Investments for the more risk averse

 

Below you will find two sections providing investments for the more risk averse: Ongoing Products – products which are always available and which we often recommend and New Products – which have recently become available

Ongoing Products – products which are always available and which we often recommend

PruFunds held within the Prudential International Investment Bond

The PruFund Cautious and PruFund Growth have produced compound returns of 5.4% and 7.4% p.a., before charges but after a representative fund charge of 0.65%, over 5 years respectively to 31 July 2018, but please be aware that past performance is not a reliable indicator of future performance. They are actively managed multi-asset funds, based upon Prudential’s strongly performing With Profits range that is lower risk than investing directly in equities. They aim to provide growth over the medium to long term while smoothing the peaks and troughs of investment performance.

PruFund Cautious


The PruFund Cautious has been in existence for just over eight years during which time the returns have been higher than those offered by banks and building societies – 5.4% p.a. compound growth before charges but after a representative fund charge of 0.65% for the 5 years to 301 July 2018. It is important that you are aware that past performance is no indication of future performance and no investment is risk free.

Every three months Prudential issue a growth forecast which is generally around 5.5% to 6.0% p.a. gross, before charges. Whilst this return is not guaranteed and the protection is provided by Prudential itself, which should be seen as something a little less than a guarantee, we still consider this to be a relatively low risk investment.

The smoothing of returns helps to provide lower volatility (movements in the value of the investment) than investing directly in the stock market. 100% Capital Protection can be provided on the 10th anniversary for a cost of 1.00% per annum. In these cases should there be falls in the fund values between the investment date and the guarantee date, then your initial capital invested is 100% protected and you should receive everything back you invested.

For those wishing to take slightly more risk the product can be bought without guarantees, which increases the potential return since there is no cost of buying the guarantee. Please note that if bought without guarantees or if not encashed at the chosen guarantee date, then the value of the investment may be less upon encashment than you initially invested.

Prudential’s Expected Growth Rate for the PruFund Cautious is currently 5.5% per annum gross. New investors can benefit from receiving this rate guaranteed on a pro-rata basis for an initial period of up to 3 months.

PruFund Growth

 

The PruFund Growth is an actively managed multi-asset fund that is lower risk than investing directly in the stock market. The focus of the fund is a little more on equities rather than fixed interest and it has returned 7.4% p.a. compound growth before charges but after the addition of a representative fund charge of 0.65% for the 5 years to 31 July 2018. It is important that you are aware that past performance is no indication of future performance and no investment is risk free.

The smoothing of returns helps to provide lower volatility (movements in the value of the investment) than investing directly in the stock market. 100% Capital Protection can be provided on 10th anniversary at a cost of 1.50% per annum. In these cases should there be falls in the fund values between the investment date and the guarantee date, then your initial capital invested is 100% protected and you should receive everything back you invested.

For those wishing to take slightly more risk the product can be bought without guarantees, which increases the potential return since there is no cost of buying the guarantee. Please note that if bought without guarantees or if not encashed at the chosen guarantee date, then the value of the investment may be less upon encashment than you initially invested.

Prudential’s Expected Growth Rate for the PruFund Cautious is currently 6.2% per annum gross. New investors can benefit from receiving this rate guaranteed on a pro-rata basis for an initial period of up to 3 months.

 

 

Aviva Guaranteed 100 Fund (accessed via Aviva Select Investment Bond)

This fund is an actively managed multi-asset fund which invests in equities, gilts, corporate bonds and property. It offers a lower risk than investing directly in equities by spreading investments over a number of asset classes, thereby protecting investors from significant falls in the value of any one asset.

It has the advantage of being able to ‘lock-in’ investment growth at certain points in the future and of being able to attach a capital guarantee. It also has provided good returns in the past for investors, although past performance is not a guide to future performance.

There is the option to include a 100% guarantee* of the original investment amount, less any withdrawals taken, on its fifth anniversary. This means that the worst that can happen is that you get back your original capital at the end of five years. Please note that the guarantee only applies on the fifth anniversary, so at all other times the value of the investment can go down as well as up and you may not get back the amount invested if you withdraw your money.

There is a useful option to ‘lock-in’ any investment gains at a future date by switching into a newer version of the Guaranteed 100 Fund, or indeed at any time by switching into cash. Aviva usually launch a new version of the fund between September and November each year. In such instances the five year guarantee period will begin again from the point in time where the switch is made.

 

 

The fund offers growth potential through the investment expertise of Aviva Investors who have a strong track record in the management of multi-asset funds. Each different issue of the fund has provided different returns. Issues 3 and 4, which were both launched over 3 years ago, have provided cumulative returns of 23.0% and 14.9% over 3 years before charges.(Source: Trustnet Fund Factsheet).

The fund is designed to achieve steady growth over five years, but the guaranteed element of the fund may result in lower growth potential than is offered by a direct investment in some asset types such as stocks and shares.

The fund is held via the Aviva Select Investment Bond, a UK onshore investment bond which allows access to a wide range of funds with a variety of risk profiles. It provides unlimited free switching between funds and no early exit charges.

*There are charges for managing the investment, and an additional charge is made to provide the guaranteed element

Please Click on the image below to access the product brochure.

Aviva Guaranteed

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 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 allocations for the two lower-volatility portfolios are:

 

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 Cautious and Cautious Growth Portfolio have produced annualised returns of 3.67% and 5.57% respectively over the 3 years to 3 September 2018.

 

We also have a range of Ethical Portfolios. 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 Deposits

Investec FTSE 100 Kick Out Deposit Plan 79

 

 

This product provides a 6.00% (non compounded) annual return on maturity which may occur from years three to six providing the FTSE 100 index is above its opening level.

If the FTSE 100 index finishes below its starting level then the investor will only get back their initial deposit. There is no Counterparty Risk associated with this product as long as the investor does not have more than £85,000 invested through Investec.

Product available until 31 August.

Please click on the above image to access the product brochure.