Stocks, Shares and Equities
We are not stockbrokers, we are financial planners.
However, we do assess investments and implement investment strategies and arrangements for our clients. A stockbroker is much more concerned with the moments throughout a day, enabling him or her to make a profit on the trades that are made. An Investment Manager or Fund Manager tends to have a longer term outlook and is invariably constrained to the legal remit guiding his or her Fund. Typically a Fund Manager may hold large quantities of shares, cash, Bonds etc all purchased at “Institutional” prices. As new money comes to the fund (from investors) this needs to be invested to purchase more shares etc. A portfolio may be held for a “long time” however in practice, most portfolios are “turned over” within 2-3 years typically.
At Solomon’s we take a very long-term perspective.
That does not mean that we are not paying attention to the present, but we are more concerned about long-term performance and trends. Fundamentally, we want to ensure that you achieve your goals by having sufficient resources available at the right time. We asset allocate based upon Modern Portfolio Theory and we review the funds held within our portfolios. There are likely to be tweaks to the amount held in each fund, based upon economic conditions, but by and large these will tend to be minor. We review the funds and will alter these depending upon whether the Fund and its Manager meet the criteria being set. One of the criteria is cost.
A Fund is a collection of assets including shares.
So we think you are likely to be interested to know where your money is being invested. An index tracking fund will buy a replication of the relevant market index. So a FTSE 100 tracker will hold shares in all of the top 100 FTSE listed companies. This will alter over time and could alter rapidly. Our blog contains information about companies within the global stock markets. It is meant to provide a more helpful and feel to the businesses behind the markets, or rather that make the markets. For example, how Shell or BP do, will have an impact on anyone with holdings in the FTSE.
As a “Fund” these types of investments are regarded as indirect investments.
Predominantly, financial planners use “funds” which are really baskets of shares. These take two forms – either as a Unit Trust or an OEIC (Open Ended Investment Company). In these collective or packaged investment schemes, investors participate in a large portfolio of securities and other assets with many other investors. This pooling of resources enables a scheme to invest in a wide spread of investments at a lower cost than could have been achieved by individuals acting on their own. Investors buy and sell units or shares in the scheme and not the underlying investments of the fund. Perhaps it is easier to think of it like this, if you have £1000 you will not be able to buy many shares (directly held investment) in companies within the FTSE100. However within a FTSE100 tracker fund, your money is pooled with those of other investors so that all of the FTSE100 is owned.