The debacle which was/is the credit crunch challenged me to reassess the service I was giving to my clients. To be honest I felt helpless as last September and October (2008) unfolded. Was the financial system as we knew it going to survive? If I wanted to change my clients portfolios how quickly could I act and was I the best person to make key investment decisions?
The answer I came up with was "not fast enough" and "no"! So, I began seeking out a discretionary manager. Someone who was approachable, open to ideas, professional, and good at their job! Not too much to ask then...
Well after three months of searching I found the right person. Paul Warner, MD of Minerva Fund Managers Ltd. He was in fact recommended to me by Harry Kerr, MD of Avalon Investment Services Ltd. Avalon were my chosen Fund Platform, mainly because it gave me access to all funds in the marketplace, and that included Investment Trusts and Exchange Traded Funds. I have used Avalon for many years so was very confident that their admininstration service was good.
The Socially Responsible Portfolios: These portfolios will invest in a spread of funds with committed managers who will follow ethical and environmental criteria with an emphasis on positive criteria. These portfolios are more light green than dark green.
Investors can select more than one portfolio (minimum of £10,000) to match their investment objectives and risk profile more accurately.
Portfolios can hold up to 20% in cash but normally the growth portfolios will have 2% in cash and the income portfolios will have 10% in cash. Higher levels of cash will be held if Minerva feel that markets are potentially over valued.
You should note that investment values can fall as-well as rise and that past performance is not a guide to the future performance. Also, should you cash-in you may not get back your original capital.
Any investments entered into are obviously considered to be for the medium to long term and it is recommended that they should be retained for a minimum of 7 years.
Discretionary Portfolio Management Service
Minerva Fund Managers Ltd who specialise in Discretionary Portfolio's of Unit Trust's, Exchange Traded Funds, Investment Trusts, and Open-ended investment companies have been chosen to manage the Socially Responsible DPMS.
They are a family run investment company that has been running since 1991 with a proven track record of success. This portfolio management service is not available directly to the public.
Since 1991 Minerva developed a Rating system to add value to their portfolios. The Minerva Ratings are designed to measure consistency of performance and enable them to choose the most consistent fund managers in their respective sectors. The rating system analyses data from the Lipper Reuters Hindsight database using the latest modern technology. Many investors in the UK use the Minerva Rating system, and both private and institutional investors buy the New Minerva Report, to access the ratings of the top and bottom funds. The Company's three directors all hold the Investment Management Certificate and between them have extensive investment experience.
A Discretionary Portfolio Management Service should be looked at as a secondary investment management service. The primary investment management comes from the Fund Manager of the funds you are invested in (via Avalon) and the secondary investment management comes from Minerva and is about selecting the right ethical funds from outset and then actively managing the portfolio thereafter on a discretionary basis.
Minerva will ultimately make investment decisions on clients behalf which will include deciding on what percentage of capital goes into each fund and most importantly rebalancing the portfolio to ensure it fits within the investment risk category chosen. I have provide advice to Minerva on portfolio construction and ethical and environmental screening.
By offering a discretionary service Minerva will have the ability to move fast on clients behalf to take advantage of market opportunities as and when they arise. Part of the service will also include once a year rebalancing portfolios and maximising Individual Savings Accounts allowances (ISA's), if requested.
Rebalancing means ensuring that each portfolio stays within its remit of the maximum % allowed to be invested in equities, matching as close as possible to the investment risk profile of the chosen portfolio.
We have designed five portfolios:
- Socially Responsible Conservative
- Socially Responsible Balanced Income
- Socially Responsible Balanced Growth
- Socially Responsible Adventurous Saver (regular and single contributions)
- Socially Responsible Adventurous (single contributions only)
The balanced income portfolio is designed to pay a regular monthly income and this will come from the cash fund which will be replenished in part from the dividends received from the various funds. Gains may also be taken from invested funds, when appropriate, to replenish the Cash Fund.
As a guide I would recommend starting the income at no more than 5% of the original investment to give the portfolio a chance to grow in the long term. Then the income can potentially rise as a hedge against inflation.
I believe that Minerva's expertise will enhance clients investment portfolio with Avalon and the cost is very reasonable - just 0.25%pa, which I believe is a small price to pay for a professional discretionary portfolio management service. This charge will be taken out of the cash account in the Avalon portfolios.
Please remember that as always unit prices can fall as well as rise as can dividends and that you may not get back your original capital if cashed.
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