Flexible approach pays dividends
An awareness of market conditions and good timing we believe are vital in the effective planning of an investment portfolio.
In recognition of that, at Reeves we have developed and refined over several years, a sophisticated process of tactical decision making for asset allocation to anticipate market shifts and to protect our client's assets.
We review the composition of our model portfolios on a monthly basis and regularly advise 'tactical' changes to the asset allocations: the mix of asset classes such as cash, bonds, property and UK and overseas equities. We have an experienced team engaged in research and market analysis, producing a report every week, identifying the key issues in the markets which feed into our monthly review.
In this way, we can take advantage of market pricing anomalies of sectors in which we have identified potential opportunities. We are also alert to any warning signs so that we can move to protect your portfolio from potential losses.
Recently, for example, we've become increasingly concerned that uncertainties created by factors such as Brexit and the threat of trade wars makes equities look vulnerable, so we've increased asset allocation in uncorrelated assets, such as property and specialists funds which focus on assets such as gold or other precious metals.
At Reeves we don't make tactical decisions lightly or try to chase 'a fast buck' by constantly trading. Switching allocations too frequently can be costly and counterproductive, and we only make changes to our investments on average four times a year.
Some IFAs adopt a more passive approach, investing in a standard portfolio and then leaving it or, at best, reviewing it annually. The argument is, that over time, the market recovers from slumps and the general trend is upwards. This may be true in the long run, but as the economist Keynes said "In the long run we are all dead". Anybody who lost money in the 2008 crash would have had to wait 10 years for their investments to recover their value. For the retired, or those approaching retirement, this is too long. Our philosophy is to remain alert to, and informed about market conditions and to move when necessary.
Recently a new client came to us for a review, an experienced and confident investor who had approximately £500,000 in money purchase schemes. He decided to test the water, initially entrusting us with 40% of his pension funds. This was not a problem for us - when you join Reeves there are no strings attached, you are not tied into a contract and are free to leave at any point.
When the markets fell by a significant amount in February, this client's money with Reeves fell fractionally compared to the investment he had left in his old arrangements. This was thanks to those tactical moves we had made into uncorrelated assets to pre-empt the market correction. The client has now moved all of his funds to Reeves and continues to benefit from our ongoing portfolio management service. He feels at ease knowing we are constantly monitoring his investments with his best interests at heart.
Of course, investing always carries an element of risk and you may not always get back your original investment. There are no guarantees and your investments are always subject to market risk, but we are convinced that taking an active and vigilant approach to portfolio allocation is the best way to minimise risk and maximise opportunity.
It is important that no actions should be taken without first taking advice. Personal circumstances and an individual's appetite for risk means that the advice for one person may not be the same for everyone. The information in this blog or any response to comments should not be regarded as financial advice. Reeves do not advise on Defined Benefit pension schemes. Reeves do introduce a third party specialists in areas of work we do not cover. Reeves run an advanced investment portfolio management service on an advisory basis only. Please note: This article has been published with the client's consent but name changed to protect their identity.