Cash rates and portfolio returns

Higher rates received on cash or fixed term deposits can – incorrectly – lead investors to the believe that holding cash or locking in at a rate provides a risk free opportunity to better portfolio returns. In fact it is unfair to compare current rates with past portfolio returns. Going forward, with rates (and yields) higher the expected outcomes of other asset classes have risen also. Believing otherwise would go against the notion that risk and return go hand in hand.

Return fishing with a wide net

Global equity markets have delivered a return of 7.2% (in GBP terms) in the first half of 2023. Remarkably, just nine companies contributed three quarters of this, and the other 7,000 or so stocks delivered the other quarter (1.9%). Some may wish they had owned these stocks (hindsight bias) and others suffer from FOMO and want to dive in.

Recency bias – the scourge of investors

Unfortunately, as humans, we are poorly neurologically wired to be good investors. Recency bias is one example of many challenges individuals face in a battle against themselves when it comes to investing.

Just a few stocks drive market returns

A timely reminder that only a very small percentage of firms deliver all of the market’s long-term return.

The risks of missing out by actively picking the wrong stocks is high and investors should simply seek the market return.

Don’t just take our word for it!

This blog takes five iconic lines from investment mavens of past and present which touch on the key tenets of the way we approach investing.


FAKE NEWS!! Active outperforms passive!!

We recently came across a very poor piece of research from a large active fund manager that exhibited some of the common flaws in methodology that poorly constructed research sometimes contains.

Anchors aweigh

In this blog we outline a couple of biases that investors face when assessing their portfolio returns, ‘anchoring’ and ‘recency bias’. Both are very important when assessing the FTSE 100 against a well diversified portfolio (of which the FTSE 100 is not!).

Wealth Audit

Lessons from Silicon Valley Bank’s demise

Our latest blog examines the news about Silicon Valley Bank (SVB) this week. It covers the causes of its demise, resolutions both here and in the US, and most importantly, lessons we can draw. Diversification of large cash holdings is essential. Fortunately, at a portfolio level, SVB represents only around 0.03% in a global index.

Five lessons from a legend

In anyone’s eyes, Warren Buffett is a highly successful investor. Paradoxically, his legendary status as an active investor provides some useful lessons in support of adopting a systematic, low-cost approach to investing.

Avoid predicting the unpredictable

Each year, investors face a barrage of commentary and speculation from the financial press about which stock, sector or country is set to do well in the coming months. We discuss the validity of some of these forecasts using the classic investment ‘patchwork quilt’ chart and sector returns in the last decade.