Although cash typically refers to money in hand, the term can also be used to indicate money in banking accounts, cheques or any other form of currency that is easily accessible and can be quickly turned into physical cash. Cash is often regarded as a ‘safe’ investment, but when taxes and inflation are taken into consideration, it can represent a guaranteed loss to an investor.
Foreign Exchange Or ‘FX’ refer to the relationship between various global currencies. Currencies move interdependently of each other and are affected heavily by the country’s base interest rate, inflation rate and general economic strength among other factors. Clients generally become exposed to these when making overseas investments or going abroad
Equities are an instrument that represent an ownership position, or equity, in a corporation. An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains. The value of the stock depends on the supply and demand of the position.
Often referred to as “Gilts” in the UK, “Treasuries” in the US or “Bunds” in Germany. A government bond is a loan to a government of a country with a fixed “coupon” or (interest rate) They are issued by a country’s government, promising to repay borrowed money a fixed rate of interest at a specified time. Bonds are also known as fixed income and fixed interest, because they pay out a fixed annual amount of interest. They are issued either as short- or long-dated bonds, and it’s even possible to buy a gilt for up to 50 years. During the ownership of a bond the value of the bond will fluctuate depending upon various factors including interest rates, inflation and the credit rating of the issuer.
Corporate bonds are issued as a way of raising money for businesses. When you invest in Corporate Bonds you are lending money to a company in exchange for an “IOU”. The promise to repay the debt has a term and at maturity (typically five or ten years) the sum invested is returned. This may not happen if the company defaults. As a result, they are seen as riskier than gilts, as companies are generally considered to be more likely to default on debt than governments. During the ownership of a bond the value of the bond will fluctuate depending upon various factors including interest rates, inflation and the credit rating of the issuer.
A commodity is a basic physical asset, often used as a raw material in the production of goods. Commodities are often referred to as the “fifth” asset class, after the conventional investment asset classes of cash, bonds, equities and property. Investors can gain exposure to this asset class by buying the physical commodity, through shares directly in commodity companies or indirectly through a funds.
An alternative asset is a broad term that includes assets that are not stocks, bonds, or cash. Examples could include commodities (like gold), hedge funds, collectibles art), and property. They often are more complex investments that are more difficult to value and harder to turn into cash.
Passive Funds or Passive Management is often referred to as Index Managing, as the investor puts their money into investment funds that track a particular index, or market sector. The reason these funds are described as passive is because there is no active strategy for the fund manager to buy and sell securities at their discretion. Instead the fund manager buys and holds securities of a benchmark index. Whilst this approach is typically cheaper than an active strategy, it is also guaranteed to underperform after fees are paid.
Real assets are physical assets that have value due to their substance and properties. Real assets include precious metals, commodities, real estate, agricultural land, machinery and oil. They are appropriate for inclusion in most diversified portfolios because of their relatively low correlation with financial assets such as stocks and bonds.
A hedge fund is an alternative investment that is designed to protect investment portfolios from market uncertainty, while generating positive returns in both positive and negative markets. As hedge funds can hold both long and short positions, they can be less volatile than typical long-only portfolios, and some funds can provide a layer of protection in a declining market. However, if the goal of the funds is to achieve high returns, it can subsequently involve a high degree of risk to the investor.
A Premium Bond is a lottery bond issued by the National Savings & Investments agency. The bonds are entered in a regular prize draw and the UK government promises to buy them back, on request, for their original price. The government pays interest on the bond (1.40% per year as at December 2017. Interest is paid into a fund from which a monthly lottery distributes tax-free prizes to bondholders whose numbers are selected randomly.
Inflation refers to the general rise in the cost of goods and services over time. Because a sustained increase in prices results in a relative decrease in the value of money, it is important to consider inflation when looking at personal financial planning.
Interest rates are the price which must be paid for borrowing money. For example, money deposited in a bank account is effectively being lent to that bank and, as such, attracts a level of interest based on the amount deposited. On the other hand, when a credit card is used to pay for goods, the credit card company is lending the money. They therefore charge a rate of interest based on the amount of the purchase.
- Active Portfolio Management
Active portfolio management is an investment strategy that tries to generate maximum value to a portfolio, by actively managing the client’s exposure to different assets and asset classes at different points in the cycle. Investors, as well as fund managers use various techniques that evaluate which financial securities will yield the greatest returns.
Active management is the use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund’s portfolio. Active managers rely on analytical research, forecasts, and their own judgment and experience in making investment decisions on what securities to buy, hold and sell.
In investment planning, portfolio diversification is the risk management strategy of combining a variety of assets to reduce the overall risk of an investment portfolio. The rationale behind this technique contends that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.
A managed fund is one type of ‘managed investment scheme’. In a managed fund, your money is pooled together with other investors. An investment manager then buys and sells shares or other assets on your behalf. You are usually paid income or ‘distributions’ periodically.
Portfolio management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance.
- Portfolio management service
Portfolio Management Service are offered by the Portfolio Manager, is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a certified investment advisor that can be tailored to meet specific investment objectives.
- Investment advisory services
investment advisory services asr offered by a professional organisation and makes investment recommendations to an individual or group of investors. Investment advisors may be independent investment consultants or work as part of established firms, such as wealth managers.
Any recommendations made by a professional regarding an investor’s portfolio. Many professionals, including financial planners, bankers and brokers, can provide investors with investment advice that is specific to their financial situation.
- Investment portfolio management
Portfolio management includes a range of professional services to manage an individual’s and company’s securities, such as stocks and bonds, and other assets, such as real estate. The management is executed in accordance with a specific investment goal and investment profile and takes into consideration the level of risk, diversification, period of investment and maturity that the investor seeks.
Multi-manager funds are investment products that consists of multiple specialised investment funds. Each investment fund may invest across different sectors and markets, or having managers investing in the same asset class but have different investment styles. Our partners at www.tbaileyam.co.uk are award winning experts at curating multi manager funds.