Steady pace suits
EAch of our IFA of the Year hopefuls started the competition in mid-February with £300,000 to invest on behalf of our case-study couple, chris and Fiona Anderson. Six months down the line, their investment portfolios have been exposed to a great deal of volatility and all the uncertainty that surrounds a potential “double-dip” recession or a raging bull market.
I am obliged to point out, as a judge, that the final result of the competition will not be determined entirely on investment performance. At the outset, our competitors were obliged to submit an investment report which will be used along with their portfolio management skills and their investment commentaries to determine the final outcome – fortunately we have until the 31 December to make that final decision.
Looking at investment performance in isolation, there is almost a 7 per cent difference between the best and worst portfolio performance – in monetary terms that’s a whopping £21,000 – so what’s made the difference? Well, yet again this competition is a good lesson in effective portfolio management and the key question for our competitors and all potential investors is “what poses the bigger threat to investment markets in the medium-term – deflation or inflation?” The answer will determine just how our IFAs approach their asset allocation calls. Assuming their clients are still comfortable with their “speculative” attitude to risk, should they stick with their original asset allocation, or are there some short-term tactical changes that could be made?
Most investment professionals still believe the mantra about investing for the long-term but, in recent times, the capricious nature of investment patterns from some investors shows this belief is beginning to be questioned. The reality is that few