VWM Wealth Portfolios are ten years old

12th January 2017

Many happy returns!

How long is the long term? Advisers are often asked but there is no clear answer. However many would say a decade is a long time so it is also a good time to reflect on the performance of the VWM Portfolios since they were first launched over ten years ago. Ten years ago our Managing Director Ken Welsh with considerable foresight realised that markets had enjoyed a strong run in the previous four years and that a more active strategy would be required to cope with the potential turbulence he foresaw ahead. Accordingly he appointed David Thomson as our Chief Investment Officer, to establish and manage the VWM Portfolios. Little did either of them know just how turbulent the next few years would be and how beneficial to our clients the ability to move rapidly to more defensive assets in times of trouble would prove to be with our discretionary investment service.

No one can say the portfolios have not been tested in that time. We didn’t know it then, but the last decade started as the credit bubble was reaching its bursting point, continuing through the worst financial crisis in living memory that gave way to an anxious and disliked stockmarket rally underpinned by historically low interest rates.

We are delighted to report that not only have all of the VWM Wealth portfolios significantly exceeded the return of their respective peer benchmarks from launch, all bar Defensive have also beaten the return of the FTSE100 index of leading UK shares which itself hit an all-time high on 4th January 2017.

Launch Date VWM Portfolio Return
from Launch
 Benchmark FTSE100
01/03/2009 Defensive 90.18% 62.10% 150.36%
01/01/2007 Cautious 74.26% 47.20% 67.82%
01/01/2007 Balanced 81.22% 61.98% 67.82%
01/01/2007 Adventurous 85.12% 55.22% 67.82%
01/01/2007 Growth 104.73% 84.93% 67.82%
01/07/2013 Ethical Defensive 34.82% 17.00% 29.44%
01/06/2014 Ethical Cautious 22.80% 14.71% 15.47%
01/07/2013 Ethical Balanced 43.78% 28.95% 29.44%
01/07/2013 Ethical Adventurous 47.58% 27.99% 29.44%

Period from Launch to 4th January 2017. Past performance is not a guide to future returns – investments and income from them can fall as well as rise and investors may get back less than they originally invested. Please note that VWM Portfolios simulated performance figures are unaudited. VWM Portfolio performance figures includes VWM Wealth annual charge of 0.25% per annum and a custodian charge of 0.25% per annum.

So why have the VWM Portfolios performed so well?

  • The first reason is our mantra of diversification. For example contrary to received wisdom low risk investments beat riskier ones; it was therefore very important to have a spread of assets.
  • The VWM Portfolios attempt to optimise the returns by having the ideal spread of assets to capture growth in rising markets while minimising the downside in falling markets using modern investment techniques and theory.
  • The VWM Portfolios enjoy expert, experienced, discretionary management.
  • Our portfolios are liquid and nimble and we are able to switch asset allocation and underlying investments very quickly. A good example of this was our exit from the property sector in 2007 before reinvesting once the dust had settled several years later and again more recently in the post Brexit turmoil.
  • While we can never be sure of the direction of markets we can be sure that portfolio costs will erode them so we have kept a close eye on cost by setting ourselves a cost ceiling that portfolios cannot exceed and avoiding as far as we are able transaction costs. For example in the past nine years portfolio costs have fallen 20.7% 1. But we are not resting on our laurels and have identified further significant cost reduction opportunities.
  • As VWM Wealth are independent we are in a great position to access the best research and fund management talent the UK has to offer and to hone our own processes as we seek constant improvement.

Looking forward perhaps the biggest question now, as it has been since 2009, is what will be the final outcome of the extreme monetary policy measures that have been taken in stopping the credit crunch turning into a great depression. We may have the answer in 10 years time !

In the meantime there are far more important things in life than watching investment markets. While few have the privilege not to worry about money we should deliver ourselves from the task of investment choice by letting VWM Wealth worry on a day to day basis and get on with the things in life that really matter.

Note 1: Based on VWM Balanced Portfolio 1st Dec 2007 to 1st Jan 2017