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Chartwell Investment Philosophy & Principles Of Portfolio Management Update Dec 2012 (Web Version)

Richard Clarke DipFA MIFS
Richard Clarke DipFA MIFS

Chartwell Financial Services is a firm of fee based independent financial advisers based in Altrincham, Cheshire. We have been providing bespoke financial solutions to both personal and corporate clients since 1992 As part of the Private Clients business Chartwell Wealth Management offers holistic financial planning advice on a fee charging basis. We manage a series of risk based investment portfolios on our own wrap which also permits our clients to hold legacy investments and deposits under pension and personal portfolio strategies

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Chartwell Wealth Management Our Investment Philosophy & Principles of Portfolio Management
Chartwell Financial Services is a firm of fee based independent financial advisers based in Altrincham, Cheshire. We have been providing bespoke financial solutions to both personal and corporate clients since 1992 As part of the Private Clients business Chartwell Wealth Management offers holistic financial planning advice on a fee charging basis. We manage a series of risk based investment portfolios on our own wrap which also permits our clients to hold legacy investments and deposits under pension and personal portfolio strategies
Chartwell Wealth Management - What is our Investment Philosophy? Managing the level of risk you are prepared to take Active fund management Reducing risk by asset diversification Selecting funds with low investment volatility Cost reduction for your portfolio Regular strategic & tactical fund manager reviews Regular client reviews to reassess risk & investment needs
How easy is it to pick a winner?
A Simple Decision for a UK Investor? Should I invest in shares? 1503 company shares registered in the UK 1 Should I invest in a retail fund and let the experts manage my money? 6172 funds offered for sale in the UK 2 Source as at end of June 2011: 1 - Bloomberg 630 for FTSE All-Share and 873 for AIM All Share 2 - Lipper All Mutual Funds
Which asset class will be the winner this year? Rank/% Annual 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 return Commodities Property Commodities Emg Mkts HY Bonds Emg Mkts Europe ex UK Emg Mkts Gilts Emg Mkts Emg Mkts 1 61.6% 7.1% 19.4% 40.5% 21.2% 50.5% 20.1% 37.4% 12.8% 56.1% 22.9% Pacific ex Pacific ex Pacific ex Property Corp Bonds Property HY Bonds Property Japan Property Cash Japan Japan Japan 2 10.5% 6.6% 10.5% 39.5% 18.9% 41.0% 18.1% 5.7% 34.2% 52.0% 22.8% Pacific ex UK Japan H Y Bonds Japan Corp Bonds Cash Corp Bonds Emg Mkts Commodities Commodities 3 10.2% 5.1% 9.8% Japan 32.7% 17.4% 40.4% 16.8% 30.4% 1.2% 46.4% 19.2% Pacific ex Pacific ex Gilts Gilts Gilt Europe ex UK Emg Mkts Europe ex UK Corp Bonds UK US Japan 4 8.8% 3.1% 9.3% 29.7% Japan 34.3% 16.3% 15.7% -3.6% 30.1% 17.9% 14.9% Pacific ex US Commodities Commodities Cash Hedge Cash Japan Europe ex UK World ex UK Hedge 5 6.0% 2.8% 3.9% 23.9% 13.8% 24.9% Japan 16.1% 10.3% -13.2% 20.03% 17.68% Pacific ex UK Hedge Hedge UK Europe ex UK HY Bonds World ex UK World ex UK Europe ex UK UK 6 4.1% Japan 1.6% 1.0% 20.9% 12.8% 24.1% 11.8% 9.7% -17.1% 19.3% 17.2% Europe ex UK Emg Mkts HY Bonds World ex UK Commodities UK Hedge Cash Property World ex UK World ex UK 7 1.7% 0.2% -11.% 20.7% 9.4% 22.0% 10.3% 6.2% -18.2% 18.65% 15.8% Pacific ex Hedge US HY Bonds HY Bonds US Japan Property World ex UK UK Property 8 -1.9% -1.6% Japan -14.6% 15.3% 8.6% 18.8% 5.7% 5.3% -23.0% 18.6% 13.4% US US Emg Mkts Hedge World ex UK US Cash Gilts Europe ex UK Property HY Bonds 9 -2.2% -9.8% -15.0% 11.6% 7.8% 16.9% 4.8% 5.3% -24.0% 14.4% 12.4% World ex UK UK Japan Property Corp Bonds Corp Bonds US US HY Bonds Hedge Hedge 10 -4.1% -13.3% -18.8% 11.2% 6.9% 8.7% 1.2% 3.4% -25.0% 13.4% 8.92%% UK World ex UK UK Commodities Hedge HY Bonds Corp Bonds Corp Bonds Commodities Corp Bonds Europe ex UK 11 -5.9% -14.0% -22.7% 8.6% 6.8% 5.3% 0.8% 1.9% -25.9% 12.7% 8.4% Emg Mkts Europe ex UK Europe ex UK Corp Bonds Gilts Gilts Gilts HY Bonds UK Cash Corp Bonds 12 -25.1% 20.1% -27.0% 5.9% 6.6% 7.9% 0.7% -0.9% -29.9% 0.8% 7.3% Pacific ex Pacific ex Commodities World ex UK Cash Cash Hedge Japan Property Gilts Gilts Japan 13 Japan -25.3% -30.1% -27.4% 3.6% 4.5% 7.4% -10.5% -5.5% -1.9% 6.5% -33.5% Japan Japan US Gilts US Cash Commodities Japan Emg Mkts Japan Cash 14 -29.6% -31.6% -29.9% 2.1% 3.1% 4.7% -25.5% -6.8% -35.2% -3.6% 0.7% You cannot predict the future? Source: Datastream and Morningstar (total return in Sterling) as at 06 January 2011.
Picking the Wrong Fund Can Seriously Damage Your Wealth The Difference Between the Best and Worst Fund Choice With a 贈10,000 Investment Over a 5 Year Period 贈18,000 贈16,586 贈16,636 贈16,062 贈16,000 贈14,313 贈14,000 贈11,720 Global Equity Property UK Equity 贈12,000 Bonds 贈10,000 Cash 贈8,000 贈7,411 贈6,000 贈6,507 贈6,571 贈4,000 贈5,020 贈4,974 贈2,000 贈0 Sectors: Bond GBP, Equity Global, Equity UK, Money Market GBP, Real Estate UK. Source: Lipper (UK Funds), 5 years to 30 th September 2012. All amounts are net of fees. This material is presented for illustrative purposes only
Investor Psychology
Buying High and Selling Low? Greed and fear: why clients need help Net retail investments in equity funds by UK investors vs. FTSE 100 Index 1992 - 2008 1,600 8,000 1,400 7,000 1,200 6,000 1,000 5,000 FTSE 100 Index (GBP) Cash flow (GBPm) 800 4,000 600 3,000 400 2,000 200 1,000 0 0 -200 -1,000 -400 -2,000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Monthly net retail cash flow to equity products in the UK (GBPm) FTSE 100 Index (GBP) Source: IMA, MSCI. Monthly cash flow data shown reflects 6-month moving average. Past performance is not a guide to future performance. 9 1 V908
Market Timing - would that work?
Missing the best days can harm performance Annualised returns of the FTSE All Share 贈10,000 average over 15 Years invested Fully Invested 8.68% 贈34,869 Best 10 days missed 5.70% 贈22,961 Best 20 days missed 3.42% 贈16,559 Best 30 days missed 1.44% 贈12,394 Best 40 days missed -0.36% 贈9,468 Source: Datastream as at 02/04/10, Basis: total return in GBP, FTSE All Share annualised returns 01/04/95 to 01/04/10 It is time in the market not timing the market that is key to investing 11
Long Term Investing between 1950 2010 Investment of 贈100 in 1950: Value 2010 UK Building Society Index - 贈1,560 (Income Reinvested) Retail Prices Index - 贈2,680 Barclays Gilt Index - 贈6,146 (Income Reinvested) Barclays Equity Index - 贈117,500 (Dividends Reinvested) Source Scottish Widows UK Financial History 1950-2010 - SW55063 03/11
How do Chartwell achieve stability for your investment portfolio?
Principles of Portfolio Management A well constructed multi-manager mix is superior to single strategies Well constructed multi-asset strategy mixes diverse drivers of return Seek returns where the opportunity for active management is greatest Portfolio risk management must be an active process Portfolio Managers should be proactively involved in the manager research process Careful implementation pays off
Chartwell Investment Philosophy & Principles Of Portfolio Management Update Dec 2012 (Web Version)
What happens next? We analyze the risk you are prepared to take with your money We operate 5 risk graded actively managed portfolios on behalf of our clients
Risk Graded Portfolios Secure Conservative Balanced Adventurous Aggressive % holding 2 3 4 5 6 UK Growth Assets 3 7 11 16 19 International Growth 6 18 30 41 54.5 Assets Real Assets 5 8 11 14 17 Defensive Assets 86 67 48 29 9.5 Source: Morningstar as at 30 September 2012 returns % (GBP) Based on C class share returns. Inception date 31st January 2010
Balanced Portfolio construction Fund Portfolio Weight UK Growth Assets 11.0% International Growth Assets 30.0% Real Assets 11.0% Defensive Assets 48.0% Asset Class Portfolio Weight Equity 41.0% Bonds 22.5% Property 2.9% Commodity & Infrastructure 6.1% Absolute Return & Cash Plus 18.2% Cash 9.4%
How well have the Chartwell investment portfolios performed?
Portfolio 1mnth 3mnth 6mnth YTD 1 year 2 years Since & Risk Grade Inception Secure 2 0.5 2.7 2.7 4.9 6.6 5.4 11.7 Conservative 3 0.8 3.3 2.2 6.1 9.1 6.9 14.5 Balanced 4 1.0 3.8 1.6 7.3 11.7 8.2 17.0 Adventurous 5 1.2 4.4 1.1 8.4 14.2 9.5 19.4 Aggressive 6 1.5 5.0 0.4 9.6 16.9 10.6 21.5 Source: Morningstar as at 30 September 2012 returns % (GBP) Based on C class share returns. Inception date 31st January 2010
Chartwell Wealth Management - Regular Review Process Chartwell Investment Management Committee Quarterly strategic review meetings External compliance consultants attend 5 risk graded actively managed portfolios All fund managers are reviewed Asset allocation & standard deviation reviews Cost reduction for your portfolio Strategic & tactical fund manager reviews
Our Contact Details We look forward to Chartwell Wealth Management hearing from you. Lindley Court Scott Drive Smarter solutions. Altrincham Endless possibilities. Cheshire WA15 8AB T 0161 929 3500 F 0161 929 3501 E info@chartwellfs.com W www.chartwellfs.com Chartwell Professionals and Chartwell Wealth Management are trading styles of Chartwell Financial Services Limited who is Authorised & Regulated by the Financial Services Authority. Registered in England 02578206 . Last Update December 2012

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Chartwell Investment Philosophy & Principles Of Portfolio Management Update Dec 2012 (Web Version)

  • 1. Chartwell Wealth Management Our Investment Philosophy & Principles of Portfolio Management
  • 2. Chartwell Financial Services is a firm of fee based independent financial advisers based in Altrincham, Cheshire. We have been providing bespoke financial solutions to both personal and corporate clients since 1992 As part of the Private Clients business Chartwell Wealth Management offers holistic financial planning advice on a fee charging basis. We manage a series of risk based investment portfolios on our own wrap which also permits our clients to hold legacy investments and deposits under pension and personal portfolio strategies
  • 3. Chartwell Wealth Management - What is our Investment Philosophy? Managing the level of risk you are prepared to take Active fund management Reducing risk by asset diversification Selecting funds with low investment volatility Cost reduction for your portfolio Regular strategic & tactical fund manager reviews Regular client reviews to reassess risk & investment needs
  • 4. How easy is it to pick a winner?
  • 5. A Simple Decision for a UK Investor? Should I invest in shares? 1503 company shares registered in the UK 1 Should I invest in a retail fund and let the experts manage my money? 6172 funds offered for sale in the UK 2 Source as at end of June 2011: 1 - Bloomberg 630 for FTSE All-Share and 873 for AIM All Share 2 - Lipper All Mutual Funds
  • 6. Which asset class will be the winner this year? Rank/% Annual 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 return Commodities Property Commodities Emg Mkts HY Bonds Emg Mkts Europe ex UK Emg Mkts Gilts Emg Mkts Emg Mkts 1 61.6% 7.1% 19.4% 40.5% 21.2% 50.5% 20.1% 37.4% 12.8% 56.1% 22.9% Pacific ex Pacific ex Pacific ex Property Corp Bonds Property HY Bonds Property Japan Property Cash Japan Japan Japan 2 10.5% 6.6% 10.5% 39.5% 18.9% 41.0% 18.1% 5.7% 34.2% 52.0% 22.8% Pacific ex UK Japan H Y Bonds Japan Corp Bonds Cash Corp Bonds Emg Mkts Commodities Commodities 3 10.2% 5.1% 9.8% Japan 32.7% 17.4% 40.4% 16.8% 30.4% 1.2% 46.4% 19.2% Pacific ex Pacific ex Gilts Gilts Gilt Europe ex UK Emg Mkts Europe ex UK Corp Bonds UK US Japan 4 8.8% 3.1% 9.3% 29.7% Japan 34.3% 16.3% 15.7% -3.6% 30.1% 17.9% 14.9% Pacific ex US Commodities Commodities Cash Hedge Cash Japan Europe ex UK World ex UK Hedge 5 6.0% 2.8% 3.9% 23.9% 13.8% 24.9% Japan 16.1% 10.3% -13.2% 20.03% 17.68% Pacific ex UK Hedge Hedge UK Europe ex UK HY Bonds World ex UK World ex UK Europe ex UK UK 6 4.1% Japan 1.6% 1.0% 20.9% 12.8% 24.1% 11.8% 9.7% -17.1% 19.3% 17.2% Europe ex UK Emg Mkts HY Bonds World ex UK Commodities UK Hedge Cash Property World ex UK World ex UK 7 1.7% 0.2% -11.% 20.7% 9.4% 22.0% 10.3% 6.2% -18.2% 18.65% 15.8% Pacific ex Hedge US HY Bonds HY Bonds US Japan Property World ex UK UK Property 8 -1.9% -1.6% Japan -14.6% 15.3% 8.6% 18.8% 5.7% 5.3% -23.0% 18.6% 13.4% US US Emg Mkts Hedge World ex UK US Cash Gilts Europe ex UK Property HY Bonds 9 -2.2% -9.8% -15.0% 11.6% 7.8% 16.9% 4.8% 5.3% -24.0% 14.4% 12.4% World ex UK UK Japan Property Corp Bonds Corp Bonds US US HY Bonds Hedge Hedge 10 -4.1% -13.3% -18.8% 11.2% 6.9% 8.7% 1.2% 3.4% -25.0% 13.4% 8.92%% UK World ex UK UK Commodities Hedge HY Bonds Corp Bonds Corp Bonds Commodities Corp Bonds Europe ex UK 11 -5.9% -14.0% -22.7% 8.6% 6.8% 5.3% 0.8% 1.9% -25.9% 12.7% 8.4% Emg Mkts Europe ex UK Europe ex UK Corp Bonds Gilts Gilts Gilts HY Bonds UK Cash Corp Bonds 12 -25.1% 20.1% -27.0% 5.9% 6.6% 7.9% 0.7% -0.9% -29.9% 0.8% 7.3% Pacific ex Pacific ex Commodities World ex UK Cash Cash Hedge Japan Property Gilts Gilts Japan 13 Japan -25.3% -30.1% -27.4% 3.6% 4.5% 7.4% -10.5% -5.5% -1.9% 6.5% -33.5% Japan Japan US Gilts US Cash Commodities Japan Emg Mkts Japan Cash 14 -29.6% -31.6% -29.9% 2.1% 3.1% 4.7% -25.5% -6.8% -35.2% -3.6% 0.7% You cannot predict the future? Source: Datastream and Morningstar (total return in Sterling) as at 06 January 2011.
  • 7. Picking the Wrong Fund Can Seriously Damage Your Wealth The Difference Between the Best and Worst Fund Choice With a 贈10,000 Investment Over a 5 Year Period 贈18,000 贈16,586 贈16,636 贈16,062 贈16,000 贈14,313 贈14,000 贈11,720 Global Equity Property UK Equity 贈12,000 Bonds 贈10,000 Cash 贈8,000 贈7,411 贈6,000 贈6,507 贈6,571 贈4,000 贈5,020 贈4,974 贈2,000 贈0 Sectors: Bond GBP, Equity Global, Equity UK, Money Market GBP, Real Estate UK. Source: Lipper (UK Funds), 5 years to 30 th September 2012. All amounts are net of fees. This material is presented for illustrative purposes only
  • 9. Buying High and Selling Low? Greed and fear: why clients need help Net retail investments in equity funds by UK investors vs. FTSE 100 Index 1992 - 2008 1,600 8,000 1,400 7,000 1,200 6,000 1,000 5,000 FTSE 100 Index (GBP) Cash flow (GBPm) 800 4,000 600 3,000 400 2,000 200 1,000 0 0 -200 -1,000 -400 -2,000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Monthly net retail cash flow to equity products in the UK (GBPm) FTSE 100 Index (GBP) Source: IMA, MSCI. Monthly cash flow data shown reflects 6-month moving average. Past performance is not a guide to future performance. 9 1 V908
  • 10. Market Timing - would that work?
  • 11. Missing the best days can harm performance Annualised returns of the FTSE All Share 贈10,000 average over 15 Years invested Fully Invested 8.68% 贈34,869 Best 10 days missed 5.70% 贈22,961 Best 20 days missed 3.42% 贈16,559 Best 30 days missed 1.44% 贈12,394 Best 40 days missed -0.36% 贈9,468 Source: Datastream as at 02/04/10, Basis: total return in GBP, FTSE All Share annualised returns 01/04/95 to 01/04/10 It is time in the market not timing the market that is key to investing 11
  • 12. Long Term Investing between 1950 2010 Investment of 贈100 in 1950: Value 2010 UK Building Society Index - 贈1,560 (Income Reinvested) Retail Prices Index - 贈2,680 Barclays Gilt Index - 贈6,146 (Income Reinvested) Barclays Equity Index - 贈117,500 (Dividends Reinvested) Source Scottish Widows UK Financial History 1950-2010 - SW55063 03/11
  • 13. How do Chartwell achieve stability for your investment portfolio?
  • 14. Principles of Portfolio Management A well constructed multi-manager mix is superior to single strategies Well constructed multi-asset strategy mixes diverse drivers of return Seek returns where the opportunity for active management is greatest Portfolio risk management must be an active process Portfolio Managers should be proactively involved in the manager research process Careful implementation pays off
  • 16. What happens next? We analyze the risk you are prepared to take with your money We operate 5 risk graded actively managed portfolios on behalf of our clients
  • 17. Risk Graded Portfolios Secure Conservative Balanced Adventurous Aggressive % holding 2 3 4 5 6 UK Growth Assets 3 7 11 16 19 International Growth 6 18 30 41 54.5 Assets Real Assets 5 8 11 14 17 Defensive Assets 86 67 48 29 9.5 Source: Morningstar as at 30 September 2012 returns % (GBP) Based on C class share returns. Inception date 31st January 2010
  • 18. Balanced Portfolio construction Fund Portfolio Weight UK Growth Assets 11.0% International Growth Assets 30.0% Real Assets 11.0% Defensive Assets 48.0% Asset Class Portfolio Weight Equity 41.0% Bonds 22.5% Property 2.9% Commodity & Infrastructure 6.1% Absolute Return & Cash Plus 18.2% Cash 9.4%
  • 19. How well have the Chartwell investment portfolios performed?
  • 20. Portfolio 1mnth 3mnth 6mnth YTD 1 year 2 years Since & Risk Grade Inception Secure 2 0.5 2.7 2.7 4.9 6.6 5.4 11.7 Conservative 3 0.8 3.3 2.2 6.1 9.1 6.9 14.5 Balanced 4 1.0 3.8 1.6 7.3 11.7 8.2 17.0 Adventurous 5 1.2 4.4 1.1 8.4 14.2 9.5 19.4 Aggressive 6 1.5 5.0 0.4 9.6 16.9 10.6 21.5 Source: Morningstar as at 30 September 2012 returns % (GBP) Based on C class share returns. Inception date 31st January 2010
  • 21. Chartwell Wealth Management - Regular Review Process Chartwell Investment Management Committee Quarterly strategic review meetings External compliance consultants attend 5 risk graded actively managed portfolios All fund managers are reviewed Asset allocation & standard deviation reviews Cost reduction for your portfolio Strategic & tactical fund manager reviews
  • 22. Our Contact Details We look forward to Chartwell Wealth Management hearing from you. Lindley Court Scott Drive Smarter solutions. Altrincham Endless possibilities. Cheshire WA15 8AB T 0161 929 3500 F 0161 929 3501 E info@chartwellfs.com W www.chartwellfs.com Chartwell Professionals and Chartwell Wealth Management are trading styles of Chartwell Financial Services Limited who is Authorised & Regulated by the Financial Services Authority. Registered in England 02578206 . Last Update December 2012