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Investment & wealth management advice

Expert Financial Solutions Ltd offer advice on investment management, advice on wealth creation and advice on wealth management.

Expert Financial Solutions Ltd are Chartered Financial Planners and independent financial advisers which means that we are able to choose the best investments for you from the entire market place to seek potentially superior long term returns in the medium to long term.

We offer investment advice and wealth management using active or passive strategies or a combination of active and passive management.

Investment advice using an active investment strategy uses actively managed funds and is effectively a search for alpha, in other words the value added by a professional fund manager.

On the other hand a passive investment strategy seeks consistent beta and tracking error ratio. Passive investment management uses index tracking Exchange Traded Funds (ETFs).

It is possible to adopt a combination of active and passive investment management, and we can also offer discretionary management services (DFM) through major stockbrokers.

The first steps in the Expert Financial Solutions Ltd investment process are to: -

• Determine, refine and understand your investment objectives and any constraints (time, ethical screening, liquidity requirements etc)
• Create the investment policy and strategies to meet your objectives.
• Tax wrapper (pension, ISA, onshore or offshore insurance bond, collective account) selection.
• Fund or investment selection.
• Performance measurement.

Your investment objectives may be, for example: -

• Capital preservation – this may be for risk averse clients or clients at or near to retirement with a shorter investment term. Those looking to minimise the risk of loss in real terms by achieving a return at or near to the rate of inflation.

• Capital appreciation – more suited to those where capital growth in the medium to long term is the priority and short term fluctuations in value are of less importance. This is likely to be for retirement planning or future debt repayment (an interest only mortgage for example).

• Income – investors requiring income often need it to supplement pension income to meet everyday living expenses, or nursing home or immediate care fees. The investment focus will be income generation coupled with capital growth or income generation with capital preservation.

• Total return – usually for longer term investors able to suffer short term volatility in value whilst seeking real growth from capital gains and reinvested income.    

Investment studies have shown that successful asset allocation is the key determinant in achieving consistent returns suited to your investment risk profile and requirements.

Expert Financial Solutions Ltd uses sophisticated investment risk profiling and asset allocation models which are based on efficient frontier methodology to determine the appropriate investment allocation for clients.

The following asset classes may be included in your portfolio depending on your requirements. This reflects our views and opinions as at January 2010 which may change at any time.

Unlike many so called wealth managers and banks Witney based Expert Financial Solutions Ltd are Chartered Financial Planners and independent financial advisers so are able to advise on and recommend bank deposit accounts from any institution and National Savings products even though no commission is payable!

Cash – this is money on deposit in banks and building societies and would also include National Savings & Investments (NS&I). Although deposit rates are low there are some attractive deals out there for those prepared to shop around. Don’t forget that the investors compensation scheme (FSCS) is limited to £50,000 per institution per client and that some institutions are linked. The FSA publish a register on their website of ‘linked deposits’ which you should refer to if in doubt.

NS&I offer a range of low risk products including Index Linked Savings Certificates which provide a return above inflation. NS&I have the added advantage that they are fully backed by Government and so there are no default risks to worry about.

Fixed interest securities – this includes gilts and corporate bonds which can perform well when interest rates are falling and can generate increased income for investors in times of low interest rates. When held as part of a collective fund the income generated and the capital value is not guaranteed and may fluctuate.

Gilts generally provide a safe haven in times of crisis and economic difficulties. Conventional gilts (as opposed to index linked) are at risk from future inflation and interest rate changes. Corporate bonds are also at risk from these factors and so an investor should reduce their positions in this asset class if it is considered that rates are likely to rise.

At present (January 2010) we favour index linked as opposed to conventional gilts because we believe inflation will return in the future, we are starting to favour strategic corporate bond funds as these will hold some high yield / sub investment grade bonds as well as investment grade bonds. We believe the default risks are falling and the higher yields on offer from sub investment grade are starting to look attractive. Care must be taken though as high yield bonds can exhibit higher default risks and equity like price volatility.

Equities (shares) -whilst in the short-term equity values can be volatile they can generate higher returns in the longer-term. Many investors will own shares either in their pensions, endowments or ISAs so should understand the volatile nature of these assets.

Expert Financial Solutions Ltd offer advice on the full range of collective investment funds and offer investment advice using an active, passive, or combination of active and passive strategies to suit your requirements.

For a passive investment strategy we will use index tracking funds or index tracking Exchange Traded Funds (ETFs) which offer investors the opportunity to track a large range of diverse indices with relatively low running costs.
Shares should perform well in the upswing phase of the cycle and many clients will position their portfolio in anticipation of this.

Commercial Property - commercial property has historically generated good risk adjusted returns with low correlation to equities and bonds. Property investment returns should return to trend at some point in the future and there are some signs (as at January 2010) that we may have turned a corner as yields are now reasonably attractive. We are moving back towards a neutral weighting for property assets.

Commodities – it is possible to invest in commodities through collective funds and also through specialist Exchange Traded Funds (ETFs) known as Exchange Traded Commodities (ETCs). It is possible to invest a single commodity ETC (physical gold for example) but there are also Index ETCs made up of a number of different commodities so you can gain exposure to hard and soft commodities as well as more broad based commodity ETCs. 

ETCs can be either backed by physical commodities or by commodity futures. ETCs that are backed by commodity futures also carry a counterparty risk; this is the risk that the counterparty could default which could result in a loss not represented by the underlying index.

Commodities are higher risk investments, can exhibit high volatility, and should only really be used as a small part of an overall portfolio, by very experienced investors, or by those with specialist knowledge. Certain commodities tend to perform well in the boom phase of the economic cycle when there is perceived very high demand and consequently reduced supply.

There is evidence to suggest that inclusion of commodities in a portfolio aids diversification of investment risk. ETCs can provide a simple and low cost method of accessing commodities in a portfolio.

Alternative investments – this would include private equity and hedge funds which can again be higher risk investments and perhaps only suitable as a small part of a larger portfolio. There is such a wide variety of different investments available including absolute return bond and equity funds, leveraged ETFs, short ETFs, fund of hedge funds and private equity funds that we cannot do justice to them all on our website.

Diversification of asset risk coupled with expert advice and management remains key to long-term success in difficult market conditions. Good asset allocation, consistent investment management and timely asset class and fund switching coupled with a commitment to future reviews are important aspects of investment and wealth management.

Tax efficient investments – based in Witney, Oxford, Oxfordshire, Expert Financial Solutions Ltd are able to access Enterprise Investment Schemes EIS and Venture Capital Trusts VCT for our clients. Please refer to our tax efficient investments page for more information or contact us for advice. 

Expert Financial Solutions Ltd offers investment advice and wealth management advice and uses sophisticated portfolio modelling techniques to seek potentially superior long term returns.

• The value of your investments and any income generated may go down as well as up, and past performance is not necessarily a guide to future returns. It is possible therefore that you may not get back the full amount invested.
• Where a fund invests overseas or if the underlying investments are in a currency different to the denominated currency, unit or share prices may fluctuate purely as a result of currency exchange rate changes.
• Future investment returns cannot be guaranteed or predicted in advance.
• Where units are held in a property fund via a unit trust or similar collective, where the fund holds direct property holdings, dealing may be suspended while the fund realises assets to meet encashment requests. The bid-offer spread - the difference between the buying and selling prices of the underlying assets in the fund may be wider for property funds and can vary. 
• Funds that invest in fixed interest securities (gilts and corporate bonds) carry the risk that the issuer of the fixed interest security may fail to make the interest payments due or to repay the amount loaned. The likelihood of this happening will depend on the credit worthiness of the fixed interest securities issuer.
• Certain investments such as Exchange Traded Commodities (ETCs) have specific risks attaching which can only be summarised here and full details are available on request.
• Please refer to the important information page of our web site.

January 2010