Cautious Portfolio up 17.5% during 2009

Our proactive approach has produced considerably less volatility, whilst out performing the average manager by almost 3% during 2009. This is how we did it…

There was a very different feeling when we started 2009 compared to now. Our clients had been fortunate enough to hold larger cash balances than normal during the main part of the financial crisis, but by the end of 2008 had established more conventional approaches to this risk category.

Our cautious portfolio started 2009 without property exposure, still relatively defensive against our competitors, but well placed to take part in the general recovery in the investment markets.

Our first change was from the beginning of February, where we recommended more exposure to funds in the Absolute Return Sector. We switched from a UK Equity Fund and a Global Bond Fund (at significant profit) into two Absolute Return Funds. We felt that the Absolute Return Funds would fair better should market conditions deteriorate.

Subsequently the global equity markets dropped significantly, giving this portfolio a massive head start. The Cautious Managed Sector as a whole had fallen by 7.64% from 1st of January to 6th of March, whilst the combined portfolio was only down 3.5% over the same period.

Although, from this point the market rallied strongly, the portfolio remained well placed and ahead of the pack. On the 1st of September, we recommended that the portfolio held more in equities – even with more stockmarket investments the potential downside risk was less than most of the other managers in the sector. We switched from one of the cautious holdings into a US Equity Fund. Investors immediately capitalised on further market gains and benefited from growth in the strength of the dollar against the British pound.

During the first part of 2010, we have asked investors to consider including commercial property, reducing some exposure to both fixed interest and equities. We also switched a manager who we felt should have done better during 2010 for a similar investment.

Our proactive approach is now available for online investors. Remember, our services are purely advisory - we do not make any alterations to your portfolio without your prior consent.

Cautious Portfolio up 17.5% during 2009