One of the reasons clients choose Informed Choice as their Independent Financial Planner is the strength of our investment management.
We never sell our services purely on investment performance; too much is out of our direct control.
What we can and do offer is suitable investment portfolios designed to meet the specific financial objectives of our clients.
As we start a New Year, it has been interesting to look back at how our investment portfolios performed in 2014.
Last year was quite challenging from an investment perspective, with a volatile UK stockmarket finishing the year at broadly the same level it started. Despite this volatility and uncertainty, the performance of our portfolios is rather pleasing.
Before I share those figures, some important disclaimers.
As you already know, the value of your investments can go down as well as up. Past performance is not necessarily a reliable guide to future investment returns.
What follows is a description of how our three core model portfolios performed last year. We use these model portfolios as a way of monitoring the performance and risk of our investment management, and they also form a starting point for recommending suitable portfolios to our clients.
For this reason, individual clients will experience slightly different investment returns to those described in this post. This is because the timing of investments and tax treatment of portfolios will differ.
Starting with our Cautious Portfolio, which has target volatility between 4.2% and 6.3%, over the year to 31st December 2014 this delivered an investment return of +10.80% compared to a benchmark return (IMA OE Mixed Investment 20-60% Shares) of +5.03%. Returns are net of charges.
Over three years, it delivered an annualised return of +8.80% compared to the benchmark at +7.63%. Over five years, our Cautious Portfolio had an annualised return of +8.21% compared to a benchmark of +5.99%.
For our Moderate Portfolio, which has target volatility of 8.4% to 10.5%, over the year to 31st December 2014 this delivered an investment return of +10.03% compared to a benchmark (IMA OE Mixed Investment 40-85% Shares) of +5.00%.
Over three years, it delivered an annualised return of +10.52% compared to the benchmark at +9.90%. Over five years, our Moderate Portfolio had an annualised return of +8.85% compared to a benchmark of +7.14%.
For our Aggressive Portfolio, which has target volatility of 12.6% to 14.7%, over the year to 31st December 2014 this delivered an investment return of +8.44% compared to a benchmark (IMA OE Global) of +7.14%.
Over three years, it delivered an annualised return of +11.05% compared to the benchmark at +12.69%. Over five years, our Aggressive Portfolio had an annualised return of +8.59% compared to a benchmark of +8.49%.
Last year was clearly a good year to take a more cautious approach, as lower volatility assets outperformed risk assets such as equities.
It’s pleasing to see these figures which confirm our approach to investment management continues to deliver consistent results over the longer-term, with the measured volatility of each portfolio well within our selected risk boundaries.
Does your financial adviser publish their model portfolio performance each year?
If you would like to find out more about our approach to investment management, and how you can apply it to your own investment and pension portfolios, please do get in touch.
