Investments for the more adventurous

Below you will find two sections:

On-going Products – products which are always available and which we often recommend

New Products – which have recently become available

All these products involve risk. With all these types of investment past performance cannot guarantee future returns and the value of your investment can go down as well as up. It is possible you could end up with less than you originally invested.  

On-going Products – products which are always available and which we often recommend

Collectives

Another area we specialise in is Unit Trusts or Open Ended Investment Companies (OEICS), together we refer to these as “Collectives”.

Collectives consist of perhaps numerous company shares, Company Corporate Bonds (loans to companies), Government loan stock such as UK Government Gilts or Property Funds. There are literally thousands of these funds which invest in different asset classes and in different market sectors, both by speciality (e.g. Technology) or geographic region and sector (e.g. UK Smaller Companies).

The advantages of investing in Collectives include diversification across a range of shares or assets thereby reducing risk of exposure to just one or two companies, professional stock-picking and lower dealing costs. Returns over the long term are anticipated to be greater than for other product groups. We recommend diversification when choosing Collectives, based upon spreading investments across markets in funds which have a good track record.

When you invest in collectives you are not tied into any long term contract and you can take money out penalty free should you need to.

Chase Tailored Portfolios

We offer a range of “Chase Tailored Portfolios” each comprising three or four funds of funds run by separate professional managers. Our portfolios are comprised of these types of fund because:

  • The fund managers can react more quickly to market movements than we can and can quickly change asset allocation if required, this means we will not have to trouble you to make frequent switches between portfolios
  • The funds of funds are volatility targeted and the managers can more easily adjust their portfolios so that the new portfolios will more accurately reflect your attitude to risk

We constantly monitor the managers and only if we find there is unacceptable shortfalls in performance or we become aware of a suite of better performing funds of funds will we need to contact you to recommend changes, which you are free to accept or reject.

We operate our portfolios on the Old Mutual Wealth platform which enables us to monitor your investments regularly and make switches between funds when we consider it beneficial to you. We also provide a facility so that you can monitor your own investment portfolio online should you wish.

We run 5 Chase Tailored Portfolios of Collectives on the Old Mutual platform. The approximate equity and fixed interest content of the three higher-volatility portfolios is: 

 

Volatility describes the variability of returns you receive on an investment. The measure is shown as movements, plus or minus from the average return. Generally higher long term returns accompany greater volatility. However many investors feel there is greater security in investing in lower volatility portfolios. For this reason we supply a variety of portfolios with varying degrees of volatility. It cannot be guaranteed that maximum volatility levels will not be exceeded though in times of extreme market turbulence.

The Balanced, Balanced Growth and Adventurous Portfolios have produced annualised returns of 6.94%, 8.16% and 9.96% respectively over the 3 years to 30 December 2017.

  

 

We also have a range of Ethical Portfolios available. For details of these please <CLICK HERE>.

Please be aware though that past performance is not a reliable indicator of future performance and with these types of investment past performance cannot guarantee future returns and the value of your investment can go down as well as up. It is possible you could end up with less than you originally invested.

We will provide further details of these portfolios at a meeting with you. Bespoke portfolios of collective investments can also be provided if required.

Our Portfolio Services includes;

  • Monthly valuations by email or post
  • Recommendations for switches in funds if we consider it necessary
  • Regular meetings / telephone support when required

 

New Products – which have recently become available

Structured Products

A selection of Structured Products appear below in order to provide a flavour of what we can offer.

Income Plans

These plans pay a specified level of income providing that the index (or indices) meets a particular reference level related to its initial opening level.  Income payments are therefore dependent on the index (or indices) achieving this level and would not be paid should this fail to occur.

Investec FTSE 10 Defensive Income Plan 2 Option 1 Available until 22nd September.

This is a six year plan paying a quarterly income of 1.50% (possible 6.00% gross per annum) providing that the FTSE 100 index is at least equal to 60% of its opening level.

A barrier operates to return capital if the index falls over the investment term by an amount of up to 40% at the time the plan ends. A fall beyond that amount will result in capital being lost in proportion to the extent of the fall in the index from its opening level. There is a counterparty risk related to Investec who are rated ‘BBB’ for financial strength by Standard & Poor’s.

Investec SP Aug 17

Growth plans – Non kick out

These products are designed to pay out a multiple of any growth in an index at the end of the term subject to a cap on returns.

Reyker FTSE 100 Supertracker Plan April 2016 Available until 25 April for cheques and 29 April for bank transfers. THIS PLAN IS NO LONGER AVAILABLE.

Provides a return of ten times the rise in the FTSE 100 index at the end of six years, from its opening level, capped at 70%. The Counterparty is Royal Bank of Canada who are rated AA- by Standard and Poor’s.  A 60% end of term barrier applies, thereby protecting capital against market falls of up to 40%. However a 41% fall in the indices would mean a 41% loss of capital with no investment return. Please click on the picture below to access the product brochure.

Growth plans – Kick out

Kick-out plans mature if and when stock market levels on anniversary dates are equal to their opening levels at the time the investment begins – the “initial strike level”. These can be very useful investments in times when stock markets are relatively stationary and can even provide a return when markets fall.

Walker Crips Annual Step Down Plan Issue 9  Available until 8th September.

Maximum 6 year term returns 5.50% p.a. from year 2 if the FTSE 100 index is above its opening level. The reference level for pay out then steadily reduces each year until it reaches 80% in the final (sixth) year. The Counterparty is HSBC who are rated AA- by Standard and Poor’s.  A 50% end of term barrier applies, thereby protecting capital against market falls of up to 50%. However a 51% fall in either index would mean a 51% loss of capital with no investment return. Please click on the picture below to access the product brochure.

Walker Crips SD plan 9

 

Structured Products – General Information

Structured Products offer a higher annualised return than Structured Deposits (see ‘Investments for the more risk averse’) for which capital gains are not taxable for island residents. Barriers make them less risky than investing directly in the stock market, but large falls in the market or counterparty failure could result in capital losses.

They offer a higher potential investment return, because as well as the reward of potential returns, there is the risk that the capital invested could be lost in adverse market conditions. Please also note that capital would also be at risk in the event of the insolvency of the counterparty as the Financial Services Compensation Scheme does not apply.

There are numerous types of “Structured Products”. Some provide income and some capital growth.

Please be aware that, while barriers make Structured Products less risky than investing directly in the stock market, large falls in the market or counterparty failure could result in capital losses.

If the relevant index falls below 50% or 60% (depending upon the plan) of the initial level on the plan start date, then capital can be lost on a 1:1 basis. The barrier we prefer is the one where the index on the closing day of the plan has to be below the threshold level for any loss to occur. Whilst relatively unlikely to happen, a 51% fall would mean a 51% loss of capital with no return.

There are also from time to time Structured Products which offer 100% capital protection. However the protection only exists as long as the financial institution does not go bankrupt since there is no compensation scheme applicable to Structured Products as opposed to one for Structured Deposits. Where institutions are relatively strong, these investments may be suitable for small investments for investors with large portfolios.

For a full list of the Structured Products available as at 15 January 2018 please <CLICK HERE>