MPA FINANCIAL MANAGEMENT THE NEW NORMAL
The pandemic has made everyone look at how they run businesses, how they run their lives and we have been looking at how we view investments going forward. One thing that we have learnt is that we all have to change in some way to take account of what’s just happened and its effect on the future. We cannot go on recommending the same way of investing money and expecting the results to be different. The two big areas that have come out of the pandemic that will affect clients are cost of investments and sustainable investing.
COST
MPA are a great believer in clients having a balanced asset allocation for their investments be that in pensions, ISA’s or other tax wrappers. However, the days when an investment portfolio costs over 1% per annum are numbered. If returns are going to be hard to achieve in the future then cost becomes more and more important.
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During February and March, they found that their panel of passive portfolios with Vanguard, HSBC and Legal & General performed better (i.e. lost less) than their panel of active portfolios. When you then realise that the passive portfolios charge around 0.20% per annum against around 1% for the active portfolios they have a strong reason for using them to achieve your long-term investment goals.
Passive portfolios use a range of tracker funds that track various market indices such as the FTSE 100 and are managed by computers which keeps the costs under control. Theory has it that during a downturn they will fall further than corresponding active portfolios because actives that are managed by a fund manager, who can spot the trends and reduce risk accordingly. Well, in the last two market shocks (this year and end 2018) this has not been borne out. It pays to be invested in a balanced way, and pay as little for the privilege as possible.
ESG
Another big winner this year has been the rise of ESG investing. It stands for Environmental, Social and Governance Funds. Put simply it is investing in companies where environmental, social and governance issues are being measured and compared and these are the key drivers of business decisions.
MPA have seen the impact on the environment that human beings not travelling around in cars and planes has had recently. Society at large will want this to continue and we are seeing more and more clients wanting to invest in strategies that buy companies that are kinder to the environment, kinder to their workforce and offer sustainable solutions to the world’s problems going forward.
Companies who tick these boxes are better positioned to take advantage of the New Normal as we come out of lockdown, and the use of new technologies will further benefit them.
We found during the pandemic that ESG portfolios tended to fall less than standard portfolios and have certainly recovered stronger and quicker.
WHAT HAVE MPA DONE TO ADDRESS THESE ISSUES
Being an Independent Chartered Firm they have no ties to any proposition and strive to find the best investment solutions for their clients. They have spent the last few months strengthening their investment proposition so that they have a panel of superb ESG portfolios run by LGT Vestra, Sarasin and Tatton Investments. MPA continue to use their market leading passive portfolios from Vanguard, HSBC Global and Legal & General to help balance clients portfolios and keep costs under control. They have rearranged a few of the suppliers on their active portfolios panel and have Brewin Dolphin, LGT Vestra and Albert E Sharp as some of the solutions.
The use of technology such as Zoom has been invaluable as we have interrogated investment providers in our annual beauty parade and this has been done in a more efficient and time saving way than in the old way of doing business.
This has given us more time to spend with clients, again via Zoom meetings to discuss their portfolios and investment goals and to make sure we can take advantage of this New Normal.
WHO ARE MPA FINANCIAL MANAGEMENT LTD?
MPA are a firm of Chartered Independent Financial Advisers based in Henley in Arden, Warwickshire, and Worcester. (Suckling Waddington Partnership) We have a total of 40 staff and manage in excess of £560M on behalf of clients. Our philiosophy is that we try to Inform, Educate and Inspire our clients to make better investment decisions to reach their financial goals.
MPA advise on all aspects of financial planning from pensions and investments to inheritance tax planning, long term care planning, mortgages and protection.
Visit their website on
www.mpafm.co.uk for more details.
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