Investment Service

INVESTMENT ASSETS CLASSES

There are many different investment asset classes that Galleon Wealth Management can assist clients with, and these can be held within a number of tax efficient vehicles e.g ISA’s.

Cash Funds

Invests in short-term deposits managed actively in the UK money market, achieving higher potential returns than those available via normal deposits. This is a secure investment fund, which aims to achieve a higher rate of return from the money markets than that achievable by an individual investor.

Building Society

Short, medium and long term gilts

Invests solely in gilt-edged securities issued by the Government, forming part of the short / medium / long Gilt index. These are specialist funds that aim to help protect against changes in annuity purchasing power, annuity rates being calculated with reference to the Long Gilt index. The underlying stocks are tradable and are therefore influenced by market fluctuations.

UK fixed interest

Invests mainly in gilt-edged securities issued by the Government, as well as other quality sterling-denominated fixed interest and convertible debt instruments issued by UK corporations. The underlying stocks are tradable and are therefore influenced by market fluctuations.

Index-linked

Invests predominantly in gilt-edged securities issued by the Government. Interest payments and capital repayment values are linked to movements in the Retail Price Index (RPI) and this provides a ‘hedge’ against inflation. The interest distributions and redemption values of the underlying securities are guaranteed by the Government to be calculated with reference to the RPI. However, it should be borne in mind that these stocks are traded in the market and prices may be liable to fluctuation.

Controlled risk funds (Derivatives)

There is a variety of controlled risk funds available. They invest in a combination of cash deposits and financial instruments linked to movements in the UK stock market, as measured for example by the FTSE-100 Index. Typically, they are quarterly rolling funds that have been structured with the aim of combining security with potential for growth. The bulk of funds are deposited with one or more major financial institutions for investment in the cash markets with the aim of protecting the capital value of the unit price from one quarterly date to the next. The balance is invested in FTSE-100 Index options with the quarterly unit price benefiting from the addition of a predetermined percentage rise in the index over the period. Various levels of ‘guarantees’ may be offered.

With profits

With profits investments aim to provide a relatively steady rate of return over a period. Depending on the fund selected, a certain level of growth by way of an annual bonus may be added through unit price increases. On withdrawal from the funds a terminal bonus may be paid. This will reflect the extent to which the client’s share of the performance of the fund’s underlying assets over the period of investment (subject to an element of smoothing) exceeds the growth already added to the client’s fund.

Mixed/Managed Funds

Invests in a variety of the provider’s regional and specialist funds with little variation from market average asset allocations, usually the larger portion of the portfolio will always be invested in the UK. Managed funds operate on a similar basis except that the assets are directly held by the fund rather than ‘holding’ a selection of the provider’s sector funds.

Property Funds

These funds are generally divided between those that invest directly in commercial property such as offices and retail units, or those that invest in the shares of property companies. The former tends to be less volatile (less risky) than the latter. Returns from property funds can be made up of a combination of rental income and increasing values in the underlying properties held within the fund. As it is sometimes difficult for fund managers to sell a property holding when investors wish to switch or encash their investment, individuals may experience a delay, although this is not common.

Global Fund

This fund is similar to the mixed fund but with wider investment ranges. It may therefore have a substantially higher proportion of assets invested overseas or in bonds and cash. Risk rating is average.

UK Equity

Invests in a broad spectrum of stocks mainly on the London Stock Exchange. The portfolio will provide exposure across all major industrial sectors and may include exposure to smaller companies. The mainstream UK equity funds aim to provide capital growth from a well diversified portfolio of holdings.

International

Invests internationally in equity markets specifically excluding the UK to provide exposure to both the assets and currency of the markets in which it invests.

Tracker Funds

Tracker funds are a relatively recent development, which have proved to be very popular for investors that wish to follow a ‘passive’ approach to fund selection and management. In simple terms, the aim of the tracker funds is to track a selected index such as the FTSE-100. This is achieved by the fund manager buying shares in the top 100 companies in direct proportion to that share’s position in the FTSE table. For example, if BP represented 5% of the FTSE-100, then the fund manager would have 5% of his investments in BP.

Individual sector funds (eg. Europe, japan, North America)

Invests in a broad spectrum of stocks quoted on their respective market(s). The portfolio will normally provide exposure across all major industry sectors. Such funds aim to provide capital growth from a well diversified portfolio of holdings.

Ethical Fund

Usually invests in a wide range of predominantly smaller companies whose activities comply with a strict set of ethical criteria. These specialist funds aim to generate growth from a broad-based portfolio and are for those who wish to impose ethical criteria in relation to their investments.

Emerging Market Fund

Invests in companies generating in, or whose shares are listed in, the emerging markets of usually Asia, Europe, Latin America and Africa. The fund will typically be invested across all major emerging markets. This provides opportunities for capitalising on the above average returns, which may be available from countries that are at an early stage of economic development. A diversified portfolio of holdings spreads the risks, which, by their inherent nature, are associated with investment in these markets. These specialist funds aim to produce growth over the medium to longer term, subject to short-term volatility.

European smaller companies

This fund invests in smaller companies listed on European stock exchanges. Typically, the fund will be invested across all major and most secondary markets within the region, although it may invest in developing markets when conditions appear to be appropriate. Risk rating is above average.

Technology

Invests in companies involved in technology-intensive industries on a worldwide basis. Its risk rating is generally ‘higher’.