Investment Philosophy

Transcription

1 Investment Philosophy Our unique approach to investment management puts you at the heart of everything we do Wealth and Investment Management

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3 Discover a new side to your personality: your investment self With our pioneering Investment Philosophy you can uncover your Financial Personality to create an investment portfolio that s right for you. We know that everyone is different when it comes to managing their finances. Only by fully understanding your Financial Personality, can we hope to build a portfolio that s right for you and achieve your potential investment success. To discover what defines our investment personalities, Barclays has led the way in applying Behavioural Finance techniques and understanding the interactions between markets, emotions, personality and reason. At its heart, Behavioural Finance is a combination of psychology and financial theory designed to provide insights into how we all invest. The result of the work carried out by our dedicated team of Behavioural Finance specialists, has created an entirely new framework: Investment Philosophy. Its purpose is to reduce the impact on returns caused by investor emotions and natural human instincts. We are often not unaware of it, but it is largely our emotions that drive our investment decision-making not practical reasoning. Investment Philosophy therefore allows us to identify your Financial Personality, your attitude to risk, decision style and your need for stability throughout your investment journey. With it, we can build an accurate picture and detailed profile of your investment preferences. Through Investment Philosophy we are able to closely match our investment services to your individual needs. At each stage, our Investment Philosophy framework puts you, the investor, at the heart of everything we do. 3

4 There is no right or wrong answer. Only the perfect solution for you Following each stage of our Investment Philosophy means we can find the right solutions for you and your wealth. What does wealth mean to you? At Barclays, we understand that wealth can mean different things to different people. Which is why the unique investment strategy of our Investment Philosophy is designed to help us find the right solution for your wealth. We start by using our expertise across our whole business to look at every aspect of your wealth from a holistic point of view. By taking into account your total wealth, we can provide you with a more accurate level of support and services. We can help you with your short-term liquidity and lifestyle needs, whilst also considering your business and entrepreneurial investments, and long-term financial goals. as many more important influences on your decisionmaking. We can take into account your feelings about such things as short-term gains or losses, and the degree to which you would prefer to avoid or engage in financial markets. We can assess your confidence in financial matters, the level of advice you need and how you feel about using investment professionals to manage your portfolio. This holistic process allows us to create an investment portfolio that matches your situation, objectives and personality, whilst maintaining a level of risk, throughout your journey, with which you are comfortable. Then using our rigorously tested Financial Personality Assessment we can, assess your attitude to risk as well 4

5 Looking at your wealth through your eyes By giving you a Total Wealth Review we can understand your overall financial situation and uncover how you intuitively group your assets. The first step of our Investment Philosophy is to assess your situation as it is now. By looking at your current wealth and where it is invested, we can see if there are any gaps, where you might be over-exposed to risk and where there could be missed opportunities to make better returns. This also lets us take a closer look at how you think about your wealth. By conducting a Total Wealth Review, we can also see how you intuitively group your assets into different categories. In our experience, most people tend to group their assets into three areas: beliefs. Often you are directly involved with these assets so they can be associated with who you are or what you do for a living, and your wealth aspirations. It may involve your business or entrepreneurial activity so you have some degree of direct risk control or decision-making. Usually, people tend to invest too much in Personal Holdings and Business and Opportunistic Investments, which are both driven by emotion or conviction. However, Investment Portfolios are based on discipline and rationality and are often not developed to their full potential. Personal Holdings these are assets that maintain your lifestyle such as cash reserves, your main home or a collection of fine art. Investment Portfolio this is a diversified selection of assets designed to achieve long-term growth while taking an appropriate degree of risk. Business and Opportunistic Investments these are usually assets in which you feel you have some expertise or strong The result is that you end up with an unbalanced group of assets, which can leave you exposed to isolated risks in certain areas and missing out on opportunities in others. For example, holding more of your wealth in cash outside your Investment Portfolio could see you fail to grow your wealth in the long term. Understanding why some investments are more important to you than others helps us to identify what you really want from your wealth. 5

6 Your personality is your emotional fingerprint: there s no-one quite like you Through our Financial Personality Assessment, we can measure your unique investment decision-making to help create a portfolio that really reflects you. Unlike traditional industry approaches, which tend to assess investors only on their attitude to risk, our Investment Philosophy sets out to create a more detailed picture of you. After all, we are all complex individuals with a combination of attitudes, goals and aspirations. your decision-making style. The results of the Financial Personality Assessment help to explain our investment recommendations more clearly and to provide context around how, and why, you make the financial decisions that you do. Although risk is important, as a long-term investment strategy to maximise your potential returns, there is much more to investment attitudes than this alone. By concentrating purely on Risk Tolerance, standard industry profiling fails to acknowledge our human side. Which is why our team of Behavioural Finance specialists has developed a unique tool: the Financial Personality Assessment that measures investors on six key dimensions, rather than one. The results of the Financial Personality Assessment will help us to understand how you think and feel about wealth and investments. We can then reflect these in your portfolio. Of course, we will also consider other essential components of your investment profile such as your overall time horizon, income requirements, liquidity profile and tax situation. All of these will affect how we manage your portfolio and the combination of wealth and investment management services we offer to you to meet your needs. This innovative approach allows us to take portfolio planning to a new level. Through three of the six key dimensions we are able to explore how you feel about different aspects of risk; the other three relate to what is In every case, the best individual solution depends on your Financial Personality and what you want your wealth to achieve. Six key personality dimensions HIGH Risk Tolerance Composure Market Management Perceived Financial Expertise Desire Delegation Belief in Skill LOW 6

7 Guidance to a whole world of opportunities Using our global wealth expertise and asset allocation approach we can create the ideal investment strategy for you. We understand that some people have far-reaching investment goals. As part of the Barclays network, we are able to draw upon a wealth of expertise across the wider group. Through the award-winning research capabilities of our Investment Banking team we can access the global economy and financial markets to fulfill your needs, wherever in the world you are or want to be. Armed with this, and our detailed information on your Wealth Review and Financial Personality, we can then identify which one of our sophisticated five model portfolios provides the best investment strategy and right asset allocation for you. Every portfolio is matched to one of five risk profiles that encompasses the full range of Financial Personalities. Each model portfolio is a mixture of nine asset classes, these incorporate financial theory, statistical analysis and our long-term investment views. Each of the asset class meets our strict investment criteria that includes competitive risk-adjusted returns, diversifying returns and efficient access for all our clients. Once we have selected which portfolio would provide the best mix of asset classes for you, we look at which short-term adjustments would enhance your portfolio or defend against specific risks. We will also make ongoing recommendations to help you capitalise on opportunities across world markets. The asset classes used to construct your portfolio Developed Government Bonds Investment Grade Bonds High Yield and Emerging Markets Bonds Developed Markets Equities Emerging Markets Equities Commodities Real Estate Alternative Trading Strategies Cash and Short-maturity Bonds* Lower risk, higher yields than cash and protection against deflation Credit losses are small relative to the additional yield investors can earn As with investment grade, credit losses are small relative to the additional yield investors can earn, however there is greater risk and more opportunity for active managers to outperform benchmarks Stocks have generated higher risk-adjusted returns than bonds over long periods of time, historically High returns over time with higher risk. But risk-adjusted returns may also be greater Few allocations are likely to protect a portfolio better against unanticipated inflation Potential compensation for illiquidity in the form of high risk-adjusted returns A select portfolio of hedge funds and similar vehicles can enhance portfolio performance Helps to insulate portfolio against short-term losses, particularly for low risk tolerant investors * This asset class also includes cash alternatives. 7

8 We believe that through diversifying your investments across a range of asset classes, you are exposed to a wider set of opportunities to achieve sustainable growth, as well as the risk being spread. Having a sophisticated asset allocation approach and diversification within your portfolio are the focus of our risk management and investment returns. Making sure your portfolio fits you in all the right places With your overall investment strategy in place, we can fine-tune your portfolio even further to make it even better for your needs. Using the Financial Personality Assessment we can further target the exact asset allocation that is right for you by looking at your measurements on the six key personality dimensions. Smoothing is when certain investments are used to help offset the effects of market volatility, giving you steadier, more consistent returns (though this may involve sacrificing some upside). For example: your attitude to Market Engagement will determine both the speed at which you invest in the market, and the type of investments we recommend. Similarly, if you have high Perceived Financial Expertise you may be more comfortable with the complexity of private equity or hedge funds. Your Belief in Skill will help us to decide whether index funds or actively managed portfolios make the most sense for you. Your Financial Personality also helps to tell us how we can customise and fine-tune your portfolio in other ways to make the investment process more comfortable to you. These include: Liquidity is the right proportion of liquid investment that allows you to take advantage of the potentially higher returns available from less liquid investments, whilst still feeling happy about being able to access your wealth when you need to. Downside Defence is when we suggest strategies that limit the extent of potential losses helping to safeguard your capital and at minimal cost in terms of long-term performance. Active Management is tailoring your portfolio to your own belief in the importance of investment skill. If you have a high conviction in active management then you can benefit from our in-depth research on fund managers. If you have a low conviction, then you can invest passively using index funds and structured notes. Together all these methods can be used to customise your portfolio to your exact needs and personality. It is important to understand that there are always risks in investing The value of investments can fall and you may lose capital. 8

9 When new opportunities arise, you want the ability to take them With your personalised portfolio in place, we still keep in touch with ongoing management and monitoring of your investments. As every investor knows, global markets don t stand still. So why should your Investment Portfolio? At Barclays, we continually monitor and manage your portfolio and adapt it to new opportunities as they arise or when markets change. That way, we know it remains right for your needs. Here s an example. Imagine an opportunity comes up in a particular asset class, or there is a strategic change to a fund manager or investment platform, or that your portfolio s risk/return profile deviates from our expectations. In each case, we ll take action to protect your interests. As you would expect from a personal portfolio, how we manage and monitor your investments is down to you and your personality. So it may be that we discuss all transactions with you in advance or that we use our discretion over the day-to-day investment decisions. We would use whichever method you prefer. We understand that some clients may not wish to invest all of their wealth into their preferred asset classes in one go. However, some may prefer a more active approach and continually alter their portfolio to take advantage of tactical opportunities. Alternatively, others may prefer a stable, long-term approach. Whichever suits you, our aim is to work with you and manage your portfolio in a way that best matches your preferences, your financial personality and meets your needs. Here s how we ll stay in touch Your Private Banker will be your contact at every stage of your investment journey. With regular Wealth Reviews, we ll be able to evaluate your circumstances as they change and offer new insights and solutions to help you achieve your wealth ambitions. Our aim is to always provide you with professional, personalised investment service with which you feel completely comfortable. 9

10 Experience counts. And we can count 300 years With Barclays you get all the experience, resources, services and solutions that you need to help you achieve your personal investment goals. Using our innovative Investment Philosophy framework, with its focus on your individual Financial Personality, Barclays can help you form clear investment objectives. We take the time to really understand what you want from your investments and what they mean to you. Then we find the right solutions that match your expectations. We are known as one of the largest financial services groups in the world and a leading global wealth and investment manager. And as such we can provide you with international and private banking, wealth planning, trust and fiduciary services, investment management, brokerage services and access to research from across the world. However, it s important that you recognise that there are always risks in investing. We cannot completely eliminate risk. With over 300 years of history and expertise in banking, Barclays has the collective experience you can rely on. We move, lend, invest and protect money for clients around the world. As a major global financial services provider, Barclays offers a wide range of services from personal banking and credit cards to corporate banking and wealth and investment management. We have an extensive presence in Europe, the Middle East, the Americas, Africa and Asia. In every region, Barclays purpose is to help people achieve their ambitions in the right way. With such knowledge, expertise and resources at your fingertips, you can rely on us to help you plan for your future, whatever your goals may be. Next steps Please contact your Private Banker or visit our website barclays.com/wealth You can also visit our dedicated Investment Philosophy website and take a mini version of our Financial Personality Assessment at investmentphilosophy.com 10

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12 This item can be provided in Braille, large print or audio by calling +44(0) *. * Lines are open 8am to 6pm UK time Monday to Friday excluding UK bank holidays. Call costs may vary please check with your telecoms provider. Calls may be recorded so that we can monitor the quality of our service and for security purposes. Barclays offers wealth and investment management products and services to its clients through Barclays Bank PLC and its subsidiary companies. Barclays Bank PLC is registered in England and authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered No Registered Office: 1 Churchill Place, London E14 5HP. Please note that these services may be provided by us from establishments outside of the U.K. and, where this is the case, neither i) the rules made under the Financial Services and Markets Act 2000 ( FSMA ) for the protection of clients; nor ii) the Financial Services Compensation Scheme established under the FSMA, will apply. Any regulatory system and compensation arrangements that do apply in the place of our establishment outside of the U.K. will be different to those under FSMA. The services mentioned in this document may not be suitable for all recipients and you should seek professional advice if you are in any doubt. This document does not constitute a prospectus, offer, invitation or solicitation to buy or sell securities and is not intended to provide the sole basis for any evaluation of the securities or any other instrument, which may be discussed in it. This document is not a personal recommendation and you should consider whether you can rely upon any opinion or statement contained in this document without seeking further advice tailored for your own circumstances. This document is confidential and is being submitted to selected recipients only. If you are not an addressee, or have received this document in error, please notify the sender immediately, destroy it or delete it from your system and do not copy, disclose or otherwise act upon any part of it or its attachments. It may not be reproduced or disclosed (in whole or in part) to any other person without our prior written permission. We remind you that the levels and bases of, and reliefs from, taxation can change. The manner of distribution of this document may be restricted by law or regulation in certain countries and persons who come into possession of this document are required to inform themselves of and observe such restrictions. We or our affiliates may have acted upon or have made use of material in this document prior to its publication. You should seek advice concerning any impact any investment may have on your personal tax position from your own tax adviser. Past performance does not guarantee or predict future performance. Investment products may be subject to investment risks, involving, but not limited to, market and currency exchange risks, fluctuations in value and possible loss of the sum invested. Item Ref: IBIM2670. April 2014.