Island Investment Process and April Market Review

Whilst we have been following the unfolding events around the world and using the multiple feeds of information to help shape our thoughts on the funds we help to look after for our clients, we can’t help but to reflect on the fact that we are lucky not to be facing the daily reality of living in a war zone.

Myself and our team have the responsibility to review our clients’ investments and to help set out our suggested way forwards, and I believe now to be a prudent time to reconfirm our investment philosophy which has, over time, outperformed many of the leading benchmarks.

The primary aim with clients is to look at potential future growth targets and income needs and use cash flow modelling to plot ahead and see what impact life changes can have on their future. These changes can be planned or unexpected.

The service we then apply to clients’ funds is currently an advisory one, where funds are managed through index funds and collective investments. Generally, clients’ investments contain a majority of Core Holdings comprised of companies that form part of mature markets (such as the FTSE 100 and S & P 500) and consist of ‘whole of the respective index’, these are selected on Geographical and a Sectorial basis, reviewed regularly and benefit from being low cost to ‘own’.

The balance of the funds we select are Satellite Holdings, selected on their ability to perform in either the prevailing economic conditions of the day, or as a response to market events.

All funds share fundamental qualities that we believe are essential for the prolonged ability to add value to clients’ portfolios by outperforming the rate of inflation and are subject to our continuous review process.

Mature markets around the world have entered an economic phase of higher inflation – this is leading to increased interest rates and greater investment volatility.

In all market conditions an investor has various options, such as:

· Do nothing and wait for the volatility/risk in markets to re-align.

· Sell some/all assets and attempt to ‘buy back in’ to the market once volatility reduces.

· Add new cash to increase good assets that can be bought at a lower price.

· Realign the current holdings with an amended risk profile

· Buy assets that are uncorrelated to those currently held to diversify risk and returns

Whilst each of these options may add value, our advice is ultimately driven by our clients’ current circumstances and goals.

Whether you are in the ‘accumulation’ phase (building assets for the future), or ‘decumulation’ phase (withdrawing from your assets), it is important that you review your savings and goals regularly to reassess you ‘risk appetite’ and allow for any changes in circumstances and review potential outcomes.