management is all about determining strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other trade-offs encountered in the attempt to maximise return at a given appetite for risk.

 

Asset Allocation: The key to effective portfolio management is the long-term mix of assets. Asset allocation is based on the understanding that different types of assets do not move in concert, and some are more volatile than others. Asset allocation seeks to optimise the risk/return profile of an investor by investing in a mix of assets that have low correlation to each other. Investors with a more aggressive profile can weight their portfolio toward more volatile investments. Investors with a more conservative profile can weight their portfolio toward more stable investments.

 

Diversification: The only certainty in investing that is it is impossible to consistently predict the winners and losers, so the prudent approach is to create a basket of investments that provide broad exposure within an asset class. Diversification is the spreading of risk and reward within an asset class. Because it is difficult to know which particular subset of an asset class or sector is likely to outperform another, diversification seeks to capture the returns of all of the sectors over time but with less volatility at any one time. Diversification takes place across different classes of securities, sectors of the economy and geographical regions.

 

Rebalancing: This is a method used to return a portfolio to its original target allocation at annual intervals. It is important for retaining the asset mix that best reflects an investor’s risk/return profile. Otherwise, the movements of the markets could expose the portfolio to greater risk or reduced return opportunities. For example, a portfolio that starts out with a 70% equity and 30% fixed-income allocation could, through an extended market rally, shift to an 80/20 allocation that exposes the portfolio to more risk than the investor can tolerate. Rebalancing almost always entails the sale of high-priced/low-value securities and the redeployment of the proceeds into low-priced/high-value or out-of-favour securities. The annual iteration of rebalancing enables investors to capture gains and expand the opportunity for growth in high potential sectors while keeping the portfolio aligned with the investor’s risk/return profile.

 

There are two forms of portfolio management: Passive and Active. Passive management simply tracks a market index, such as the FTSE 100 or the S&P 500, where as, Active management – this involves a single manager, co-managers or a team of managers who attempt to beat the market return by actively managing a fund's portfolio. This is achieved through investment decisions based on research and decisions on individual holdings and collective investment funds, known as actively managed funds.

 

Please contact info@sancusrp.co.uk for more information, help and guidance on our Centralised Investment Process.