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How we Invest
How we Invest
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Keeping it Simple.
Investors may see great attractions in the various forms of complex products which have sprung up offering, for example, the profits from a particular market or asset while protecting them against losses. It all sounds too good to be true and so it can be as many found out to their costs in 2008.
Losses are normally only protected to a certain level – then they are locked in. In some cases these products are neither liquid nor transparent and an investor can be locked in to something which they do not understand for a period of years. In principle, the building blocks on which investment performance is based are the returns of the main asset classes; bonds, equities, property and cash.
In the UK, over time, long term bond returns have been around 7%, while equity and property returns have been around 11%.* Therefore a product which purports to offer a higher return while still paying all its associated investment fees will necessarily have to take a higher level of risk to cover the additional costs.
Most of all, we believe that by driving down the cost of investment at all levels, beginning with our fees, we can help clients and investors to achieve the one measure which really is likely to improve their long-term returns - by reducing their long-term investment costs.
We take a simple approach to investing. We aim to ensure that our clients and investors are exposed to attractive asset classes using transparent, low-cost, liquid instruments which are normally listed on the London Stock Exchange.
Our aim is to ensure that everyone understands what is in their portfolio and how their money is being invested. If the market environment is inauspicious we aim to give them the comfort of seeing that risk has been reduced and that they own more defensive assets.
Finally, we are concerned that within the world of Exchange Traded Funds (ETFs) a new generation of ‘complex’ ETFs is emerging. These typically have higher fees than the ‘simple’ ETFs Pan Asset uses and in some cases the underlying asset or index they track is not truly liquid – a basic requirement for an ETF. We avoid these complex ETFs and do not use ETFs which use ‘short-selling’ or leverage techniques.
*Source: Sarasin & Partners Compendium of Investment: 14th ed.