Investing Intelligently – it does what it says on the tin


According to the 2015 Investment Association (IA) survey1, assets under management by their members came to £5.5 trillion – that number is over 47 times the annual cost of running the NHS2.

The vast majority of these private savings invested in the UK are done on an ‘active’ basis where fund managers are buying and selling, stock picking and market timing. The IA survey states that “Passive remained a comparatively small part of the overall UK asset management activity (20%).” The term ‘passive’ in this case simply means the alternative to ‘active’. By contrast we call what we do Intelligent Investing™.

With close to a quarter of a billion pounds of client assets under our management at Capital, we take the role of careful and effective stewardship extremely seriously. A huge amount of intellectual activity goes on behind the scenes to ensure that we are providing the very best possible investment outcomes for you, matched to your future needs.

Intelligent Investing™ embraces rational outcomes which are based on facts, evidence and hard data;

  • Capitalism works  – there is no need to create an alternative
  • Markets work – as soon as new information is known, it’s reflected in market prices
  • Risk and reward are related
  • Diversification (not putting all your eggs in one basket) makes good sense
  • Ignore costs at your peril (especially the hidden ones you don’t know about – the ‘unknown unknowns’)

Where Capital differs from the majority of the investment community is how the market returns are captured for you. Whereas many of the active fund management industry believe that they can predict what will happen in the future (‘the dollar will strengthen’, ‘oil prices will rise’, ‘interest rates are going to change next month’) we avoid crystal ball gazing.

Recent independent evidence3 suggests that many of the predictions made by bright and busy analysts are as wrong as often as they are right, and once costs (paid by you the investor) are factored in, together with constant changes to portfolios, you may end up on average in a worse position than if you had not made any changes at all.

Capital’s philosophy can be described as ‘long term buy and hold’ – we believe we have a classy investment proposition and to use an analogy, once you have a Rolls Royce engine in place you service it annually but you don’t need to remove and replace it each and every year.

Capital launched our portfolios during February 2011, and now have five years of performance data which is an excellent opportunity to see how they have performed during different market cycles.

We have charted the portfolios and based them on an invested sum of £500,000.

Source: FE Analytics. Bid to bid. Daily frequency. Pounds Sterling. Square blocks denote a fund switch.

Please note that past performance is not indicative of future performance and the value of units can fall as well as rise.

Each of our five portfolios has an ‘above inflation’ benchmark and we are pleased to report that as at the 19th April they have produced the following:

PortfolioAnnualised return %Inflation %Return above inflation %

We are occasionally asked if our Intelligent Investing™ approach is better than the more heavily advertised active alternative. It is a fair question and there are two prime sources of independent portfolio measures which we can use.

The Investment Association represents about 200 UK investment managers such as Fidelity, Aberdeen and their like. Asset Risk Consultants4 (ARC) provide manager research and performance reporting which includes over 60 of the private client and discretionary fund managers such as St James’s Place and Cazenove as well as the private banks Coutts & Co, Barclays Wealth etc.

Cam 60 is our most popular portfolio and  we have compared this with the closest alternatives from the IA and ARC.

CAM 60ARC Sterling RiskIA Mixed 40%-85%

The returns generated by our approach over this five years for CAM60 is over 10.5% more than the IA and ARC alternatives, which in this example equates to £70,000, and we are truly delighted that our approach is paying dividends.

Five years is a short period in investment terms and the caveat applies that past performance should not be seen as indicative of future performance and that values can fall as well as rise. You may not get back what you invest.

Our focus is always on the things that are important to you such as lifestyle, career and family. After all, money is only ever truly useful when it is spent on something of value.

Capital’s investment offering is a best-kept secret, and as we pass the first five years of Intelligent Investing™, we wanted to share the results with you.

We encourage you to share this article with your friends and family whom you feel may benefit from a second opinion on their own portfolios.

Graham McCulley

Investment Director

At Capital our focus is on profit not prophecy.

Investment Association (IA) survey
NHS Budget
Evidence Investor and Scorecard
Asset Risk

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