John Bellamy, Head of Adviser Solutions, Waverton Investment Management
WHICH PORTFOLIO TYPE MIGHT BEST MEET CLIENT OBJECTIVES?
A
s difficult as this period has been for advisers, paraplanners, asset managers and clients, we must keep all things in perspective. All around us are frontline key workers doing far more important, valuable and dangerous jobs and for that we thank them. Having said that, as advisers the recent setback has provided the perfect opportunity to review your preferred investment solutions (and those on the bench) with the benefit of a full investment cycle behind you.Whatever volatility awaits in the coming months and beyond, you can now judge your providers through one of history’s longest bull markets and, most recently, through a surprising, savage and swift bear market. It is important that advisers are armed with this information so that they can communicate effectively with their clients in terms of how the selected portfolios have performed, whether any changes are to be recommended and the reasons for those changes.
In the protracted period of steady, if unspectacular, economic growth and consistently rising markets it was all too easy to be charmed by the top-quartile returns of investment services coupled with the promise of active management and downside consideration. The problem being that whilst stellar historic returns are easy to demonstrate the protections within are not. There are too many stories now of clients in all mandates receiving 10%, or even 20% drop letters during the downturn which goes to prove that there is more to active management than glossy slides and riding the risk train.
We are hearing of most active managers falling in to one of two particular camps. The hares or the tortoises.
We are hearing of most active managers falling in to one of two particular camps. The hares or the tortoises.
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Summer 2020  www.rsmr.co.uk
Equally, there are well known investment houses that are rightly lauded for their caution. Positive returns in the last great sell-off in 2008 and outperformance in Q1 2020 speak to investment processes that really are doing something very different. However, if these same processes were delivering little or none of the upside in the intervening years then surely they are guilty of reckless conservatism. Maybe neither the tortoise nor the hare won this race?
