Investments
The weekly briefing note aims to pick out some of the key financial and economic issues touched on in the press over recent days and from time to time includes the views of some of the independent fund managers of St James's Place Wealth Management. Please click here to read our weekly St. James's Place Monday Market Bulletin.
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Successful investment is critical to your future financial wellbeing, but it is a field which presents a unique problem: future performance is unpredictable.
A widely used method of assessing the quality of an investment manager is to look at their previous performance; however this can only give you part of the picture. Some of the best managers will occasionally underperform the market over a short period and equally the worst managers can sometimes achieve impressive performance. This happened during the dot-com bubble when some managers looked good for a while. Clearly past performance can provide no guarantee of future performance.
Also consider that the manager who performed successfully in the past may no longer manage the fund, having moved onto another fund or left the company. It may also be that a management style which had historically worked so well may not be right for current or future market conditions.
As a result, when you choose someone to manage your money, no matter how successful they have been in the past, how can you be sure that you have made the right choice and that it will continue to be the right choice in future years?
Crucially, what can you do to monitor the manager you have chosen and to ensure that they are continuing to do a good job for you?
St. James’s Place adopts a radical and effective solution to this problem. Recognising that no single investment house has a monopoly of investment expertise, we do not employ any in-house managers. Instead, we carefully select a number of external managers of outstanding ability to manage our range of funds.
You can benefit from this approach, as well as the role of the St. James’s Place Investment Committee and Stamford Associates – key elements which are at the heart of the St. James’s Place Approach to Investment Management.
The St. James’s Place Approach to Investment Management
When it was formed in 1992 the St. James’s Place Wealth Management Group decided to take a radical and effective approach to investment management. Our approach recognises that no single investment house has a monopoly on investment expertise so we carefully select a number of external managers of outstanding ability to manage our funds.
This has a number of advantages:
• It gives us the freedom to select first-class managers from the global investment market to manage our funds on behalf of our clients.
• It enables us to change any of these managers at short notice if we have lost confidence in them, without any charges, or tax, or inconvenience to our clients.
• It offers our clients a real opportunity to diversify their investments by spreading their money across funds managed by different managers with different styles.
The St. James’s Place Investment Committee ‘manage the fund managers’ on your behalf. In order to achieve the objective of consistently generating superior investment results, having selected the best individuals within the appropriate investment company, the key is to monitor both the individuals and the company they work for to ensure they remain appropriate for the fund that they are managing. If the Committee loses confidence in a manager, they will be replaced, quickly and efficiently. In carrying out this task, the Committee is assisted by independent investment consultants Stamford Associates.
The work of the Investment Committee
The St. James’s Place Investment Committee focuses on:
1. Selecting the best investment managers – which includes careful examination of the people and procedures within a large number of investment companies.
2. Continually monitoring those managers to ensure they maintain the standards for which they were selected – this process includes monitoring of both their portfolios and their processes.
3. Changing managers if necessary – where St. James’s Place becomes unhappy with a manager, it will remove that manager and appoint another to manage the fund. This is a seamless transition to the new manager. There is no charge to investors and, as you still hold the same fund, no tax consequences either.
4. Ensuring clients have an appropriate spread of investments by providing a comprehensive range of Managed and Specialist funds – the managers of these funds are carefully selected not only for their quality but also to ensure that they have different styles of investment management.
A distinctive approach to investment management
Whilst many companies now offer a ‘multi-manager’ approach, the St. James’s Place approach remains distinctive:
1. Unlike most other companies, St. James’s Place only uses external investment managers for its funds.
Whilst other companies will have an interest in directing as much business as possible to the investment funds managed by the ‘in-house’ fund managers they employ, in order to maximise their own profitability, St. James’s Place has no such conflict of interest or investment bias.
2. The Investment Committee of St. James’s Place appoints and replaces managers on behalf of all of its clients, ensuring no client is ‘left behind’. We do not wait to act if we have lost confidence in a manager.
This contrasts with the approach of many other companies who simply try to provide access to as many existing funds in the market as possible. This leaves the individual investor with the difficult challenge of having to decide which of the investment companies and funds they believe is likely to produce the best results.
3. St. James’s Place offers a range of investment styles that together provide a truly diversified portfolio for clients. The funds available include Managed funds invested in a balanced portfolio of UK and international equities as well as a range of Specialist funds, including a range of income and growth options.
Clients can create their own portfolio or invest in one of the range of portfolios we have created to meet a variety of different investment objectives.
4. St. James’s Place chooses the managers for portfolios based on their skills in active management rather than following a benchmark.
As pointed out by the Myners Report (1) commissioned by the Treasury, institutional investment managers tend to invest the huge amounts of money they handle largely in line with market indices or industry benchmarks and many other companies are content to follow this line. St. James’s Place insists that its managers are truly active rather than passive.
5. Clients of St. James’s Place have the peace of mind of knowing that investment manager changes are implemented promptly and seamlessly.
There are no explicit charges for changing a fund manager since it is simply that the responsibility for managing the underlying assets has been handed over to a new investment professional who will then make their own adjustments to the portfolio.
Another important advantage is that there are no capital gains or income tax implications involved for investors in the change – this means that longer-term wealth strategies are not disturbed by unwanted taxable events.
(1) Institutional Investment in the UK: A Review, Paul Myners, 2001
Investment management companies are asked by us to change the individual handling funds for the group or we may replace the manager and company when we no longer have confidence in the structure and approach of the managers.
If you, as an investor, are unhappy with a particular manager, you can move money from that manager to any other within the St. James’s Place range of managers. This transfer will involve little or no charges for you and where you are invested in one of our life, pension or overseas life funds, will have no tax consequences.
There is significant potential for increasing your wealth through investing, but only if your money is invested in the right way. With St. James's Place, you benefit from our distinguished Approach to Investment Management as well as expert recommendations on where to put your money.
The performance of your investments could make a critical difference to your financial well bing in the future, so reliable financial advice, investment products and fund managers you can trust are important.
The vast majority of our new clients come from referrals from our existing clients who have a solid relationship with their St. James's Place Partner and have been very satisfied with the advice and service they have received.
