Investment Approach

We often meet new clients who have accumulated various pensions and investments over the years who by their own admission have no specific strategy in mind other than to grow their funds for retirement or some other financial objective. They often have no idea which funds they are invested in, what level of risk they are taking, what charges they are paying or how their funds are performing.

Their pension or investment was often set up many years ago in a mix of assets i.e. one or more funds that may potentially include cash, gilts, commercial property and equities. Clients have rarely, if ever, had their portfolio reviewed and have remained faithfully in the same asset mix through thick and thin over the years. The hope is that the age at which they retire will coincide with a high point in the stock market, which may or may not be the case, in many ways it’s largely a matter of luck.

This “buy and hold” investment approach works well when the stock market is rising however when there is a stock market crash the clients pension or investment falls in value as well, the portfolio is in some ways like a cork bobbing up and down in the ocean it’s vulnerable and cannot react to downturns.
The asset mix a client invests in on day one may be the perfect choice at that particular time however as we all know the economy and stockmarket are constantly changing, just think back over the last decade, we have experienced high and lows as shown on the graph of the FTSE. The point here is that the economy constantly changes so shouldn’t our investments be regularly reviewed and changed to ensure that we are always in the optimum mix of assets at any given time.

As an IFA we can access and provide clients with advice on many different investment approaches to suit the clients specific objectives.

One such example is “Tactical Investment approach” which is an alternative strategy that aims to provide a potential solution to overcome the pitfalls of the traditional “buy and hold approach”.

Firstly you have an Independent Investment consultant who’s sole job is to research and analyse what is happening in the economy at any point in time and select fund managers from the whole of the market who they feel will present the best potential for good returns.

This research is carried out on a continual basis and every 3 months the clients portfolio will be changed to reflect what is happening in the economy, so for example if the markets are very low , it may be all doom and gloom, however this presents potential opportunities to buy assets at undervalued prices thereby providing good growth potential.

On the other hand when markets are very high and looking a bit overheated the portfolio may change to become more defensive to preserve gains and limit potential losses. The aim is to ensure that the client is continually invested in the optimum mix of assets and to reduce volatility by buying assets with good growth potential and sell assets before they drop. Clearly it’s difficult to get the timing exactly right however the aim is to avoid the big losses that we’ve seen with the recession.

A good example of the Tactical Investment approach in action is Commercial Property (where the fund manager invests typically in office, retail and industrial buildings and derives growth from capital appreciation, rental etc), historically Property funds have shown a good steady return with low volatility however back in 2007 the signs were that commercial property was looking very overheated with the potential for a correction. As a result the Tactical Investment portfolios do not currently have any commercial Property because the view is that there’s no point investing in an asset which is poor value and likely to lose money. For example some Property funds lost over 40% which would have been a disaster if you had remained invested in them throughout the period, which is exactly what typically happens with the traditional “buy and hold” approach.

The Tactical Investment approach aims to avoid these pitfalls because the portfolio changes on a regular basis, some asset classes may disappear when they look unattractive i.e. Commercial property.

Now at some point Commercial Property will reappear in the Tactical portfolio’s but only when the consultants feel it represents a really good buying opportunity.

The view is that there’s no point in blindly sticking with an investment portfolio that continues to invest in assets and funds that are looking poor value and are likely to go down in value and cannot react to what’s happening to the economy. A Tactical Investment approach provides a pro-active way to maximise growth and minimise volatility and losses. It changes regularly to reflect what is happening to the economy (good or bad).

There are of course other alternative investment strategies that we can advise on, please ask for details.


An Independent financial adviser (IFA) is not tied to a particular Bank, Pension or investment company and therefore is not restricted to their own or a limited range of products.