How I use investment companies: Sandy Robertson FIFP, CFP

Acumen Financial Planning is privately owned and totally independent. They are first and foremost planners, working with clients to create a strategic financial plan reflecting their goals and aspirations. These plans do not gather dust; they are updated regularly so that they form an authentic contextual background upon which all financial decisions can be made.  Risk management, investment management, and tax planning decisions, all remaining true to the plan, automatically become part of a truly professional and comprehensive service.

Sandy started Acumen Financial Planning in 1995 after branching off from a firm of chartered accountants.  The firm manages £210m predominantly on an advisory basis with a little discretionary.  The planning and investment process is the same for both types of management.  They do not outsource.

How do you use investment companies?

We use them a little as over the years we have become predominantly passive.  As there is no passive option on property, we use investment trusts for that.  We favour the use of ZDPs for some of our higher rate taxpayers at the moment with gilt yields low it makes sense.  ZDPs feature heavily in the portfolios we put together for our clients.  We believe that the best ideas all clients should have so everyone gets the same makeup of the equity asset mixes and we water this down and dampen down the excitement with cash and bonds.  The whisky and water approach if you will!

What do you like about investment companies?

I like that fact that they are closed-ended and therefore not contaminated by enthusiastic investors!  In open-ended funds those investors chasing ‘flavour of the month’ funds cause large inflows and then outflows of money, harming those investors who have bought on a long-term buy and hold strategy. We like ZPDs as I’ve already mentioned.  We also support those investment trusts who gear responsibly.

Do you favour certain geographical regions when thinking about investment companies for clients?

Property.  In the fixed income area we like JPM Convertible income and Henderson Diversified Income.

And what do you dislike?

Taking on capital losses voluntarily!  Liquidity is important.  We need to ensure we can obtain a planned exit for our clients when the time comes. The costs of getting in and out of investments in small amounts can be a downside.  We prefer using them for annual investments on a long-term buy and hold strategy to minimise costs for our clients.

What could boards or the AIC do more to help advisers understand investment companies?

Many advisers are lazy so investments like investment trusts often remain unfamiliar to them which can put them off.  Keep on with the messages of good performance and sensible board management with clear messages.

Are there any tips or thoughts you could pass on to other advisers to help them understand or advise on investment companies more frequently?

Investment trusts are a big step for many.  I would say advisers should buy their own data stream including total return data and a way to assess portfolio return data. Then, you need to do your homework to gain more confidence in this area.