Financial experts have long debated whether investors should go down the active or the passive route when it comes to selecting their investments. The benefit of passive funds can largely be put down to the lower fees they charge over their active counterparts. On the contrary, the benefit of an active fund is that, while more expensive, it offers the possibility of outperforming the benchmark and returning greater profits to the investor.
It goes without saying that investments should only be recommended to, or included in discretionary portfolios of, clients whose needs, characteristics and objectives they meet. MiFID II has formalised this obligation by requiring advisers, platforms and DFMs (collectively referred to as distributors) to consider matching any funds or products with target markets based on given criteria.
A recent study by Ben Carlson showed “the only one of the [US-based] three major asset classes that’s up this year is actually cash”. Carlson has found out that “it’s only happened 10 times in 92 years”. I decided to apply the same analysis to UK-based investors, who have not benefited from several interest rates hikes in 2018.
Following the EU referendum in 2016, investors expected property markets to fall sharply, resulting in a rush of withdrawals from property funds. Several funds had to suspend withdrawals or apply value adjustments to stave off the tide while they raised money through the sale of assets. Despite the initial panic most of the affected funds have now re-opened and the sector overall has performed relatively well since 2017. We give our view on what's next for the sector.
Following the launch of MiFID II, the FCA recently carried out a review of MiFID authorised firms* to gage how firms are complying with the new rules and what challenges they have faced.
At FE Invest, our investment philosophy is built around managing and adjusting risk to deliver optimal returns for clients. Below we look at 5 key investment successes our robust methodology has offered in 2018.
As everybody is getting into the festive spirit – we thought we’d use the 12 Days of Christmas song as inspiration to look at 12 ways FE has helped Advisers this year. So why not grab a mince pie and scroll through our year in review...
Retirement planning used to be simple, an investor had a long period of accumulation which ended up with the buying of an annuity at retirement which provided a guaranteed income until death. Pension freedoms changed everything as investors are now much likely to enter drawdown in retirement. This has been combined with a period of very poor annuity rates, meaning that these are now seen as very poor value by many entering retirement.
FE’s discretionary model portfolio service was first launched on a single platform just over three years ago to offer Advisers a new breed of model portfolios; created jargon-free with a view to enhancing the Adviser – Investor relationship.
Financial regulators have become slightly obsessed with transparency as a tool for both increasing competition and protecting consumers. Early attempts were pretty clunky, with Simplified Prospectuses that failed to live up to their name, later replaced by Key Investor Information Documents (KIIDs) for UCITS funds, while life and pension funds have had Key Features Documents.