Investment Approach & Portfolios

What style of investment do evestor use?

We use a passive investment strategy towards investing when managing our portfolios. Meaning we invest in passive mutual funds which track market indices; like the UK FTSE All Share and the US S&P 500. We believe there are several benefits towards using this approach:

  • Passive funds are less costly than actively managed funds, which means you could keep more of your hard-earned cash

  • It allows exposure to many global companies meaning further diversification of our investments

  • We don’t try and outperform the market, instead we stick to our original asset allocation, capture market returns and eliminate the complex guesswork which is employed by active managers whose objective is to outperform their chosen benchmark

What are passive mutual funds?

A mutual fund is a type of financial product that pools investors’ money together to purchase financial assets, such as Equity and Bonds. These track the performance of its relative benchmark and requires minimal human intervention from the fund manager. As such, these funds are significantly cheaper than active funds. Our use of mutual funds is the core to our passive investment approach.

What is a portfolio?

At evestor, when we say ‘portfolio’ we simply mean a collection of investments. We offer three model portfolios created by our investment committee, these represent three risk levels; 1 – Low Risk (Cautious), 2 – Medium Risk (Balanced) and 3 – High Risk (Adventurous).

What is asset allocation?

Asset allocation is a type of investment strategy. This method balances the risk and rewards associated with investing, against an individual’s attitude to risk and time horizon. The core principle is to use diversification to allocate non-correlated assets (i.e. assets that perform differently in the same economic conditions) to an investor’s investment portfolio. The use of different asset classes in a portfolio aims to reduce the overall risk of the investment and provide better returns for the customer.

What is diversification?

Investment diversification is one of the basic building blocks of asset allocation. The principle suggests that spreading your investment across a wide range of asset types will help manage the overall risk of the investment. If you’re familiar with the phrase ‘don’t put all your eggs in one basket’, this might help you to understand diversification. Our investments are globally diversified so an investor in one of our model portfolios can be invested in over 70 countries and 2,500 companies.

How do you decide on the composition of each portfolio?

Our investment committee decides on the asset allocation of our three model portfolios. Each portfolio contains mutual index funds which invest in the core asset classes i.e. Bonds, Equities, Cash and Property. The type and proportion of each asset class included in our portfolio is based on target risk levels. Depending on the risk level of the portfolio the proportion of assets will vary to meet set targets.

Do you offer an ‘ethical’ investment portfolio?

Our portfolios are invested in several mutual index funds, meaning they track global market indexes like the UK FTSE All Share and the US S&P 500. Currently we are unable to remove specific investments which may be considered unethical from these funds.

Where can I find the past performance for evestor’s portfolios?

The past performance of each of our portfolios can be found in our portfolio factsheets. These contain useful information on the funds we use, the asset allocation and the past performance of each portfolio. If you wish to view these, please get in touch and we will have these sent across to you. Please remember that past performance provides no indication of future performance.

Can I pick my own investments?

Our investment committee have carried out extensive research when building each portfolio. Changes can only be made where the investment committee see fit so customers are currently unable to adjust the holdings or ‘pick and choose’ their own investments.

What Funds do evestor invest in?

As we manage our portfolios on a discretionary basis, the exact funds we invest in will changefrom time to time, however here’s a list of the funds evestor currently invest in:

Vanguard UK Investment Grade Bond – this fund invests in pound sterling, major investment grade bonds securities around the world, excluding government and government related securities. Investment grade refers to the quality of a company’s credit. To be considered investment grade the company must be rated ‘BBB’ or higher by the rating agency. Only bonds rated ‘BBB’ or above will be considered for use in this fund. This fund uses a passive strategy to replicate the performance of the Barclays Global Aggregate UK Non-Government Bond Index. We use this fund to gain exposure to sterling denominated investment grade bonds issued by developed companies around the world.

Vanguard UK Government Bond Index – this fund invests in United Kingdom treasury andgovernment related securities with maturities greater than one year. UK Treasury securities refer to the bonds issued by the UK Government. This fund uses a passive strategy to replicate the performance of the Barclays UK Government Float Adjusted bond index. We usethis fund to gain exposure to UK Government Securities.

Vanguard Global Bond Hedged Index – this fund invests in major government and investment grade bonds from all around the world. Only bonds rated ‘BBB’ or above will be considered for use in this fund. This fund uses a passive strategy to replicate the performance of the Barclays Global Aggregate Index. We use this fund to gain exposure to major global government and corporate bonds, hedged against the pound sterling.

Blackrock UK Equity (FTSE All-Share) - the aim of this fund is to achieve capital growth for investors by tracking closely the performance of the FTSE All Share Index. Using a passive strategy, this fund will invest directly in companies that are constituents of the FTSE All-Share in relation to their market capitalisation. We use this fund to gain exposure to UK Equities.

Fidelity Index US (S&P 500) - the aim of this fund is to achieve capital growth for investors by tracking closely the performance of the S&P 500. Using a passive strategy, this fund will invest directly in companies that are constituents of the S&P 500 in relation to their market capitalisation. We use this fund to gain exposure to US Equities.

Fidelity Index Europe (ex UK) - the aim of this fund is to achieve capital growth for investors by tracking closely the performance of the MSCI Europe Ex. UK Index. Using a passive strategy, this fund will invest directly in companies that are constituents of MSCI Europe ex. UK Index, in relation to their market capitalisation. We use this fund to gain exposure to developed European Equities.

Fidelity Index Japan - the aim of this fund is to achieve capital growth for investors by tracking closely the performance of the MSCI Japan Index. Using a passive strategy, this fundwill invest directly in companies that are constituents of the MSCI Japan Index, in relation to their market capitalisation. We use this fund to gain exposure to Japanese Equities.

Fidelity Index Emerging Markets - the aim of this fund is to achieve capital growth for investors by tracking closely the performance of the MSCI Emerging Market Index. Using a passive strategy, this fund will invest directly in companies that are constituents of the MSCI Emerging Market Index, in relation to their market capitalisation. We use this fund to gain exposure to Emerging Market Equities.

Fidelity Index Pacific (ex-Japan) - the aim of this fund is to achieve capital growth for investors by tracking closely the performance of the MSCI Pacific Ex. Japan Index. Using a passive strategy, this fund will invest directly in companies that are constituents of the MSCI Pacific ex Japan Index, in relation to their market capitalisation. We use this fund to gain exposure to developed Pacific Markets.

Blackrock Global Property Securities Tracker - the aim of the fund is to achieve capital growth for investors by tracking closely the performance of the FTSE EPRA/NAREIT Global Real Estate Index. Using a passive strategy, this fund will invest directly in companies that areconstituents of the FTSE EPRA/NAREIT Global Real Estate Index. We use this fund to gain exposure to the Global Property Market.

(Correct as of 13th July 2019)

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