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Grade Your Portfolio

Is your financial adviser 'top notch' or 'bottom of the barrel'?

Topic: Investor Insights 27 October 2017


The fact is, 9 in 10 portfolios reviewed by Yodelar contain poor performing funds (funds consistently in the worst 25% of funds within their sector).

So how certain are you that the investment portfolio your adviser has recommended has performed well or not?


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There are many advisers in the UK who have an expert knowledge of fund performance and provide high quality investment management to their clients. Such advisers are able to build and manage top performing portfolios suitable to their clients’ risk profile and overall objectives.  But like any industry, there are those who are good at what they do, and there are this that are not. The main difference in the financial sector, is that it is very difficult for a client to know whether their adviser is an expert, or merely standard or worse.

Fund performance is not a regulated aspect of financial planning and there are many advisers in the UK who, while regulated and fully compliant, are not efficient or competent at portfolio management. As a result, many investors find themselves invested in funds that underperform - which negatively impacts on their overall portfolio growth.

It is not uncommon for investors to believe the growth returned by their portfolio is good, when the reality is they are missing out on potentially significant extra growth each year, without increasing their risk exposure. We often hear statements like “My portfolio performed well this year as it returned growth of 10%”. But market conditions can dictate sector and fund performance which can result in a portfolio of poor performing funds returning a level of growth that is perceived to be good. But it’s only when you compare a portfolio against a similar risk portfolio of consistently top performing funds that you can determine if the performance was appropriate for the level of risk taken.


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The fact is, there are funds within each investment sector that have consistently delivered better performance than competing same sector funds. These funds are managed by fund managers who have proven their expertise within that particular sector. For example, the ‘Baillie Gifford North American’ fund has consistently been one of the best performing funds in the North American sector, with returned growth of 148% over the recent 5-year period. In contrast, the ‘Henderson US Growth’ fund has consistently been among the worst performers within the same sector, and over the same 5-year period it returned growth of 98%, which may still seem impressive but in comparison to all other same sector funds it was among the lowest. It is the advisers who recognise what is good and what is not and are able to make informed decisions based on the evidence not opinion. Advisers are subsequently able to build and manage high quality portfolios suitable to each of their clients’ risk tolerance and overall objectives.


How can you determine if your financial adviser is top notch or bottom of the barrel?

The most potent question you can ask your investment adviser is “Are the funds you recommend I invest in consistently top performing? And if so, can you prove it?” If your adviser can’t answer or they give you an indirect response, you may want to consider getting a second opinion.


Find out instantly if your investment portfolio is top or poor performing

Use our portfolio analysis tool to instantly find out if your funds are top, mediocre or poor performing. This quick and easy tool scans more than 70,000 funds and will clearly identify the performance, sector ranking and overall rating of the funds within your portfolio - helping you to discover if your fund choices, or the advice you have received to date, has been up to par. 




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