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Investment Philosophy:
Establishing objectives and lining up assets >
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At Grierson Dickens we believe that
investments are a means to achieving
clients’ objectives and life goals and not
an end in themselves. Our experience also
tells us that clients relate well to having
their assets and income notionally ‘lined
up’ with specific goals; for example clients
may want to ring-fence income and capital
from specific sources to support their
ongoing lifestyle costs; they may then want
to create a ‘pool’ of money to provide for
children’s or grandchildren’s education,
another one to fund future lifestyle, and
another to buy a boat in the Bahamas.
Agreeing acceptable levels of risk and proposing the
right type of assets >
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Clearly each of these goals has a different
timescale, and a different degree of
importance in terms of its achievement.
(You may be willing to compromise on the
size of the boat, but not on the quality of
the children’s education). This importance
and timescale, along with a client’s
individual approach to investment risk will
then help to identify the acceptable level
of risk for each pool of money. This ‘risk
profile’ in turn will lead us to the choice
of the right type of assets to give the best
chance of delivering the required rate of
return, with an acceptable level of risk.
In addition we will recommend and implement
the best ‘tax wrapper’ e.g. ISA, Pension,
Investment Bond, to create the most
efficient tax environment; always with a
focus on the importance and timescale of the
achievement of the objective.
Selecting
Funds >
Once an appropriate
asset allocation strategy has been agreed we
will propose the specific funds in which we
believe our client should invest. For core
holdings Grierson Dickens believe that a
‘passive’ investment approach offers clients the
best chance of meeting medium and long term
investment objectives. Please see below:
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An ‘active’ approach is where advisers
select from a wide range of fund managers
whose objective is to provide returns in
excess of those delivered by the market
concerned (e.g. UK Equity). In practice
outperforming the market is very difficult
for any fund manager to achieve consistently
over time. In fact, according to research
the probability of any fund manager
achieving market beating returns on a
consistent basis is less than 25%. The
adviser then being able to predict which 25%
of fund managers might achieve this
outperformance adds another layer of doubt.
When one also factors in the additional cost
that an active fund manager will charge for
his efforts, the probability of actual
returns being in excess of ‘market returns’
decreases even further.
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The passive approach which we normally
recommend for clients’ core holdings is
where investment is made in ‘index tracking’
assets, in most cases through Exchange
Traded Funds (ETF’s) which perform that role
most effectively. These ETF’s have
significantly lower charges than other
investment funds and are not
subject to the influence of fund managers.
In the majority of cases the after
charges performance achieved by them exceeds
the performance of actively managed funds
due to the factors mentioned above. In
addition, there is no risk of
underperformance as there is with the
actively managed alternative.
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For non core holdings
where clients’ risk tolerance is greater we
are happy to discuss active management on a
client by client basis.
Annual Reviews >
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Grierson Dickens Ltd will review with clients
the performance of the investments allocated to
‘pools’ against the required rate of return each
year. In light of this information, changes
will then be recommended where necessary, and
importantly clients will know what progress they
are making towards the achievement of their
goals and objectives. Please note that
automatic annual reviews apply only to
investments for which Grierson Dickens Ltd have
agreed and are charging 0.5% annual fees.
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Should a client experience a specific life event
that necessitates a review of investment
strategy this can be done at any time.
Summary >
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In
summary, we believe our job is to help you identify
the things you want to provide for; establish the
risk profile for each ‘pool’ of money; recommend the
appropriate mix of assets to support that objective,
select the most favourable ‘tax wrapper’, and
implement the investments.
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Grierson Dickens Limited Registered office 47, Queen Anne
Street, London W1G 9JG. Registered in Englad No 3827610
VAT No. 862585395
Grierson Dickens Limited is authorised and regulated by the
Financial Services Authority.
The Financial Services Authority does not regulate tax and trust
advice.
©
Grierson Dickens Ltd 2007 |
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