Investment Management

image of financial report being presented to a client

Our investment management strategy starts with you, our client. We believe it is more important to manage your portfolio to meet your risk objectives than to chase short-term returns, so we will design your unique portfolio to meet your individual needs and attitude to risk.

Starting with an in-depth discussion seeking to understand your ambitions, attitude to risk and your time horizon, we will structure a well-diversified portfolio, investing in a wide range of investment styles, strategies and asset classes that best meets your stated investment objectives

Just some of the features of our investment service includes:

  • Building a portfolio to meet any income, tax, ethical and socially responsible requirements, industry sectors and geographical preferences.
  • Formulating portfolios on the underpinning of effective asset allocation strategies and techniques.
  • Structuring your portfolio in a range of tax and pension wrappers.
  • Ongoing management to guide your portfolios through complex and ever-changing environments.
  • Reviews and reporting and access to view your portfolio valuation online at any time.

Investment Process

Asset Allocation

We believe the ability to fare well in any economic environment is crucial, and therefore a sound, diversified portfolio represents the most successful strategic approach to this. Our experience shows that asset allocation plays a major role in generating investment returns; different asset types, sectors, and geographies each bring with them different opportunities.

We look to combine the asset allocation with the client’s investment time horizon, attitude to risk, investment objective and tax status to build and recommend a portfolio which best meets the client’s requirements and expectations.

In order to construct portfolios effectively and manage risk, our asset allocation process is forward looking, dynamic and not based solely on backward-looking statistics. This will involve a distribution between each of the main types of investment such as: Equities, Bonds, Commercial Property, Commodities and Alternatives. We will periodically adjust the amount allocated to each asset depending on the views on each of the various markets.

Fund Selection

Once we have identified the correct level of asset diversification, we then look at fund selection by identifying the very best fund managers in each sector. Being entirely whole-of-market, we are able to offer unbiased recommendations from a world of investment opportunities, spanning major global markets, across the market-capitalisation spectrum, managed under various style biases and with differing risk profiles.

When we recommend an investment, you can be sure that we’ve interrogated it thoroughly, testing its performance, measuring its potential and challenging our own preconceptions. Only when an investment has satisfied all aspects of this process is it considered for inclusion as part of our investment portfolios. In order to do this analysis, we make full use of a number of industry leading analytical tools, including Bloomberg, Morningstar and Financial Express Analytics

All selected investments are continuously analysed and reviewed on an ongoing basis as well as ensuring that this matches the risk profile of the portfolio is compatible with the parameters.

Monitor & rebalancing

Over time the allocation of assets within a portfolio will change as various markets move in different directions. As part of our review process we will regularly rebalance portfolios. We will also be alert to any changes in circumstances, both in the big picture and at the fund level. If a fund manager moves, or we sense that a fund has become too large to be managed efficiently then we will make changes.

This framework, supported by risk management systems, due diligence procedures and regular reviews, makes sure your portfolio remains in line with your investment objectives.

At Macdonald Wealth our clients benefit from a secure, third-party fund platform, based on an open-architecture investment approach enabling clients to have access to a wide range of fund managers, covering the full range of financial instruments from all the world’s major markets.

Tax-Efficient Investments

The first place we look to start is utilising your Stocks & Shares ISA. An ISA (Individual Savings Account) is effectively a tax-wrapper for which the government sets an annual contribution allowance. For the 2018/19 tax year the allowance is £20,000 and this will remain unchanged for 2019/20.

You can deploy your £20,000 allowance in cash or stocks and shares (or a mixture) and any gains made on the money, whether from interest or investment returns, are tax free. ISAs therefore represent a very generous tax break that everyone should take advantage of every single year.

Another interesting aspect of ISA’s is to use these as retirement vehicles. With the lifetime allowance (the amount of money you can put tax-efficiently into your pension pot) currently sitting at £1.03m, with pensions greater than this potentially being subject to a lifetime allowance charge. ISAs are therefore increasingly being used as retirement savings pots by High Net Worth Individuals.

Also, junior ISAs allow for £4,260 (£4,368 in 2019/20) to be put aside for under-18s in cash or stocks and shares, making these a great savings option for children (although bear in mind they become legal owner at 18). Adult children can then use a Help to Buy ISA to save for their first home and receive a 25% bonus from the government when they make a purchase (up to a maximum of £3,000).

Ethical Investing

With many clients now considering their ethical footprint, this has unsurprisingly found itself operating the investment world, indeed it is a fast-growing area with investment management.

Traditional ethical or socially responsible investing (SRI) is usually focused on screening out companies with links to controversial areas like alcohol, tobacco, gambling, firearms, pornography or animal testing.

At Macdonald Wealth we are able to cater for those clients who require an ethical portfolio by incorporating investments that follow an environmental, social and governance factors (ESG) policy. With ESG, rather than ‘screening out’, this concentrates on ‘positive screening in’ of companies that have a demonstrable track record of taking sustainability issues seriously. Many of the companies within an ESG portfolio have already achieved the standards necessary for inclusion in a traditional exclusionary ethical fund.

Environmental criteria look at how a company performs in relation to the natural environment – for example, it might be evaluated according to its energy use, sustainability policies, carbon emissions, resource conservation or animal rights

Social criteria examine a company’s relationships with its employees and the communities in which it operates – does it care about employee welfare and workplace safety? Does it make a positive contribution to the community?

Governance factors concern a company’s leadership, executive pay, audits, internal controls, independence, shareholder rights and transparency.

Looking at these aspects allows investors to assess a company’s social and economic impact. Businesses that are working proactively to improve their record in these areas are more appealing to thoughtful investors.

The value of investments and the income from them can fall as well as rise and past performance is not a guide to future performance. You may get back less than you invested as investment returns are not guaranteed.