Canaccord Genuity Wealth Management (CGWM) has seen continued success for its Select Portfolio Service (SPS), launched in response to a demand from financial intermediaries for an entry-level, risk-based managed portfolio service. It is available to anyone with more than £100,000 to invest. Tim Sanders (pictured), CGWM’s Head of Wealth Management Jersey, explains what it is and why it could be the right solution for offshore intermediaries and their clients
The Select Portfolio Service (SPS) helps to bridge the gap between investing in funds and fully bespoke discretionary portfolios, ordinarily considered for clients with larger investments. It allows investors to benefit from having their money in their own ring-fenced portfolio, which is based according to the level of risk each individual investor is willing to accept.
There are four distinct risk-level portfolios available: Cautious, Cautious Balanced, Balanced and Adventurous (see graph).
What each portfolio looks like
The select portfolios have their roots in our in-house funds, the CGWM Funds*. Originally launched more than 10 years ago, they now have assets under management exceeding $1bn. A number of our core discretionary strategies are replicated across this fund range, making them a pure expression of our rigorous and highly analytical investment expertise and therefore the perfect building blocks for the SPS.
Using portfolio modelling systems, we identified the optimal combination of the CGWM Funds to give the best possible returns for our four different portfolios according to their risk levels.
It meant we could harness the investment expertise that underpins the CGWM Funds, including the increased diversification gained by spreading investors’ money across a range of fund managers, rather than investing in stocks, bonds and other securities directly.
Using the underlying funds also provides exposure to specialist and geographic areas where an investor might not have the right expertise and knowledge to invest on their own.
A disciplined framework
Whilst this service is a risk-based solution and designed to maximise returns, it is important to understand that it is not risk-free. Through the process of optimisation, in designing portfolios for investors with different risk appetites, we impose rules around how much risk each strategy is permitted to take – and in each instance, we stipulate an upper and lower limit.
Depending on prevailing market conditions and our assessment of short-term opportunities, we will permit more or less risk based on our outlook. So, whilst there is a disciplined framework, there is also scope to adjust our positioning to enhance or protect returns in times of market volatility.
As we look back over the life of the SPS, generally speaking we have held a positive view on equity markets. As a result, we have been willing to tolerate slightly higher levels of risk in the belief that an increased allocation to equities would yield improved returns.
This means that over time, we have typically exhibited moderately higher levels of risk than our benchmarks. However, importantly, we have always operated comfortably within the tolerances we allow ourselves.
The SPS has enjoyed impressive success. Focusing on the sterling portfolio as it has the longest history, each strategy has outperformed its benchmark over every period. Not only is the SPS underpinned
by excellent risk-adjusted returns, but it also benefits from our industry-leading support services:
• Clients have access to a dedicated manager, as well as being supported by our in-house client services team and long-standing operations based in the Channel Islands.
• They can opt to receive periodic reporting and quarterly factsheets.
• They can monitor their portfolios, both via our online portal, Wealth Online, and on our recently launched mobile app.
In addition, because the SPS invests through the CGWM Funds, we have developed full look-through reporting to provide investors with a complete and transparent insight into the current positioning of the underlying CGWM Funds.
* The CGWM Funds are ‘funds of funds’ (also known as multi-manager investments). This means they are made up of other investment funds (which are themselves made up of different assets) rather than investing directly in stocks, bonds or other kinds of securities.
Find out more
For more about CGWM’s services in the Channel Islands, please contact Tim Sanders:
Email: tim.sanders@canaccord.com
Tel: 01534 708090
• This advertising feature was first published in the May/June edition of Businesslife magazine