Portfolio Construction

Even with the best intentions, not all companies can offer the best performance on a consistent basis. Experience would suggest, for example, the best performing funds, say five years ago, are unlikely to have the best performance five years later. In fact, in many previous portfolios we have reviewed, it is likely some funds would have dropped down to the third or fourth quartile for investment returns.

When building an investment portfolio there are two important considerations. The first is asset allocation, which is concerned with how you spread your investment between different asset types and regions. The second is fund selection, which is concerned with the decision of which fund managers and funds to use for each of the different asset sectors shown. Studies have consistently shown that in the medium to long term, asset allocation usually has a much larger impact on the overall portfolio risk and return than the individual funds selected.

To help you select the right asset allocation, we need to take into account your specific investment objectives, as this will affect the asset chosen. Using our risk profiling system will also enable us to establish your attitude to risk.

The asset allocation is determined by using a financial model. The model attempts to determine an optimal combination of different asset classes to predict the maximum mathematically expected return for your chosen level of risk. Such a sophisticated approach to constructing portfolios is not normally possible for retail investors and would typically only be done by institutional investors and pension fund managers.

The financial model is dependent on a set of economic assumptions. The assumptions are assembled using a combination of past experience and forecasts of future economic conditions. Whilst no guarantees can be attached to these, we believe that they represent a reasonably reliable basis of future economic assumptions.

Based on the above, we would then select the most appropriate companies from each sector within the designated portfolio. With access to over 1,000 investment funds and in excess of 80 investment companies, we are well placed to construct a well-diversified portfolio tailored to your individual needs. Whether you are looking for growth or income, high risk or a cautious approach, we can provide a strategy for you.

Discretionary Management

With Financial Services Authority (FSA) approval we are one of a very small percentage of IFA’s who are able to offer a full discretionary investment management service.

We work closely with our research partners, which include Old Broad Street Research (OBSR) in our investment process. OBSR are leading researchers in product and investment research.

This investment approach enables Littlejohn to help determine the most appropriate asset allocation and fund selection for you. We then ensure this is monitored and active adjustment made where necessary to ensure your portfolio is efficiently managed.