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Good Morning

Investment Markets and Financial Advice Overview – with portfolio results

Firstly, we very much trust you and yours are well and managing against this torrid health and economic backdrop.

We have prepared the performance tables in relation to our actual portfolio results, against the relative benchmarks, to the end of July – and the data is again pleasing to read, in relative terms, against peers and benchmarks.

The economic backdrop remains worrying, potentially turning worse – based upon the R rate increase – in parts of the UK and in other developed/leading economies.  We have all seen that the USA has not been able to control the infection rate to this point – which is damaging investment sentiment.

As we have all been reading, emerging/developing countries with more fragile infrastructure and large populations are hurting at this time – both in health and economic terms.  (India/Brazil – as an example).  Latin America as an investment sector may struggle for some time to come, therefore, we are not allocating to this sector further until further clarity and improvements arise.

The investment markets are certainly more negative with sentiment, given this backdrop – which has seen the main index chop back the gains made in late May/June from 6500 or so on the FTSE 100 Index to 5900 or so at the time of writing (9am on 3 August 2020).

As always, investing must be a medium to longer term time horizon (5 years minimum).  Of course, the investment markets can pull back substantially from this point (I wish I could predict the outcome) but for a 5 year plus time horizon, the levels of certain sectors are looking attractive.  Ironically, Tech – which has been a ‘super’ asset holding – is starting to create some concerns based upon P/E’s so this position is one to be mindful of.


More than ever the value of the advice we provide is evident.  We have seen some investors (not our clients) ravaged with losses they simply could not comprehend, so we as a business have been successful with gathering new investment clients – based upon the ‘value add’ we deliver and can back up via factual results.

We are also now seeing investors look beyond their previously ‘closed view’ of perceived ‘discount offerings’ as the largest discount broker (I’ll not name but it’s listed in the main index) total cost is often greater than our ‘Advice’ cost, which relies on investors picking from a top 50 list (previously 150 list) without regulatory protection and due diligence process in relation to constructing a risk based investment solution – so the outcomes to most portfolios we have seen have been woeful!  Some down as much as 50% due to concentration in specific damaged sectors.

We have also seen the largest ‘tied’ distributor deliver shockingly poor results but they keep talking up their value, delivering little short of poor results – from what I have personally seen of the asset allocations and funds used.


We very much want to deliver complete transparency to all investors so we continue to publish our portfolio results against the relative benchmark for all portfolios.  (Pleasingly, our results remain ahead of the benchmark and all other portfolios reviewed on a risk adjusted basis).

I hear some advice firms stating “we’re all in the same boat!”.  Thankfully for our clients and ourselves we’re not in ‘that boat’, although we are mindful that the economy is still requiring intensive care and huge amounts of support, moving forward from here.

We have experienced, over recent weeks, how hard a number of providers make it to gather information in order for us as a business to provide ‘suitable advice’ in respect of transfers of existing arrangements.

There are a couple of national advice firms (not independent) that are unable or unwilling to measure the performance of assets held within their clients’ portfolios.  My cynical mind tells me this is because their results are so very weak – especially when measured against our risk based model portfolios.

Now is the time to dig out any investments ‘paid up’ or left around with an “I’ll deal with this later” view – so capital can be deployed effectively, in line with your needs for the medium to longer term.

Financial mentoring has certainly become a hot topic, although personally I would expect the “lifestyle planning” to be the ‘normal’ process of advice, so the “planning” part of the financial engagement is clear for all clients to understand and put into practice.  Ensuring that clients have sufficient income (cashflow) to meet ones needs is the starting point – discussions around deploying capital that is held in ‘cash accounts’ is essential for long term investing at this time.

We are seeing a greater demand for larger inter-generational transfers of wealth, which is expected to gather further momentum over the next decade so the process of expert advice around asset transfer and the risk allocation of the assets in question will need expert ‘input’ – more than ever in this unpredictable world.

Action Points

From the periodic reviews that have been carried out, it is clear that our existing investment clients hold ‘cash’ that would be better deployed for the longer term into assets that have the potential to deliver greater results than 0.1% to 0.6% from cash holdings.

If this describes you, you should get in touch, as we have many ideas and solutions; some that are capital guaranteed and a no-brainer for potential investment.

Performance Tables

You will see the chart of the FTSE 100 Index over the last 12 months above.  (Please note that our Risk Portfolios should not be considered in the same way as the Index, as we are globally and sectorally diversified but we know that investors use the Index as a proxy investment indicator, that they understand).

Evidently, from the periodic reviews carried out, clients were concerned about valuations received at the end of the tax year, when portfolios were down between 7-12% – some feeling that this was bad!  The periodic reviews carried out and regular communication has hopefully placed the results we have delivered into context.  We are a country mile ahead of peers and at low cost (with exceptional service!)

The position with the index was a reduction more akin to 40% lower and most other asset managers down 15-30%, so our results of being flat(ish) to a little lower over the last 6 months is an incredible achievement.

How have we delivered this?

For many years we have held (in line with risk volatility tolerances) tech, bio tech and healthcare – using the leading funds in the sectors, along with the best of breed funds in other geographies – selected with independent due diligence.  (Personally, I wouldn’t say this is rocket science but it is what is required of a professional advice service that lives and breathes the investment markets and clients’ needs – so we are certainly delivering, and hugely outperforming, at lower cost than others).

Take a good look at the data:

Risk Model 2

Portfolio volatility        4.25
Benchmark volatility     5.10

Risk Model 3

Portfolio volatility        7.40
Benchmark volatility     5.80

Risk Model 4

Portfolio volatility        8.36

Benchmark volatility     8.50

Risk Model 5

Portfolio volatility        8.50 (substantially lower risk than benchmark and massively outperformed)
Benchmark volatility    10.80

Risk Model 6

Portfolio volatility        9.27
Benchmark volatility    10.80  (Mixed Investment 40-85% Shares)
Benchmark volatility     9.50  Weighted Sector Average

Risk Model 7

Portfolio volatility       9.64
Benchmark volatility    9.35  (Flexible Investment)
Benchmark volatility    10.80  (Mixed Investment 40-85% Shares)

Risk Model 8

Portfolio volatility       10.20
Benchmark volatility    9.40  (Flexible Investment)
Benchmark volatility    10.35 (Weighted Sector Average)

Risk Model 9

Portfolio volatility       11.00
Benchmark volatility    9.45  (Flexible Investment)
Benchmark volatility    11.20   Weighted Sector Average

Risk Model 10

Portfolio volatility       16.15
Benchmark volatility    16.14   Weighted Sector Average

(The Risk/Return is powered by data from FE)

As always, if you have a financial advice matter that requires addressing, simply get in touch.  We’re here to help.

We wish you and yours the very best of health and happiness against this continued concerning time.

Best Wishes.

Richard and the Best Price FS Team