12 Jan Driving Performance – The Important Role of Non-Core Asset Investment
There is nothing wrong with a safety first approach to investment strategy. Indeed, many investors – perhaps the majority – will choose to hold tried and trusted assets over a long time frame in order to secure a predictable and reliable income, coupled with an acceptable level of growth.
In practice, that might mean a spread of investment across FTSE-350 in companies representing a broad range of sectors. Companies that – over the medium to long term – can be expected to turn in solid if perhaps unspectacular results. In addition, the investor might also include long-term investments in properties or bonds in his or her portfolio. You can think of these as the core assets that form the bedrock of a portfolio.
A Broader Portfolio
But a focus on core assets alone will seldom deliver returns that could be described as exciting. To secure better than average returns it is often necessary to look to what are commonly described as non-core investments. On the face of it, taking the non-core route – usually as part of a wider portfolio – might appear to be more risky, but if chosen judiciously the assets in question can turn in a performance that is significantly better than their more traditional counterparts.
An Appetite for Performance
The Route — City wealth club has identified a genuine appetite for non-core investment opportunities among Members.
This is probably not surprising. Everyone’s investment goals are different but once an individual has established a portfolio of core investments -providing a high degree of financial security over the long term – a natural next step is to allocate a percentage of the total investment capital to higher-performance non-core opportunities.
In the case of equities, this might mean a focus on a particular ‘high-growth’ sector. Or it could mean looking beyond the UK at, say, emerging markets funds.
The key to successful non-core investment is to fully appreciate not only the opportunities presented by the deals on offer but also to understand the possible downsides, with a view to minimising the risks and maximising the prospects for high returns.
For individual investors who don’t have personal expertise in, say, specific high-growth sectors or the dynamics of emerging markets, this is a big ask. It is important, therefore, to work with a wealth manager that can provide exposure to carefully chosen non-core assets.
This has become an important focus for the The Route — City wealth club.
The Route — City wealth club provides members with bespoke portfolio management services and that includes opportunities to invest via our Equity Investment Ventures, which in turn offers exposure to a range of available non-core opportunities, when appropriate.
The Route’s approach is to work with Members to establish both their appetite for risk and their life goals and then design an investment strategy accordingly. That might involve a safety-first approach but there is also ample scope to invest in non- core equity assets offering superior returns over short timescales.
Equally important, The Route offers opportunities to invest in selected property deals – often in the Midlands and North where yields are high – which can be exited after a relatively short period of time.
One of the most important components of The Route’s offer, is the opportunity to lend cash to small businesses via a well-established Private Debt Platform. Essentially, the focus of The Route’s Private Debt Platform is to facilitate special situations lending to selected SMEs. These businesses will often be asking for finance that sits outside the normal lending criteria of their incumbent banks. Interest rates are accordingly higher, reflecting the risk. However, due diligence is carried out by The — Route and the loans are fully secured, reducing the actual risk to Members. It’s a strategy that allows The Route to target returns of 15%+ per annum.
Typically loans will be be paid in full and with interest, within a maximum period of 24 months, meaning that capital does not have to be tied up for long periods of time and the returns are delivered quickly.
Non- core assets are by their nature considered more risky than their core counterparts. But the associated risks are not necessarily high and the returns are generally superior. As such, The Route believes that non-core assets should play a role in the majority of High Net Worth individual portfolios.
To find out more call: 020 3141 9040