Our Discretionary Investment Management (DIM) offering is designed to work in harmony with the service provided by your current financial adviser. The service can be tailored to provide the outcome you need balanced with the risk you wish to take.
If you do not currently have an adviser why not take advantage of the services provided, either by one of our own advisers or else by an adviser from one of our sister companies. FACET aims to provide a low volatility, multi-asset, multi management portfolio service run as a Model Portfolio Service (MPS), or on a bespoke basis for larger portfolios.
We have very much a ‘top-down’ approach and firmly believe that asset sector allocation will provide the majority of the performance with the underlying investment choice providing the critical alpha (outperformance) over our peers.
We aim to utilise both passive and active Collective Investment Schemes (CIS) for the majority of our asset allocation, with direct investments being bought as and when appropriate opportunities arise. One of our core strategies is to take long term ‘buy and hold’ position rather than trading to try and ‘beat the market’. We have an allocation model which dictates that for any set market environment, we have a target allocation to each macro sector, this then breaks down to sub sectors, and finally to preferred investments. We envisage the majority of our trades being for the purpose of a change in market environment rather than for opportunistic capital gains.
However we constantly assess our chosen investments and are always looking for any deviation in performance or alternative superior offering.
Founding principles
Over long-term time frames, asset returns tend to approach the economic value of the business or asset(s) underlying the investment.
Asset returns over short time frames are inherently unpredictable. The best we can do over short periods is to forecast the degree of uncertainty. Our view is that volatility (standard deviation) is just one measure of investment risk as it can be least predictable at the time investors care most about risk.
A winning investment strategy involves buying low and selling high, but unless investment portfolios are strictly risk-controlled, the reverse tends to happen. Investors often buy too high after being sucked in by an over enthusiastic reaction to perceived strengths in the market, or alternatively are driven out of the market by fear and sustain unforeseen losses having sold too low.
Return forecasts
Asset returns come from four places:
1) Valuation change: the buy low and sell high effect
2) Risk premium: a compensation for taking risk. Riskier assets should return more, all other things being equal
3) Economic change: investments have exposure to economic changes including growth and inflation
4) Yield: cash returned to investors
Optimisation
The following asset classes have been included in order to build a strategic asset allocation:
UK Equities
Global Equities
Government Bonds
High Yield Bonds
Investment Grade Corporates
Commercial Property
Commodities
Cash