CFM Investment Strategy
Our investment strategy informs all decisions related to our investment and portfolio choices. Our investment committee meets once a month to discuss what is happening in the financial markets and the wider economy. This informs our view on how these prospects will affect our client portfolios and what investments we should make on your behalf.
This in-depth monthly review helps us develop a strong framework for delivering responsible investments for our clients. From a top down analysis of global economic trends, we can forecast economic growth and manage risk.
Ongoing Analysis of the Global Market
All our analysis considers the economic outlook; which countries are likely to see accelerated growth and which are slowing down. Our team studies global trends that drive or disrupt the market such as online retail, environmental concerns and cloud hosting, as well as health concerns such as the recent worldwide health pandemic and its impact on the market.
We consider global politics, and factor in how wars, trade and energy can have a significant impact on investments and the flow of capital. It enables us to see what areas to avoid, and what may be solid investment opportunities.
Asset Classes
When you become a client of Capital Financial Markets and ask us to manage your investments, we will decide what the split should be between low and high-risk investments. This is known as the ‘Asset allocation’ decision. Often younger clients will require a capital growth strategy and this will likely mean allocating most of the portfolio to shares. Conversely if you are about to start retirement, we may decide that a larger proportion should be allocated to low risk shares or bonds with a fixed annual dividend which can be used to pay pension income.
There are a number of different asset classes, with shares being the most well known.
Stocks and shares
Also known as equities, stocks and shares are a share of ownership of a company. Many larger companies are listed on a stock exchange enabling us to buy them within your portfolio. Investors can benefit from shares and equities when the share price increases, or by getting a dividend. Shares have been shown to give the best chances to achieve capital growth over time.
Fixed Income Investments
Fixed-income investments or Bonds involve investing in debt securities i.e an I.O.U. that pay a rate of return in the form of interest. They are less risky than investing in other asset classes. At the end of the term the holder receives the initial sum back.
Infrastructure
The process of financing infrastructure requires huge financial outlays, which often include private investment. Specialist funds are available to invest in which offer exposure to these investments. They are suitable for long-term investment and are often used by pension funds because of their predictable income. For example, a toll road.
Renewable Energy
Investing in global renewable energy infrastructure. Many clients now wish to make sure their investments are supporting environmentally and socially responsible companies.
Property
Real estate is an asset class that offers protection against fluctuating inflation rates and diversification away from ordinary shares.
Infrastructure
Infrastructure funds are listed on the stock exchange. These offer exposure to long-term investments such as hospitals, roads and rail networks. They are very stable dividend payers.
Commercial Property Investments
We can invest in commercial property that is listed on stock markets through Real Estate Investment Companies (REITs). REITs can be a reliable source of income, as they must pay out a large proportion of their profits as dividends. Our presence in the City Of London ensures that we are well placed to invest in real estate as we understand the sector and understand REITs.
Investment Trusts
Investment Trusts are funds that are listed on the London Stock Exchange. They were originally designed to help retail clients access stock markets in a cost-effective manner. Investment Trusts offer exposure to many areas, particularly overseas stock markets. When deciding which ones to invest in, we analyse their performance over time, and the underlying portfolio of investments that they own. We often have a face to face meeting with the investment trust manager in order to be fully informed about every aspect of the investment trust. Capital Financial Markets has many years of experience analysing investment trusts, which gives us an in-depth knowledge of this sector, knowledge that most of our competitors do not have.
Individual Portfolios
We use our investment strategy as a reliable base from which to make informed decisions about your investments. Each portfolio is different as we still build them to tie into your individual objectives and requirements. We use our investment strategy as a long term roadmap for how we invest. We monitor all of our portfolio's daily and we always keep up to date with global trends and developments. This enables us to deliver a reliable, professional wealth management service. We only offer investment opportunities in products that have been assessed as being suitable for a client’s attitude to risk and long-term objectives.
While each portfolio Capital Financial Markets offer is bespoke we have a selection of strategies.
| Strategy | Composition | Risk |
|---|---|---|
| Capital Growth Focused portfolio | 25 – 35 individual's stocks | 10 |
| Capital Growth – medium risk | Individual stocks | 7 |
| Capital Growth | Fund of Fund | 7 |
| Capital Preservation | Funds | 5 |
| Growth & Income – fund of funds | Funds | 7 |
| ISA builder | ETFs & Investment trusts | 7 |
| Income | Direct securities | 8 |
| Income | Direct securities | 7 |
| Inheritance Tax mitigation | Individual stocks | 10 |
| Junior ISA for growth | ETFs & Investment Trusts | 10 |
| Retirement Builder Growth | Direct securities & Funds | 8 |
| Retirement Builder – Mixed assets | Funds | 7 |