Your investments with Lloyd & Whyte are strong!

When so much of the news that we read on a daily basis is loaded with doom and gloom, we wanted to take this opportunity, in our Autumn newsletter, to break the mould and bring you some good news. With the issues faced by the FTSE 100 since the first lockdown, our FE portfolios have weathered the pandemic storm favourably.

The financial markets have been so tumultuous since March, the peaks and troughs have shot sky high and dipped incredibly low, but many of the Lloyd & Whyte portfolios have held strong. How have we managed it?

How we’ve kept investments strong

The positives of having investments with Lloyd & Whyte is down to the connection between our IFA’s and our investment partner. By working in partnership, our IFA’s in conjunction with FE Investments, have been able to manage portfolios in parallel with the level of risk that has been agreed.  Together with FE Investments we’ve managed the investments when markets dipped, whilst making up the lost ground during the recovery in markets.

Our Investment Partnership

We joined forces with FE Investments because they pride themselves in being leaders in the management of risk.  Unlike other investment firms, they do not make conviction “bets” on the direction of markets, instead they focus on keeping your portfolio on track for your objectives and take the appropriate amount of risk to achieve your goals.  Their view is that you are compensated for taking a level of risk: lower risk investors get lower returns and higher risk investors obtain higher returns.

To keep you on track and avoid the pitfalls of investing, they focus on avoiding problems that may derail your portfolio and diversify your investments so they are not too over exposed to any particular risk: do you remember the dot-com stock market falls, the banks during the global financial crisis or the Woodford fund debacle?

FE Investments carefully analyse your investments by using their unique in-house technology, robust process and experience so they can reassure us at Lloyd &Whyte, and you, that the investments are all on-track.

The partnership benefits you in two ways.  Lloyd & Whyte are your primary point of contact which makes a simple and streamlined process, which leverages our skills in financial planning.  We bring together FE Investments as part of your team of specialists to investment expertise.  We think combination in expertise will make a meaningful difference to you.

Firstly, let’s get your investment groundwork in place

Your IFA will discuss the management of your investment portfolio thoroughly, taking your personal risk level into account, whilst also considering your desires for future planning. When your cash ISA is in place, you’ve sorted your pension and then protected yourself for critical illness, life insurance and income protection, the exciting part really begins because then we can look at the investment options available to you.

Your portfolio choices

There are so many options when it comes to investing your money and with a pandemic thrown in the mix, the temptation to put your cash under the mattress could be high. However, as your Independent Financial Advisers we would like to reassure you that the diversity within the portfolios has demonstrated wise money investment choices.

The above graph demonstrates the performance of our FE Hybrid Risk Level 3 Medium Portfolio. As you can see our funds in red have been less volatile and have out-performed for the majority of the Covid-19 period.

Why do we invest in the way we do?

In the above graph, Lloyd & Whyte have recommended a ‘hybrid’ approach for this particular fund selection. It uses a combination of passive and active investment funds. (An ‘active’ fund manager selects stocks that they think will outperform the average benchmark in a particular sector, whereas a ‘passive’ fund manager aims to replicate as closely as possible the performance of a particular group of companies/assets trading on a stock exchange known as an ‘index’.) Given the unanswerable debate about whether passive or active is better, our view is that a hybrid portfolio offers a balanced compromise.

This portfolio will be re-balanced twice a year in April and October, to ensure the underlying optimum asset split does not deviate too far from your original risk level requirements: it should remain on track for the time horizon for your objectives. Also, at any time in-between the six monthly rebalances, if FE Investments highlights any particular concerns about a fund, under their ‘critical event’ criteria, they may decide to change the portfolio before the six monthly re-balance point.

What is a critical event?

Surprisingly Covid-19 is not a critical event.  A critical event is something that could fundamentally affect the performance or running of an investment fund in your portfolio. The pandemic is systemic, it’s something that will affect everything and therefore could not be controlled by the individual fund, whereas if for example, the management team of the investment fund all walked out at the same time, this would be a critical event.

Another example of a critical event would be if an investment fund changed how and where they invested the monies ( all investment funds have a statement of how and where they will invest).If this was very different from the existing strategy, this could be a critical event.  If it is deemed critical, the fund will be removed and replaced from the investment portfolio.

Diversifying your portfolio

As the old adage goes: avoiding putting all of your eggs in one basket is critical when it comes to successful investing.  By investing in different opportunities or asset classes you are spreading the risk but more crucially giving your money the potential to work more successfully for you.

Your confidence for investing and tolerance towards your perceived level of risk is unique to you and your financial plan. Everyone feels differently towards the investment of their money and this may vary according to the objective of each financial product you invest into.  For example you may invest in two products, an ISA and a pension, which may have very different investment goals and time horizons.  The ISA may be for a deposit for a house in 5 years and the pension for retirement.  Lloyd & Whyte offer you 15 different investment portfolios to utilise to help achieve your objectives.

FE Investments provide portfolios with varying time horizons and risk levels to allow for flexible solutions that best suit your needs.  The short term portfolios are for investors with a 3 – 7 year objective, medium term is for 8 – 15 years and the long portfolios for 15 years plus. Within each time span there are 5 risk grades.  Your IFA will discuss all options with you and together you can make an informed decision.

Other factors to consider when making your investment choices are how ethical you would like your investments to be. Your IFA will happily discuss Socially Responsible Investments (SRI) with you. These choices balance the objectives of your portfolio whilst doing less harm and more good with your investments.

Avoiding Duplication

The other crucial thing to consider is to avoid any cross-over of your investments. Lloyd & Whyte are pleased to be able to offer you the level of management where we will balance your investments ensuring that you do not invest in any duplicated funds i.e two different funds that both invest in UK supermarkets.

Continuing the Good News

Lloyd & Whyte, what matters to you, matters to us. We know that the success of your investments matters to you, and that in turn, matters to us. We endeavour to offer our clients continued success with their investments and in conjunction with FE Investments we feel confident that the decisions you make will continue to be sound.