How we have outperformed most of our peers in such a difficult climate

How we have outperformed most of our peers in such a difficult climate

Our discipline, diligent focus and patience has proved effective. By holding our nerve, keeping our costs low and making sure we loaded the portfolio mix to help protect assets with an intelligent balance of corporate and government bonds,  we were able to perform better than our peers during the rising market and significantly better in the falls so far this year. Many of our peers made one of these two mistakes. Some tried to second guess the top of the market, left far too early, and therefore didn’t benefit from the growth up until 2020. Others were too greedy and chased returns with high risk investments leaving them horribly exposed this year. Our repeatable methodology, balancing intelligently higher risk (equities) and lower risk (corporate and government bonds) asset classes, has led to outperformance in a rising market and a greater level of protection in a falling market. Investing with Flying Colours.       

The mechanics? – Well, we use a few basic principles to help us build portfolios and manage them across the economic cycle. This short summary explains the last 5 years and illustrates how we might manage the next 5, which yes of course you could, potentially, benefit from too.

  • We invest on behalf of people in the UK, normal but shrewd, investors. Our clients are individuals and need portfolios that have certain characteristics to give them the best chance of having their best life. We therefore run a range of portfolios that have set characteristics that we can match to their needs to help reach a clear set of goals
  •  Investing across a wide range of asset types to create wide diversification giving our clients the advantage of smoother returns or more return for any level of risk.
  • By changing the portfolios infrequently we can be more confident in our ability to produce better results for you. Our research proved that regular changes reduce returns
  • We try and lean against the economic cycle, because it gives us room to take advantage of any falls during recessions for you.
  • We are transparent with our charges and we will be clear with what you get including a very useful App where you can see the relative performance of your own portfolios at any time.

 

We think this investment philosophy should always apply but the changing background to investing is important and means you should change direction from time to time. The right portfolio 2 years ago is unlikely to work today. We think that the coronavirus pandemic has changed the outlook for investments (add link to next blog post) but here I wanted to explain how we’ve navigated the last 5 years including the current crisis.

The first 5 years have been very consistent and we were able to stay with a simple strategy. We maintained a neutral to slightly underweight position in equities but got this exposure entirely from large mainstream companies. We held on to government bonds throughout the period and balanced these with some corporate bond exposure. We kept it very simple with the portfolio largely invested into passive funds and we avoided completely any investments that might be hard to sell like property, private equity and infrastructure. All of this was designed to give us full exposure to what has been a rising market but to maintain significant risk control in case we hit a recession.

HELPING OUR CLIENTS BUILD THEIR WEALTH.

Flying Colours Life Investment Management aims to make investment management more accessible and transparent for clients. Our roots in investing money on behalf of our clients, and our motivation lies in a genuine desire to make a difference to people’s futures and maximising the potential for solid long-term returns.

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