Reviews and Revelations

Jun 14, 2024 | Financial Planning, Investments

Change is the only thing which is constant and with ever so changing global paradigms, especially over the past 5 years, we at GoddardFry did an in-depth review on the current solutions that are being utlised and are set to do a few more reviews as we are finishing the second quarter of 2024.

Smoothed Investments Review:

Smoothed funds are designed to provide steadier long-term growth. They hold a range of different investments and are designed to reduce the worry of investing by smoothing out some of the ups and downs of the investment markets, so are subject to a reduced level of investment risk.

Smoothed funds will spread your money across a range of different investment types and geographical locations – helping to ensure your money is never over-exposed to risk in any one area.

Unlike other funds, smoothed funds undergo a ‘smoothing process’, which aims to shelter your money from some of the daily uncertainty of investing. This is like the old fashioned ‘With Profits’ setup which worked on a bonus structure where they add a fixed bonus to the fund every month/year. Modern versions have various mechanisms but basically, they do this by retaining some returns during bull markets and providing these returns in bear market to reduce the volatility of performance for the investors. This is generally advised for clients who are nearing their retirement/investment goal and/or who are very cautious with their risk appetite.

Good examples are trust-based investments and those moving from cash to a stocks and shares environment.

GoddardFry do not have any inhouse smoothed funds. We often recommend third party smoothed investment solutions, and we perform annual reviews to see if the solutions that are being recommended are up to scratch with respect to performance, charges and client experience amongst other things.

We firstly researched about the smoothing process used by various market leaders along with our recommended provider. We then formed a list of all the funds provided by all the significant market players and segregated them into different risk levels (most of them fell between risk level 4-8 as per Dynamic Planner). We then analysed the performance of these funds in each risk level to see which provider came on top with respect to growth. We also checked their charges, and the number of options offered by each provider to hold this investment (ISA, Pension, GIA etc) to really understand the best options.

The research confirmed that our current recommended provider and their fund range are the market leaders on various grounds. This is Prudential’s PruFund offering which can be utiilised in Pensions, ISAs and Investment Bonds.

MPS Review:

The second review we performed a few weeks ago is the MPS review. Model Portfolio Service’s (MPS) are a recent innovation in the financial service markets. It involves constructing a portfolio of funds used to match different levels of risks and are commonly available via platforms.

The main advantages of MPS are:

  • Expertise and Resources: MPS programs offer access to a wider range of investment knowledge and tools compared to what a single advisor might have on their own.
  • Cost-Effectiveness: MPS is a more affordable option than a fully customized investment plan, which would be tailored exactly to each client’s unique situation.

At GoddardFry Wealth Management we have our own in-house MPS solutions that we have been advising our clients. The methodology and process have been designed by our Director and Financial Planner, Alexander Fry, based on a solid investment strategy using multiple funds from different fund managers to give the best ‘diversified performance’ to the client while adhering to their risk appetite, along with the input from our wider ‘Investment Commitee’.

These are;

  • GFWM Cautious Portfolio for low-risk investors
  • GFWM Balanced Portfolio for medium-risk investors
  • GFWM Growth Portfolio for high-risk investors

We used our tools to look at the best performing MPS solutions in the market had performed at the same levels of risk.

We did this by using one of our systems to collate a list of all MPS solutions in each risk level (4, 5, 6, 7, and 8). We then filtered these funds based on best 5-year performance and 3-year performance to make sure of consistency in returns. We then collected the yearly performance data for the top 5 funds in each risk level. Performance line charts are generated using this data and the GFWM Portfolios are added to the mix, in their respective risk levels. We also collated the charges related information of the leading performer in each risk level and compared it to our in-house portfolios where suited.

It is a matter of pride to see that all the 3 GFWM Portfolios, compared to the MPS solutions in their respective risk levels, that our in-house solutions either stood up well or actually outperformed major investment firms with far, far greater resources than ourselves.

As a bonus, they are also competitive in their charging structures as well.

We will do our in-depth portfolio review very soon where we will still try to see if the performance can be optimised by switching some of the funds in the portfolio and if not, we will try to find if there is a possibility to reduce the overall investment charges (initial and ongoing) of our portfolios.

We are dedicated to providing the best service possible to our clients and these reviews are a testament to our continued dedication and integrity.

By Alex Fry (Managing Director) and Ash Jatla (Junior Paraplanner),