Chartwell Investment Philosophy & Principles Of Portfolio Management Update Dec 2012 (Web Version)
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Transcript of Chartwell Investment Philosophy & Principles Of Portfolio Management Update Dec 2012 (Web Version)
Chartwell Wealth Management
Our Investment Philosophy
& Principles of Portfolio Management
Chartwell Financial Services is a firm of
‘fee based’ independent financial
advisers based in Altrincham, Cheshire.
We have been providing bespoke
financial solutions to both personal and
corporate clients since 1992
As part of the Private Clients business
Chartwell Wealth Management offers
holistic financial planning advice on a fee
charging basis. We manage a series of risk
based investment portfolios on our own
wrap which also permits our clients to hold
legacy investments and deposits under
pension and personal portfolio strategies
Chartwell Wealth Management -
What is our Investment Philosophy?
Managing the level of risk you are
prepared to take
Active fund management
Reducing risk by asset diversification
Selecting funds with low investment
volatility
Cost reduction for your portfolio
Regular strategic & tactical fund
manager reviews
Regular client reviews to reassess risk
& investment needs
How easy is it to pick a winner?
Should I invest in shares?
1503 company shares registered in the UK 1
Should I invest in a retail fund and let the
experts manage my money?
6172 funds offered for sale in the UK 2
A Simple Decision for a UK Investor?
Source as at end of June 2011:
1 - Bloomberg 630 for FTSE All-Share and 873 for AIM All Share 2 - Lipper All Mutual Funds
Which asset class will be the winner this year?
Source: Datastream and Morningstar (total return in Sterling) as at 06 January 2011.
You cannot predict the future?
Rank/%
Annual
return 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
1 Commodities
61.6%
Property
7.1%
Commodities
19.4%
Emg Mkts
40.5%
HY Bonds
21.2%
Emg Mkts
50.5%
Europe ex UK
20.1%
Emg Mkts
37.4%
Gilts
12.8%
Emg Mkts
56.1%
Emg Mkts
22.9%
2 Property
10.5%
Corp Bonds
6.6%
Property
10.5%
HY Bonds
39.5%
Property
18.9%
Japan
41.0%
Property
18.1%
Pacific ex
Japan
34.2%
Cash
5.7%
Pacific ex
Japan
52.0%
Pacific ex
Japan
22.8%
3 Corp Bonds
10.2%
Cash
5.1%
Corp Bonds
9.8%
Pacific ex
Japan
32.7%
Emg Mkts
17.4%
Commodities
40.4%
UK
16.8%
Commodities
30.4%
Japan
1.2%
H Y Bonds
46.4%
Japan
19.2%
4 Gilts
8.8%
Gilts
3.1%
Gilt
9.3%
Europe ex UK
29.7%
Pacific ex
Japan
14.9%
Pacific ex
Japan
34.3%
Emg Mkts
16.3%
Europe ex UK
15.7%
Corp Bonds
-3.6%
UK
30.1%
US
17.9%
5 Cash
6.0%
Hedge
2.8%
Cash
3.9%
Japan
23.9%
Europe ex UK
13.8%
World ex UK
24.9%
Pacific ex
Japan
16.1%
Hedge
10.3%
US
-13.2%
Commodities
20.03%
Commodities
17.68%
6 Hedge
4.1%
Pacific ex
Japan
1.6%
Hedge
1.0%
UK
20.9%
UK
12.8%
Europe ex UK
24.1%
HY Bonds
11.8%
World ex UK
9.7%
World ex UK
-17.1%
Europe ex UK
19.3%
UK
17.2%
7 Europe ex UK
1.7%
Emg Mkts
0.2%
HY Bonds
-11.%
World ex UK
20.7%
Commodities
9.4%
UK
22.0%
Hedge
10.3%
Cash
6.2%
Property
-18.2%
World ex UK
18.65%
World ex UK
15.8%
8 HY Bonds
-1.9%
HY Bonds
-1.6%
Pacific ex
Japan
-14.6%
US
15.3%
Japan
8.6%
Property
18.8%
World ex UK
5.7%
UK
5.3%
Hedge
-23.0%
US
18.6%
Property
13.4%
9 US
-2.2%
US
-9.8%
Emg Mkts
-15.0%
Hedge
11.6%
World ex UK
7.8%
US
16.9%
Cash
4.8%
Gilts
5.3%
Europe ex UK
-24.0%
Property
14.4%
HY Bonds
12.4%
10 World ex UK
-4.1%
UK
-13.3%
Japan
-18.8%
Property
11.2%
Corp Bonds
6.9%
Corp Bonds
8.7%
US
1.2%
US
3.4%
HY Bonds
-25.0%
Hedge
13.4%
Hedge
8.92%%
11 UK
-5.9%
World ex UK
-14.0%
UK
-22.7%
Commodities
8.6%
Hedge
6.8%
HY Bonds
5.3%
Corp Bonds
0.8%
Corp Bonds
1.9%
Commodities
-25.9%
Corp Bonds
12.7%
Europe ex UK
8.4%
12 Emg Mkts
-25.1%
Europe ex UK
20.1%
Europe ex UK
-27.0%
Corp Bonds
5.9%
Gilts
6.6%
Gilts
7.9%
Gilts
0.7%
HY Bonds
-0.9%
UK
-29.9%
Cash
0.8%
Corp Bonds
7.3%
13 Pacific ex
Japan
-25.3%
Commodities
-30.1%
World ex UK
-27.4%
Cash
3.6%
Cash
4.5%
Hedge
7.4%
Japan
-10.5%
Property
-5.5%
Pacific ex
Japan
-33.5%
Gilts
-1.9%
Gilts
6.5%
14 Japan
-29.6%
Japan
-31.6%
US
-29.9%
Gilts
2.1%
US
3.1%
Cash
4.7%
Commodities
-25.5%
Japan
-6.8%
Emg Mkts
-35.2%
Japan
-3.6%
Cash
0.7%
£14,313
£16,586£16,062
£16,636
£11,720
£7,411
£5,020
£6,507
£4,974
£6,571
£0
£2,000
£4,000
£6,000
£8,000
£10,000
£12,000
£14,000
£16,000
£18,000
Picking the Wrong Fund
Can Seriously Damage Your Wealth
Sectors: Bond GBP, Equity Global, Equity UK, Money Market GBP, Real Estate UK. Source: Lipper (UK Funds), 5 years to 30th September 2012. All amounts are net of fees. This material is presented for illustrative purposes only
Glo
bal
Eq
uit
y
UK
Eq
uit
y
Pro
pe
rty
Cas
h
Bo
nd
s
The Difference Between the Best and Worst Fund Choice
With a £10,000 Investment Over a 5 Year Period
Investor Psychology
9 1
V908
-400
-200
0
200
400
600
800
1,000
1,200
1,400
1,600
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Cash
flo
w (
GB
Pm
)
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FT
SE
100 I
nd
ex (
GB
P)
Monthly net retail cash flow to equity products in the UK (GBPm) FTSE 100 Index (GBP)
Greed and fear: why clients need help
Net retail investments in equity funds by UK investors vs. FTSE 100 Index 1992 - 2008
Source: IMA, MSCI. Monthly cash flow data shown reflects 6-month moving average. Past performance is not a guide to future performance.
Buying High and Selling Low?
Market Timing - would that work?
11
Annualised returns of the FTSE All Share
average over 15 Years
£10,000
invested
Fully Invested 8.68% £34,869
Best 10 days missed 5.70% £22,961
Best 20 days missed 3.42% £16,559
Best 30 days missed 1.44% £12,394
Best 40 days missed -0.36% £9,468
Source: Datastream as at 02/04/10, Basis: total return in GBP, FTSE All Share annualised returns 01/04/95 to 01/04/10
It is time in the market not ‘timing’ the market that is key to investing
Missing the best days can harm performance
Long Term Investing between 1950 – 2010
Investment of £100 in 1950: Value 2010
UK Building Society Index - £1,560 (Income Reinvested)
Retail Prices Index - £2,680
Barclays Gilt Index - £6,146 (Income Reinvested)
Barclays Equity Index - £117,500 (Dividends Reinvested)
Source – Scottish Widows – UK Financial History 1950-2010 - SW55063
03/11
How do Chartwell achieve stability
for your investment portfolio?
Principles of Portfolio Management
A well constructed multi-manager mix is
superior to single strategies
Well constructed multi-asset strategy mixes
diverse drivers of return
Seek returns where the opportunity for
active management is greatest
Portfolio risk management must be an
active process
Portfolio Managers should be proactively
involved in the manager research process
Careful implementation pays off
What happens next?
We analyze the risk you are prepared to take
with your money
We operate 5 risk graded actively managed
portfolios on behalf of our clients
Risk Graded Portfolios % holding
Secure 2
Conservative 3
Balanced 4
Adventurous 5
Aggressive 6
UK Growth Assets 3 7 11 16 19
International Growth
Assets 6 18 30 41 54.5
Real Assets 5 8 11 14 17
Defensive Assets 86 67 48 29 9.5
Source: Morningstar as at 30 September 2012 – returns % (GBP) Based on C class share returns. Inception date – 31st January 2010
Balanced Portfolio construction
Fund Portfolio Weight
UK Growth Assets 11.0%
International Growth Assets 30.0%
Real Assets 11.0%
Defensive Assets 48.0%
Asset Class Portfolio Weight
Equity 41.0%
Bonds 22.5%
Property 2.9%
Commodity & Infrastructure 6.1%
Absolute Return & Cash Plus 18.2%
Cash 9.4%
How well have the Chartwell
investment portfolios performed?
Portfolio & Risk Grade
1mnth 3mnth 6mnth YTD 1 year 2 years Since Inception
Secure 2 0.5 2.7 2.7 4.9 6.6 5.4 11.7
Conservative 3 0.8 3.3 2.2 6.1 9.1 6.9 14.5
Balanced 4 1.0 3.8 1.6 7.3 11.7 8.2 17.0
Adventurous 5 1.2 4.4 1.1 8.4 14.2 9.5 19.4
Aggressive 6 1.5 5.0 0.4 9.6 16.9 10.6 21.5
Source: Morningstar as at 30 September 2012 – returns % (GBP) Based on C class share returns. Inception date – 31st January 2010
Chartwell Wealth Management -
Regular Review Process
Chartwell Investment Management
Committee
Quarterly strategic review meetings
External compliance consultants attend
5 risk graded actively managed portfolios
All fund managers are reviewed
Asset allocation & standard deviation
reviews
Cost reduction for your portfolio
Strategic & tactical fund manager reviews
Our Contact Details
Chartwell Professionals and Chartwell Wealth
Management are trading styles of Chartwell
Financial Services Limited who is Authorised &
Regulated by the Financial Services Authority.
Registered in England 02578206 . Last Update December 2012
Chartwell Wealth Management Lindley Court
Scott Drive
Altrincham
Cheshire
WA15 8AB
T 0161 929 3500
F 0161 929 3501
W www.chartwellfs.com
We look forward to
hearing from you.
Smarter solutions. Endless possibilities.