CFM Investment strategy

CFM believe in long-term investment.

Our process is three fold:

– Strategic decisions – why are you investing and therefore which type of assets, countries & industries do you need to be invested in. We then decide the percentage to be invested into Stock market investments, Bonds, listed property exposure (Commercial) & listed Infrastructure investments.

– Tactical
– where currently are their pockets of value which we can take advantage of for you

– Individual holdings
– Having decided the strategic allocations we decide which shares, bonds and funds will be bought in order to meet this exposure.

Properly researched it is quite possible to buy a selection of assets and hold them for the very long term without having to make frequent changes. That is why we spend a lot of time researching each investment.

Strategic decisions

When you sit down with us we will analyse your situation and come up with a plan as to what proportion of growth or defensive assets it is best to hold and in which asset types you should be invested in.

CFM have 10 risk graded Strategic allocations. Risk Grade 10 meaning full exposure to UK Equities. If this is suitable for you we then set about deciding on the make up of the individual shares. This is unique to your portfolio depending on what is best at that time. Similarly if you are building a pension in your fifties you may have a requirement for a Risk grade 5 portfolio with only 50% exposure to equities. The full list of Strategic allocations can be found here:

For growth assets, we prefer to invest directly into listed shares. This saves cost compared to buying funds if your portfolio is large enough. Otherwise we would use our knowledge of the industry to pick a selection of appropriate funds which themselves invest into shares.  Shares are the best vehicle for achieving capital growth. For example for someone aged 40 years old with high earnings looking to grow capital, we may recommend a high exposure to listed shares. Shares have the advantage of being able to grow earnings and grow their dividends. Where suitable we prefer to buy shares directly. This cuts out the cost of using some expensive funds.

Many shares can also make great investments to provide income. Sectors such as Utilities, Defence and pharmaceutical often are very established and reliable income streams from which they pay high and growing dividends.

For overseas exposure, we often use specialist funds and prefer Investment Trusts. It does not always make sense to invest in lots of individual overseas individual holdings. Particularly as these companies can be more risky that UK shares and expose clients directly to foreign exchange movements. Investment trusts are long-term investment vehicles which have been tried and test over 150 years and listed on the London Stock Exchange and enable investors to get exposure to many overseas markets in an efficient manner.

Bond investments we invest either directly into bonds or using specialist funds or often a combination of both. Often there will be exposure to different countries in order to further mitigate risk. We have specialist knowledge of the UK preference share market which can be a very good source of income for older investors in retirement and gain access to new issues on the Retail ORb market. There are also many good ETF funds these days offering exposure to Global Bonds issues by both governments and companies. The one main difference with our portfolios is that each is unique to the investor.

Individual Stocks

We prefer to invest in companies with strong cash flows, strong balance sheets and great management teams. These type of companies tend to stand the test of time. Dividends are also very important as these make up a lot of the overall investment return when analysing stock markets. An also often overlooked part of investment is that companies can INCREASE their dividends. So if you are retiring and need your investments to produce income, shares can also provider a GROWING amount of income. Bonds on the other hand only pay a FIXED return. While this means less risk it also means your income gets eroded by inflation over time.

Infrastructure Investments

Infrastructure investment is a fairly new investment sector. Essentially specialist funds have been created to themselves invest in major infrastructure products. The advantage is that once these projects are built they charge their users and for investors the cash flows are fairly predictable making them excellent pension investments. So for example an large fund may invest in toll roads, electricity networks, ports or airports in both Western and emerging markets. Other examples include rail, or new energy such as wind or solar so often their may be a social context for some. There are many such funds in London and around the world to choose from.

Each investor with CFM has a portfolio tailored to them.

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