9th March, 2018
10 Years On…
When we launched our range of five model portfolios on 1st March 2008, we didn’t quite know it yet, but one of the deepest financial crises in modern history was ensuing. At the market open, the FTSE 100 index priced at 5,884 but markets were firmly in panic mode. Exactly a year on, it was clear to the world that the financial system was in big trouble – house prices globally were falling (something people never thought could happen), one of the worlds biggest investment banks, Lehman Brothers, had defaulted, and many others were in the process of being saved by governments (well… taxpayers). So just 12 months later, on 2nd March 2009, the FTSE 100 index closed at 3,625 (over 2,000 points and 38% down).
On the one hand, it wasn’t the most favourable market environment to launch a range of new investment solutions, but then again, I cannot think of one more appropriate to characterise our philosophy of protecting the downside.
The 10-year period from launch has been fascinating. It is true that overall markets are higher now than they were back then, but looking back at just some of the events or phases we have had to navigate should remind us how much can happen in a decade. To name but a few, we had the euro debt crisis that started in 2009, the Japanese Tsunami and Nuclear disaster in 2011 and the oil price crash in early 2015, and that’s before we even start coming on to more recent phenomena like Brexit or Bitcoin.
The return data that is provided below is extremely strong. However, we believe that whilst achieving the end outcome is vital, the nature of the journey is equally important to our clients. It is therefore the sustainability and consistency of the results, in addition to the protection offered in the difficult markets across this period, that give us the most pride.
It is also refreshing to review investment performance over a reasonable time period. The modern world that we live in places so much emphasis on receiving satisfaction “now”, and the media world push us to think week-to-week or even day-to-day. In reality, beating or underperforming a benchmark from one year to the next is of limited importance. Luck comes into play a lot more in the short-term than it does in the long term. Warren Buffet (arguably the most successful investor of all time) isn’t famous for his excellent results in one single year; he is famous because he consistently delivered for over 30 years. Our clients have objectives that often span such timescales, and whilst we will always focus on staying proactive and adapting the portfolios to the environment ahead of us, remembering that this is a long term game is of equal importance.
With this reflection in place, we now look forward to the next 10 years with the aim of replicating these great results. The investment world is now more complex, data more readily available and technology that much further progressed. It is therefore a similar, but also a different set of challenges. As a team we are that much further forward as well though; more experienced, more knowledgeable, and with more expertise. The one thing that has stayed consistent… the philosophy. Focus on delivering sustainable, consistent returns, with portfolios that work hardest for our clients through the difficult times.
As always, it remains a privilege to be managing and growing our clients’ wealth.
*Basis of return: total gross return net of annual management charges, bid to bid basis. The figures do not include any initial charge. You should be aware: pension and life fund performance differs from unit trust/OEIC performance, due to the underlying difference in the taxation treatment. Past performance is not a reliable indicator of future turns. The value of an investment, and the income from it, can fall as well as rise. Investors may not get back the amount they invested.