The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.

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A Whole New World

A whole new world

There are around 50,000 companies listed worldwide. But there are over 120,000 funds and ETFs* in existence. The funds universe is huge. If you consider that there are both passive and active funds in every asset class, often from multiple providers, you can start to see the scale of the problem.

Trying to research each of these funds takes up a significant amount of time and effort, a monumental challenge for advisers who are trying to support clients and grow their business.

Constructing a strong model portfolio requires robust planning, with a combination of both quantitative and qualitative processes, all while continuing to monitor a market that is evolving rapidly. And building one is arguably harder now than it's been in the past.

Managing this risk, and knowing what funds to include, carries a tremendous research requirement for advisers. And its necessary research; just because a fund has worked in the past, doesn’t necessarily mean that it will work in the future! And so, partnering with a trusted, experienced fund manager could be the solution.

How we do it at 7IM

At 7IM, we’ve built a team of 12 experts to analyse and monitor third-party funds. Within this team, we’ve got dedicated experts to cover each area. Each sector is subtly different – what works in one region or asset class might well not transfer over to another. And many of our team have been doing this for decades. They have networks in place. They know what screens to run. They know who’s an expert, and who just got lucky. They have the systems. They know what’s what.

It isn’t as easy as just looking at an index and picking table-topping funds each time. For quite some time now, large US equities have performed well, which has naturally led to portfolios holding more in the US than fundamentals would necessarily suggest, and this is most typified by large exposures to lofty-valued growth sectors. But it’s rare for the same investment style to win consistently for such a long period – these portfolios are positioned for the last ten years, not the next ten.

At 7IM, we think it’s crucial to ensure you have a well-diversified portfolio. But not only this, we believe the key to securing returns over a longer period is to position yourself for the next cycle, which is exactly what we have been doing and it’s why we’ve shifted away from these winners of the past.

The market is turning, and if you can’t keep up or you don’t partner with an experienced fund manager, your portfolios – and your clients – could feel the pain. Partner with us and we’ll do all the heavy lifting for you.

*Source of stats: https://www.world-exchanges.org/storage/app/media/H1%202021%20Market%20Highlights%20Final%20.pdf

Image of a mini yellow paddle boat on sand against a blue background On-demand Webinar
10 years of paddling; under the surface of model portfolios
From the challenges of the operational burden to narrowing down the investments universe, we sat down to talk through the most common difficulties faced by advisers when it comes to managing model portfolios, and how we manage these ourselves.
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