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What do we think about investment?

What we think about investment

We base our investment recommendations on:

  • Multiple class investment
  • We trade on a minimal frequency
  • Our objective is to invest for the long term
  • Whilst minimising, where possible, both expenses and taxation

We do not try to time or beat the market; we seek to obtain a level of return that allows our clients to reach their goals without taking on impractical levels of risk.  

Our portfolios are designed using academic and market research. This allows our clients to invest through a variety of economic conditions and cope with the market fluctuations that will occur daily, monthly and yearly.

Active vs. Passively Managed Investments

Actively managed investments can be defined as a managed fund in which decisions to buy, sell, what, where and when are planned by an individual or a small team, resulting in a smaller, more concentrated portfolio. Passively managed funds will have its decisions made by more general criteria, such as the company in question's inclusion in the FTSE 100. Both have their advantages, for example:

  • Active fund management allows for the potential to create higher returns on investment by getting in and out of the market quickly due to more specific criteria planned by an individual or team.

  • Passive fund management typically costs less than active management and should provide more predictable returns.

Setting a Suitable Asset Allocation

The term "asset allocation" is a reference to where a certain asset will sit in the portfolio dependent on its proportions. If the portfolio is evenly spread across various categories; cash, equity, fixed interest and so on, there is less risk of the portfolio being driven by the largest proportionate aspect of the portfolio itself. For example:

  • Before we build the portfolio we determine your risk profile using risk profiling questionnaires that determine what risk means to you

  • We then match the risk level for that portfolio to the respective goal(s) that it seeks to support

  • Tax efficiency, the more we can reduce taxation by using the optimum combination of tax wrappers the better, otherwise risk has to increase to cover the tax that arises that may have been avoidable

  • Diversification, a portfolio that is predominantly comprised of equity will of course be far more affected by the equity market than an evenly balanced portfolio. The equity-focused portfolio will therefore be deemed as "volatile" - able to generate high returns on investment, but at the same time, very vulnerable to market instabilities generating a high loss of capital

  • Conversely, a portfolio that contains cash as its largest asset won't see large gains in growth, unlike equity. However, it is far more likely to remain stable if the property market were to suffer a sudden crash

Suitable Benchmark

In order to gauge how well a portfolio will perform, it is important to set a benchmark for it from the outset. In order to do this, we will either over- or under-weigh the different components of the portfolio against that benchmark. This allows us to see whether the portfolio will be low-growth and low-risk, or high-growth and high-risk. Syndaxi uses the FTSE Wealth Management Association (WMA)  Private Investor Income Portfolio Index to benchmark performance. We use this index because:

  • Out of the three available, this is the lowest-risk comparative index on the market.

  • The benchmark is regularly reviewed with the aim of providing a strategic long-term mix of assets for the more conservative investor.

Core and Explore

We recognise that for investors who are prepared to accept a degree of risk our core approach using passives may be acceptable but they may wish to invest in alternative investments, For those either Balanced or above we would anticipate a maximum "explore" percentage of 10% to 20%.

Syndaxi - Financial Planners