Our clients come to us to protect the wealth they have created, whether that’s through a lifetime of working and saving, or through the sale of a business. In many cases, clients are not looking to take substantial investment risks in seeking to earn large investment returns (as this might result in large losses). Therefore, we have designed our range of portfolios to balance wealth protection with earning a reasonable investment return.
We do this by carefully matching the client’s individual risk profile with the appropriate Lumin portfolio. Within all of our portfolios we will only invest in broadly-spread larger investments, where the potential to permanently lose money is lower or minimal.
We do not invest in smaller investments or single company investments where there is a higher risk of losing money. Our investments do move up and down in line with market sentiment, but this is not the same as a loss of value that you may not recover when sentiment improves again.
Diversification is the process of spreading your investments around the main types of assets and geographical markets so that your exposure to any one of them is limited. Allocating your money across the different asset classes – equities, government bonds, corporate bonds, real estate, commodities and alternative trading strategies – helps reduce your exposure to risk and volatility.
We research the whole investment universe when choosing the investments we hold in our portfolios, but we will only utilise regulated funds (mainly the top standard known as UCITS), listed ETFs (exchange-traded funds) and investment trusts. When it comes to investment, we take suitability and security very seriously. This means that we don’t invest in unregulated investments, individual company equity and corporate bonds, excessively leveraged investments, or collective vehicles where we would be the majority owner.
Put simply, passive funds are investment funds that will closely track a popular benchmark, for example the FTSE 100, and seek to match it, and do this at low cost. Active investment funds will attempt to outperform the returns of an appropriate benchmark. This is done by having an experienced fund manager who makes investment choices about which shares and how many of each type to hold, and this comes at a higher cost. We have a strong preference to keep costs low, so we will generally start with a passive fund as a default investment. If we do identify an active fund manager who we believe can outperform after taking fees into account, then we may invest in their fund, after rigorously researching their performance, philosophy, process, personnel, research capabilities and fees.
Our investment team monitors the markets continually, tracking trends and reviewing investment performance in markets around the world. We conduct a formal and comprehensive review of our five model portfolios every quarter, involving a forensic analysis of asset class returns and the performance of all the individual funds that we are invested in. We then make the changes appropriate to our investment views, and rebalance portfolios to keep them in line with client attitudes to risk.
Our approach is not to aggressively beat a benchmark by moving in and out of asset classes. Instead we aim to add incremental value when we are confident in our view that an asset market is wrongly priced; either too expensive or too cheap. In the absence of a strong view either way, we will revert to a neutral position as defined by our long-term strategic asset allocation benchmark.
Do you have any further questions? The first meeting is free of charge.
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