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Chartwell investment philosophy & principles of portfolio management update may 2013 (web version)


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Chartwell investment philosophy & principles of portfolio management update may 2013 (web version)

  1. 1. Chartwell Wealth ManagementOur Investment Philosophy& Principles of Portfolio Management
  2. 2. Chartwell Financial Services is a firm of‘fee based’ independent financialadvisers based in Altrincham, Cheshire.We have been providing bespokefinancial solutions to both personal andcorporate clients since 1992As part of the Private Clients businessChartwell Wealth Management offersholistic financial planning advice on a feecharging basis. We manage a series of riskbased investment portfolios on our ownwrap which also permits our clients to holdlegacy investments and deposits underpension and personal portfolio strategies
  3. 3. Chartwell Wealth Management -What is our Investment Philosophy? Managing the level of risk you areprepared to take Active fund management Reducing risk by asset diversification Selecting funds with low investmentvolatility Cost reduction for your portfolio Regular strategic & tactical fundmanager reviews Regular client reviews to reassess risk& investment needs
  4. 4. How easy is it to pick a winner?
  5. 5. Should I invest in shares?1503 company shares registered in the UK 1Should I invest in a retail fund and let theexperts manage my money?6172 funds offered for sale in the UK 2A Simple Decision for a UK Investor?Source as at end of June 2011:1 - Bloomberg 630 for FTSE All-Share and 873 for AIM All Share2 - Lipper All Mutual Funds
  6. 6. Which asset class will be the winner this year?Source: Datastream and Morningstar (total return in Sterling) as at 06 January 2011.You cannot predict the future?Rank/%Annualreturn2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20101 Commodities61.6%Property7.1%Commodities19.4%Emg Mkts40.5%HY Bonds21.2%Emg Mkts50.5%Europe ex UK20.1%Emg Mkts37.4%Gilts12.8%Emg Mkts56.1%Emg Mkts22.9%2 Property10.5%Corp Bonds6.6%Property10.5%HY Bonds39.5%Property18.9%Japan41.0%Property18.1%Pacific exJapan34.2%Cash5.7%Pacific exJapan52.0%Pacific exJapan22.8%3 Corp Bonds10.2%Cash5.1%Corp Bonds9.8%Pacific exJapan32.7%Emg Mkts17.4%Commodities40.4%UK16.8%Commodities30.4%Japan1.2%H Y Bonds46.4%Japan19.2%4 Gilts8.8%Gilts3.1%Gilt9.3%Europe ex UK29.7%Pacific exJapan14.9%Pacific exJapan34.3%Emg Mkts16.3%Europe ex UK15.7%Corp Bonds-3.6%UK30.1%US17.9%5 Cash6.0%Hedge2.8%Cash3.9%Japan23.9%Europe ex UK13.8%World ex UK24.9%Pacific exJapan16.1%Hedge10.3%US-13.2%Commodities20.03%Commodities17.68%6 Hedge4.1%Pacific exJapan1.6%Hedge1.0%UK20.9%UK12.8%Europe ex UK24.1%HY Bonds11.8%World ex UK9.7%World ex UK-17.1%Europe ex UK19.3%UK17.2%7 Europe ex UK1.7%Emg Mkts0.2%HY Bonds-11.%World ex UK20.7%Commodities9.4%UK22.0%Hedge10.3%Cash6.2%Property-18.2%World ex UK18.65%World ex UK15.8%8 HY Bonds-1.9%HY Bonds-1.6%Pacific exJapan-14.6%US15.3%Japan8.6%Property18.8%World ex UK5.7%UK5.3%Hedge-23.0%US18.6%Property13.4%9 US-2.2%US-9.8%Emg Mkts-15.0%Hedge11.6%World ex UK7.8%US16.9%Cash4.8%Gilts5.3%Europe ex UK-24.0%Property14.4%HY Bonds12.4%10 World ex UK-4.1%UK-13.3%Japan-18.8%Property11.2%Corp Bonds6.9%Corp Bonds8.7%US1.2%US3.4%HY Bonds-25.0%Hedge13.4%Hedge8.92%%11 UK-5.9%World ex UK-14.0%UK-22.7%Commodities8.6%Hedge6.8%HY Bonds5.3%Corp Bonds0.8%Corp Bonds1.9%Commodities-25.9%Corp Bonds12.7%Europe ex UK8.4%12 Emg Mkts-25.1%Europe ex UK20.1%Europe ex UK-27.0%Corp Bonds5.9%Gilts6.6%Gilts7.9%Gilts0.7%HY Bonds-0.9%UK-29.9%Cash0.8%Corp Bonds7.3%13Pacific exJapan-25.3%Commodities-30.1%World ex UK-27.4%Cash3.6%Cash4.5%Hedge7.4%Japan-10.5%Property-5.5%Pacific exJapan-33.5%Gilts-1.9%Gilts6.5%14 Japan-29.6%Japan-31.6%US-29.9%Gilts2.1%US3.1%Cash4.7%Commodities-25.5%Japan-6.8%Emg Mkts-35.2%Japan-3.6%Cash0.7%
  7. 7. £14,313£16,586£16,062£16,636£11,720£7,411£5,020£6,507£4,974£6,571£0£2,000£4,000£6,000£8,000£10,000£12,000£14,000£16,000£18,000Picking the Wrong FundCan Seriously Damage Your WealthSectors: Bond GBP, Equity Global, Equity UK, Money Market GBP, Real Estate UK. Source: Lipper (UK Funds), 5 years to 30th September 2012. All amountsare net of fees. This material is presented for illustrative purposes onlyGlobalEquityUKEquityPropertyCashBondsThe Difference Between the Best and Worst Fund ChoiceWith a £10,000 Investment Over a 5 Year Period
  8. 8. Investor Psychology
  9. 9. 91V908-400-20002004006008001,0001,2001,4001,6001992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Cashflow(GBPm)-2,000-1,00001,0002,0003,0004,0005,0006,0007,0008,000FTSE100Index(GBP)Monthly net retail cash flow to equity products in the UK (GBPm) FTSE 100 Index (GBP)Greed and fear: why clients need helpNet retail investments in equity funds by UK investors vs. FTSE 100 Index 1992 - 2008Source: IMA, MSCI. Monthly cash flow data shown reflects 6-month moving average. Past performance is not a guide to future performance.Buying High and Selling Low?
  10. 10. Market Timing - would that work?
  11. 11. 11Annualised returns of the FTSE All Shareaverage over 15 Years£10,000investedFully Invested 8.68% £34,869Best 10 days missed 5.70% £22,961Best 20 days missed 3.42% £16,559Best 30 days missed 1.44% £12,394Best 40 days missed -0.36% £9,468Source: Datastream as at 02/04/10, Basis: total return in GBP, FTSE All Share annualised returns 01/04/95 to 01/04/10It is time in the market not ‘timing’ the market that is key to investingMissing the best days can harm performance
  12. 12. Long Term Investing between 1950 – 2010Investment of £100 in 1950: Value 2010UK Building Society Index - £1,560(Income Reinvested)Retail Prices Index - £2,680Barclays Gilt Index - £6,146(Income Reinvested)Barclays Equity Index - £117,500(Dividends Reinvested)Source – Scottish Widows – UK Financial History 1950-2010 - SW5506303/11
  13. 13. How do Chartwell achieve stabilityfor your investment portfolio?
  14. 14. Principles of Portfolio Management A well constructed multi-manager mix issuperior to single strategies Well constructed multi-asset strategymixes diverse drivers of return Seek returns where the opportunity foractive management is greatest Portfolio risk management must be anactive process Portfolio Managers should be proactivelyinvolved in the manager research process Careful implementation pays off
  15. 15. What happens next? We analyze the risk you are prepared to takewith your money We operate 5 risk graded actively managedportfolios on behalf of our clients
  16. 16. Risk Graded Portfolios% holdingSecure2Conservative3Balanced4Adventurous5Aggressive6UK Growth Assets 3 7 11 16 19International GrowthAssets6 18 30 41 54.5Real Assets 5 8 11 14 17Defensive Assets 86 67 48 29 9.5Source: Morningstar as at 30th April 2013 – returns % (GBP) Based on C class sharereturns. Inception date – 31st January 2010
  17. 17. Balanced Portfolio constructionFund Portfolio WeightUK Growth Assets11.0%International Growth Assets30.0%Real Assets11.0%Defensive Assets48.0%Asset Class Portfolio WeightEquity 41.0%Bonds 21.1%Property 2.9%Commodity & Infrastructure 6.1%Absolute Return & Cash Plus 18.6%Cash 10.4%
  18. 18. How well have the Chartwellinvestment portfolios performed?
  19. 19. Portfolio& Risk Grade1mnth 3mnth 6mnth 1 year 2 years 3 yearsSecure 2 -0.02 1.22 2.21 5.14 6.30 11.09Conservative 3 0.29 2.07 5.01 7.79 7.94 15.22Balanced 4 0.61 2.92 7.86 10.46 9.47 19.20Adventurous 5 0.91 3.77 10.75 13.16 10.93 23.10Aggressive 6 1.26 4.67 13.82 15.89 12.21 26.84Source: Morningstar as at 30th April 2013– returns % (GBP) Based on C class sharereturns. Inception date – 31st January 2010
  20. 20. Chartwell Wealth Management -Regular Review Process Chartwell Investment ManagementCommittee Quarterly strategic review meetings External compliance consultants attend 5 risk graded actively managed portfolios All fund managers are reviewed Asset allocation & standard deviationreviews Cost reduction for your portfolio Strategic & tactical fund manager reviews
  21. 21. Our Contact DetailsChartwell Professionals and Chartwell WealthManagement are trading styles of ChartwellFinancial Services Limited who is Authorised &Regulated by the Financial Services Authority.Registered in England 02578206 .Last Update February 2013Chartwell Wealth ManagementLindley CourtScott DriveAltrinchamCheshireWA15 8ABT 0161 929 3500F 0161 929 3501E info@chartwellfs.comW www.chartwellfs.comWe look forward tohearing from you.Smarter solutions.Endless possibilities.