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Investment Management

What is Investment Management?

There is an age-old debate of active versus passive investment management.  

Traditionally, asset managers take an active approach to investing, charging their clients fees to hire a ‘superstar’ fund manager to predict and outperform the market. Compelling evidence tells us that active investing is fundamentally flawed. In fact, most active managers negatively impact investor returns – nearly 90% of active fund managers fail to beat their benchmark indices 

At First Wealth, we use evidence-based portfolios for our clients. These are available via ISAs, pensions, and direct investment. Among other benefits, our evidence-based portfolios remove the emotion from investing, have lower costs, and wider diversification. 

We understand that every client is different, so a big priority for us is understanding everyone’s unique circumstances and goals. This allows us to fully understand what our clients need and when they need it.  

What are the benefits of evidence-based investment (EBI) management?

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Evidence-Based investing means that your investments are guided by the academic research available which fits your best interests. Working closely with your financial planner for investment management purposes allows them to get to know your authentic best interests. 

Financial planner managing client investments

What are the potential risks?

There is no guarantee of returns when you invest. The value of your investment can therefore fluctuate in line with market changes as well as other factors like governments, and current affairs.

The level of comfortable risk is different for everyone. When investing, your financial planner will therefore take into account the whole picture.

Before making an investment, it is important that you discuss the risks with a Certified Financial Planner.

How do we plan for Evidence-Based Investing?

At First Wealth, we have an Investment Committee which reviews and challenges our processes to ensure they reflect the latest empirical evidence available to us. Where new evidence suggests doing things differently for our clients’ best interests, the Investment Committee will revise our approach. We also work with an independent investment strategic consulting firm who support our research and ensure evidence is up to date.  

With 14,000 holdings spread across the biggest companies and government bonds in the world, the evidence-based approach creates huge diversification in your portfolio. 

The portfolio is, broadly speaking, separated into two parts. First, growth asset allocation (return enhancing assets like emerging market equities, smaller companies, less value companies, and global commercial properties). Second, defensive asset allocation (short-dated bonds, AAA-rated bonds, and a smaller allocation to investment grade BBB bonds). 

We look for funds that are systematic in their approach to identifying market risks and which build a rules-based system for capturing market returns. We invest in global equities and bonds via indices. 

Your portfolio will be used in combination with financial planning where elements like the annual Capital Gains Tax allowance are considered. We help your investments work within the wider context of your financial plan. 

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Questions we get asked a lot

Investment management refers to the management of assets (including financial and property). This includes creating an investment plan, assessing attitude towards (and appetite for) risk, optimising for tax efficiency, and more.  

The assets managed will often be labelled as an ‘investment portfolio’.  

Investing isn’t just about money. It’s about making your money work for you – investing in the long term to achieve your objectives.  

Investment management is therefore vital in: 

  • Getting clarity on what you’re invested in and what this means for your wealth. 
  • Gaining and retaining financial control. 
  • Growing confidence in your financial future. 

The active versus passive debate is a complex one 

At its’ core, active means investors attempt to outperform a benchmark index by ‘guessing’ the market. While passive investors accept market returns by creating a diverse portfolio and tracking an index; they focus on long term returns.  

We use Evidence Based Investing which aligns with the passive approach.  

The advantages of investment management include compounding, mitigated risk (via diversified portfolio), and focus on achieving your objectives. 

There are always potential disadvantages too when it comes to making investments. These include risk (with returns also come losses), lack of instant access (if investing without an accessible emergency fund), and many more. 

You should always speak with a trusted financial planner before making any investment decisions. 


Our investment philosophy is evidence-based. This means we review the best evidence available over the long term to determine how we should invest.  

The evidence shows that investing in a globally diversified portfolio, and utilising low-cost index funds will deliver superior returns in the long term. In addition to this, there is evidence to show that certain factors create additional returns over the long term. For example, smaller capitalisation and value companies tend to deliver higher returns. We therefore choose certain funds which allow us to tilt our portfolios towards these areas of the market to try and maximise the returns we can obtain for clients.  

Remember, the evidence also shows that no investment strategy outperforms in all market conditions and no investment strategy is immune from volatility.  

We are evidence-based investors, and the evidence shows that timing the market, chopping and changing your investments, and trying to predict how current affairs will impact the market are all extremely hard to do. And, attempting to do this is a wealth destroyer rather than a wealth creator. We make investments and coach our clients to avoid making these mistakes.  

If the evidence revealed by our research (supported and upheld by a qualified external consultancy firm) supports a change in approach, then we would adapt accordingly.  

The reality is that you can do it yourself, but you will miss out on a lot of the benefits which come with having a lifestyle financial planner manage your investments. By missing out on these benefits and managing your investments yourself, you: 

  • Will have to undertake ongoing research on the funds you have in your portfolio  
  • Will need to manage regular rebalancing on your portfolio at the appropriate times 
  • Will be limited to investing in funds available to retail investors – many of the specific funds you need to allow for the factor tilts we utilise cannot be accessed by retail investors 
  • Will be limited to certain investment platforms which are available to retail investors 
  • Will miss out on the valuable ongoing coaching and advice of provided by professional advisers, which can help to deliver 3% higher net assets over time 
  • Will have to manage all the administration yourself  
  • Will have to consider the tax implications of different options you undertake  

Although you live in the UK, the UK stock market only makes up around 4% of the global market capitalisation. It therefore only represents a small portion of global assets.  

When you invest in a globally diversified portfolio only a small portion of your capital is invested in the UK, and this means your portfolio will not move in line with the FTSE 100.   

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