Save & Invest Financial Planning

Traditional Principles at the Core of Our New World Portfolios

In the past few months we have been talking about our strategic investment review and the changes we are advising, to have our clients positioned for future opportunities and reducing the risk of exposure to what is being termed "stranded assets". This work is now finished and we are starting introducing the new portfolios to clients.

These changes do not mean that the fundamental building blocks of a Save & Invest portfolio have changed. We still firmly believe in diversification,adherence to rules, proven quality management and value for money.

We also believe the need for changes in some of our funds is compelling and in this bulletin would like to introduce, Liontrust one of the groups that will feature in the changes we are recommending, using their sustainable funds.

"Our investment process and philosophy is based on the belief that in a fast-changing world, the companies that will survive and thrive are those which improve people’s quality of life, drive improvements in the efficiency with which we use increasingly scarce resources and help build a more stable resilient and prosperous economy. We believe that most investors underappreciate the speed and the scale and persistence of these broad trends and therefore often underestimate the longer-term growth and earnings potential of sustainable companies." Liontrust May 2020


A New Way of Looking at Investment

Tradionally managers would allocate capital across asset types (equities, bonds, property, commodities etc. and geographic areas), the Liontrust graph below demonstrates how they think about capital allocation to themes that will lead to growth, and a better world.

Their investment process uses a thematic approach to identify the structural growth trends that will shape global economy of the future and the fund managers then seek to invest in well run companies whose products and operations capitalise on these transformative changes

In the past six months Liontrust Sustainable Future Managed Trust has returned 6.10% by comparison the FTSE100 has fallen circa16% and the L&G International Index Trust (tracker) has produced 0.5%.

 The Sustainable Future Managed Fund has 127 holdings spanning the globe; the Liontrust sustainable funds (Managed and Cautious Managed) will feature in all our new portfolios. As Sustainable funds, they are looking not just at growth opportunities but how the growth is achieved, so good governance of the companies in which they invest is critical.

Recently we saw how the instant fashion retailer Boohoo, had nearly 50% of its value wiped out when it was revealed that their garments were being made in Leicester factories which were exploiting their workforce. Poor business oversight can now be punished instantly by the markets.

Sustainable Innovations

Water scarity is a global concern, so US company Zero Mass's operation to produce water extracted from the atmosphere of the Arabian Desert 12 miles from Dubai is a trailblazing project because of its scale. The water is being bottled by a local Emerati partner IBV using solar power, recyclable bottles with bamboo tops and is priced to compete with brands such as Evian. It is hoped that the technology which uses solar powered rectangular boxes to absorb vapour, can develop to eventually enable tomatoes or rice to be grown in the Gulf to reduce dependency on imported food. Improving food security and retaining cash in the local economies.

As markets have settled and are now looking ahead we are beginning to introduce new funds to our portfolios, some have an ESG bias others have traditional asset allocation styles but with innovative features to keep costs low and leverage skills within an investment group.

Our portfolios have recovered well from the depths of the market falls and our rules based, diversified approach has seen them not only recover strongly but moderate the downside risk. We have therefore, whilst changing many of our funds, not changed our house rules which govern portfolio construction.

Our view, pre covid, was that we wanted our portfolios to move to a more ESG orientated position, to funds with new, not old world companies. New ESG funds are emerging, and traditional funds are adjusting, all of which has taken detailed research before we were able to make our final recommendations.

Our new look portfolios will not contain 100% of funds describing themselves as ESG funds (funds with Environmental, Social and Governance, wholly driving their decision making), but some of our clients have advised us they wish their portfolio to be comprised solely of these style of funds, and we therefore have built portfolios with 100% ESG/Sustainable funds. If you have not already done so, please let us know, by responding to this email, if you wish your portfolio to be fully ESG orientated.

How sustainably focussed is your portfolio or pension plan?

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Our switchboard 0141 332 8088 is being diverted and answered remotely in normal office hours, while the majority of our team continues to work from home.

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