Rockin’ Around the Christmas Tree

WAY Christmas eCard 2011…

Paul Wilcox,
Chairman & Technical Director, WAY Group
22nd December 2011
www.waygroup.co.uk

Posted on 23rd December, 2011 | Tags: Merry Christmas! |
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More rubbish is written about Gold in the financial media than any other market!

Back in July 2008 when Gold was $800 an ounce, I wrote an article for the Daily Telegraph entitled “Gold: The precious laggard that will hit $2000 an ounce”.

This article drew the normal criticism as the ranting of a ‘Gold bug’ from the mainstream investment community. But they nearly all missed out on the meteoric bull market that has taken Gold from $250 an ounce (the famous [Gordon] Brown bottom) to its current level today having risen every year for the past 9 years.

Not only have most of the herd missed out on this unique money making opportunity, they continue to miss out. This is due to a fundamental misunderstanding of the forces that are driving not just Gold, but every commodity on Earth in what is a giant commodity super-cycle bull market that is nowhere near reaching its final peak.

That said why has Gold & Silver been hit so hard over the last week? The main reason is that Comex raised the margins on Gold & Silver contracts when Gold bullion was technically overbought.

A case study on the effect of increased margin calls is Silver, This time last year Silver was $18 an ounce – it then rose exponentially to $50 an ounce over a period of 8 months before peaking in April 2011. At $50 Comex upped the margins on Silver futures without warning. Silver then fell to $32 an ounce in 2 weeks as forced liquidation was enforced on anyone who could not pay the increased margin calls. Silver then rallied from the low of $32 an ounce to hit $44 an ounce just over a week ago. Yet again Comex upped the margin calls and yet again Silver fell sharply – this time down to $26 an ounce before rallying  to today’s level of $32 an ounce (still nearly double what is was last August ).

Elliott Wave and Fibonacci students will be interested to note that wave A sell off (from $50 to $32) is identical in length to Wave C (from $44 to $26) and completes a near perfect ABC down wave – the path now being clear for the long-term uptrend in Silver to resume especially as all the speculative loose longs have been well and truly washed out. All that is left are speculative shorts, and long-term holders who have met any increased margin payments.

It is our view that investors should not be scared off by any of this ‘volatility’ but look to take advantage of these sell-offs to invest in the asset class. The sell-off enables investors to buy at much cheaper prices than existed a week ago. If our analysis of the cause of the sell-off is correct, then expect normal service to resume – as it has done every time the margin-induced selling has ended (normal service being the ongoing bull market in Gold & Silver).

Last week the WAY Charteris Gold Portfolio Fund was ranked top Fund over the last 3 months across all asset classes (circa 5000 Funds). It has been knocked in line with the fall in the asset class but it is the same fund as it was a week ago – just cheaper to buy.

Ian Williams,
Chairman, CEO & Gold Fund Manager, Charteris Treasury Portfolio Managers Limited
28th September 2011
www.charteris.co.uk

*References:
Data & Statistics – Charteris Treasury Portfolio Managers Limited

Note: Ian Williams has spent the last 35 years as a specialist in Equity and Fixed Income markets, covering sales, research, market making and proprietary trading. He was a Member of the London Stock Exchange for many years before joining Chase Manhattan Bank (now JP Morgan). He subsequently worked for Dresdner Kleinwort Benson & Guinness Mahon (now Investec) before becoming Chairman & CEO of Charteris Treasury Portfolio Managers Limited. Ian is also the investment manager of the WAY Charteris Gold Fund which was launched in the first quarter of 2010 and is in the IMA UK specialist sector. In the first three months of trading, also was the number one fund against over 3,200 mutual funds across the UK.* Ian Williams is a Fellow of the Chartered Securities Institute and a regular contributor to the national written press and various television networks including Bloomberg and CNBC.

www.waygroup.co.uk

Posted on 15th August, 2011 | Tags: Commodities, Gold |
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Get Well Soon!

Low growth and high inflation – the UK economy maybe out of the emergency room but we are still in intensive care.

The huge cost of rescuing the economy from recession and bailing out the banks has left a massive hole in the nation’s finances. The medicine required to reduce the deficit is austerity which means cutting government expenditure and raising taxes, helped along the way with a spoon full of sugar – low interest rates. For some time now, even with this sweetener, the economy has been finding the medicine a little too hard to swallow which has prompted critics of the Coalition’s plan to question the amount as well as the fairness of the distribution of spending cuts and tax rises. However, I am yet to be convinced of any alternative medicine than will work.

Our Nation’s finances are not that dissimilar to those of the Portuguese, the Irish and the Greeks, all of which have been bailed out in the past twelve months. These countries are all in the Eurozone where the responsibility for setting interest rates and as such the exchange rate via the single currency is controlled centrally by ECB (European Central Bank.). Fiscal policy on the other hand as in how much each country spends and how much they raise taxes, is left in the hands of each member state. Until the global financial crisis, all Eurozone countries enjoyed the same cost of borrowing, any past history of poor repayment was overlooked. This is not the case today and the weaker Eurozone members have seen the cost of their borrowing soar to an unsustainable level. With the benefit of hindsight the proposed bailouts were inevitable, as the alternative of sovereign default has been politically unpalatable.

However bailouts are not the solution, these are simply a temporary fix whilst something more permanent is worked out. For those countries accepting a bailout there is a hefty price to pay. Firstly, there is the loss of their fiscal autonomy – the right to manage their own finances. The government has had to persuade their people, their voters, to accept a severe austerity package and the consequential reduction in their standard of living. Secondly, there is the prospect of weaker economic growth – the ability of any country to service and repay their debt depends upon the growth of their economy, as tax revenue needs to be at least maintained to pay back their creditors. Whilst, austerity packages reassure bond holders, consumers and businesses become more cautious about spending so consequentially economic growth weakens. Squeezing more tax revenue out of a shrinking economy is a challenge. In the past, Portugal, Ireland and Greece have devalued their currencies to encourage export growth. Devaluing the Escudo, Punt and Drachma is no longer an option, they are all part of a single currency where exchange rate policy is controlled by ECB. The Euro has been a relatively strong currency and this month’s hike in interest rates to hive off inflation fears will not help foster economic growth.

In the UK we have an advantage because we have more control over both our monetary and fiscal policy, although this is still limited by the wishes of our bond holders. Sterling has been devalued, in line with the plan to replace consumer spending for export growth. Whilst the competitiveness of our exporters has greatly improved, import prices have also dramatically increased with a weaker pound. The other major part of the Government’s fiscal consolidation plan, is to encourage the private sector to replace government investment as the proposed spending cuts start to bite. Investors should expect to see looser regulation and more tax incentives for both new and existing private enterprise to promote this initiative.

For all the autonomy we have to manage our own public finances, there has been a cost in lower economic growth and higher inflation. Inflation remains stubbornly above the Government’s 2% target and is considerably higher than most other developed economies. Whilst every part of the global economy has seen inflation rise as result of soaring commodity prices, inflation in the UK has taken on the additional price changes due to the increase in VAT and a weaker pound. The MPC (Monetary Policy Committee) at the Bank of England, which has the role of setting UK interest rate policy, has repeatedly stated that they believe the above target inflation is only temporary. It is clear from the recently published minutes of their last meeting that they are a long way from raising interest rates particularly with no signs of wage inflation given the high unemployment numbers. It seems to me that interest rates will only begin to rise either when we see a pick up in wage inflation or we experience a couple quarters of higher than higher economic growth. Until then household incomes will continue to be squeezed by low returns on cash deposits and increases in the cost of living. With the consumer representing almost two thirds of economic activity, this means weaker growth for the foreseeable future.

This weaker economic growth has clearly been reflected in lower Gilt yields in the last quarter, in recent months the yield on ten year government debt has fallen from around 3.8% to close to 3%. However these falls have exceeded my expectations and begs the question are there other factors at play here. It can be no coincidence that the fall in Gilt yields has occurred as Eurozone government bond yields in the weaker countries have soared over renewed fears of a sovereign debt default. This seems to support the fact that that bond investors still consider Gilts to be a safe haven and approve of the Government’s handling of the UK economy. Or, perhaps, maybe there is a belief that we will see further quantitative easing should weak economic growth persist.

When looking at the UK economy it does seem that it has lost steam over the last year. Some commentators are saying that this is only to be expected following a major financial crisis, however there has also been a weakening in the global economy following the supply chain issues caused by the Japanese earthquake and tsunami as well as the spike in commodity prices. The resultant weaker global trade has delayed the expected boost from a lower pound. For my part, I am not in the deflation and further recession camp at this stage, I believe that Gilts are a very expensive asset to own and that equities will offer far greater value over the coming year, however I am cautious in the very short term as investors focus on the plight of sovereign debt in the Eurozone. Furthermore I believe that economic weakness also threatens the longevity of the Government’s austerity plan which is not only based upon spending cuts but also on increasing tax receipts from a growing economy. I am not sure that Plan B, one which necessitates a slower pace of fiscal consolidation, will work as I believe that bond investors will not continue to lend at the current low levels of interest rates. The real fear is that a policy error may send our fragile recovery into another recession and straight back to the emergency room.

John Husselbee,
CEO North Investment Partners
1st August 2011

Note: John Husselbee is fund manager to the WAY MA Cautious and WAY MA Growth Portfolios. He started his career at Rothschilds in the mid 1980s and for more than 20 years of the intervening period has specialised in multimanager investment. Before launching North in 2005, John was the Director of Multi Manager Investment at Henderson Global Investors and prior to that headed up Rothschild’s Multi Manager business. John is a well-respected commentator within the industry.
www.waygroup.co.uk

Posted on 1st August, 2011 | Tags: Inflation, Recession, Spending Cuts, U. K. Economy |
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Dr. Benson’s Casebook

“I thought ISAs were tax free?”

This is the first in a series of blogs from “Dr. Benson’s Casebook” .
Our Technical Manager, Mark Benson, delves into his IHT surgery files for topical cases and selects those likely to be of most interest to IFAs (and their clients)..

In each case he gives his opinion and demonstrates the methods he would use to solve the issues raised.

Case Study:

Graham is 70 and a divorcee.  He has two adult daughters from his former marriage who will eventually inherit his wealth.  His assets are as follows:

Assests:
House (mortgage free): £300,000
Bank accounts: £15,000
Cash ISAs: £20,000
Stocks & Shares ISAs: £70,000
Value as at May 2011: £405,000

He has met with his IFA who suggests that he should undertake some planning to reduce his potential Inheritance Tax (IHT) bill of £32,000.  Graham is perplexed, since he is aware that he can leave £325,000 in his will free of IHT and thought that his taxable estate would fall within that nil rate band?

He consults Dr. Benson at his IHT surgery, who says:  Graham’s IFA is quite correct in his assessment of the potential IHT liability.  It turns out that Graham held the common misperception that his ISA investments really were tax free, and so did not count them when calculating his estate.  Graham can be easily excused this confusion. For example, a visit to a well known consumer money website garners the following explain of an ISA:   “it’s simply a tax free wrapper into which you can place either cash or shares.”

Unfortunately the site in question, along with many others who also ought to know better, has incorrectly suggested that ISAs are completely tax free and overlooked the fact that the tax advantages only extend to Income Tax (partially) and Capital Gains Tax (CGT), but not to IHT. Graham’s IFA has therefore correctly calculated the potential IHT liability.

The good news for Graham is that I can reassure him that he has been well advised to make use of his ISA allowances up to this point. The savings in Income Tax on his Cash ISAs and CGT on his Stocks and Shares ISAs over the years are real and valuable. However the situation now is that, as he enters the later stage of his life, the future savings in these two taxes are likely to be less valuable than the potential savings if the IHT issues were to be addressed. Let’s see why:

If Graham were to transfer most of his ISA funds into a flexible reversionary interest trust he could remove the current IHT liability once the transfer falls out of account after 7 years, whilst retaining the potential to benefit from the capital if needed in the future. This would mean forgoing the Income Tax and CGT benefits of the ISA wrappers. Could the lost benefits amount to more than the potential IHT saving of £32,000?

Let’s first consider his cash ISAs. The potential IHT on the £20,000 balance is £8,000. Graham has kept a careful eye on the rates on offer and has transferred his holding into the current “best buy” account paying 3.35% p.a. (source Moneyfacts.co.uk). As a basic rate taxpayer he therefore saves £134 p.a. in Income Tax on the interest received. That sounds great, until I point out that it will take him almost 60 years to save enough Income Tax to offset the IHT bill!

How about the Stocks and Shares ISAs? Suppose that Graham lives another 10 years to age 80 and that he enjoys an average capital growth of 5% p.a. over that time. His holdings would grow to just over £114,000 which would attract an IHT charge of around £45,000 (ignoring growth in the nil rate band) if held in his estate at death. If the assets had been transferred into the trust, and the trustees passed on the units to his daughters after his death, their CGT bill would be less than £13,000 (at the very worst, but probably much less with some simple tax planning) – below 1/3 of the potential IHT liability.

In conclusion, although Graham’s ISAs have been a valuable and sensible choice over previous years, now may be the time to think about saving IHT as a priority over Income Tax and CGT.

Mark Benson, TEP CertPFS,
Technical Manager, WAY Investment Services Limited
13th June 2011
www.waygroup.co.uk

Posted on 13th June, 2011 | Tags: Dr Benson's Casebook |
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Cycling for Charity 2011

The WAY Fund Peddlers… three intrepid members of the WAY team are embarking on a cycling challenge for charity.

The WAY Fund Peddlers are made up of Fund manager, Trevor Chanter – who developed the idea for this ride in the first place – and two of our Regional Sales Managers: Rob Owen and Peter Atkins.

They will be travelling through the New Forest in October 2011 as part of their epic 100 mile route, which they hope will raise money for two charities:

(a) www.jdrf.org.uk : Juvenile Diabetes Research Foundation (for young people with Type 1 diabetes) and;
(b) www.neuroblastoma.org.uk : The Neuroblastoma Society (fighting childhood cancer).

For more information about either of these charities, please access their websites using the links above.

The WAY Fund Peddlers intend to hold a 50 mile warm-up ride taking place on Sunday 12th June 2011 in Newbury, where they will also be joined by another of our Regional Sales Managers, John Humphreys.

If you wish to donate to these worthy causes, their respective JustGiving pages are here:

(a) http://www.justgiving.com/wayfundpeddlers/ and;
(b) http://www.justgiving.com/helpingkidswithcancer

The WAY Fund Peddlers would really appreciate your support in any way you can give it. Thank you.

Paul Wilcox
Chairman & Technical Director, WAY Group
6th June 2011
www.waygroup.co.uk

Posted on 6th June, 2011 | Tags: Charity |
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The Last Crusade

– search for the investment strategy Holy Grail

I am one of those industry veterans who, whilst still having some way to go before retirement age, can boast 30+ years of experience in investment management.  The earliest of those years was spent managing discretionary portfolios totalling some £40m of private client moneys (I am talking the 1970/80s here!).  Although slightly more removed from the coal face these days my interest in the industry search for the Holy Grail of investment strategy remains just as strong as ever.

 The ideal combination of low costs, low charges, competitive performance and minimal drawdowns (reductions in value) has eluded academics and practitioners alike ever since stockmarkets evolved almost two centuries ago.  Index trackers and absolute/hedge funds have been the most recent attempts but both have failed miserably to deliver anything remotely resembling consistent upward-only performance.

After all this time it is pretty clear that the emotional drivers behind efficient stockmarkets, the urge to speculate in shares, means that there isn’t and never will be a formula for achieving consistent stockmarket returns.  However, my study of markets over the last 120 years and more does indicate that markets undoubtedly move in both short and long term trends, normally linked to economic and political factors at play in the global commercial world.  Trend following (and trading strategies through the use of moving averages) has also, therefore, been a feature of investment management for a long time.

It is therefore with great pleasure and amusement that I have discovered that a combination of trend-following and trading triggers, based on moving averages, has now been demonstrated to be the most reliable means of managing a portfolio over the medium to log term – BUT ONLY if all subjective and emotional human input is removed from the management equation!  Extensive research from professors at the City-based Cass Business School has indicated that investment performance is enhanced and volatility reduced by adopting a purely mechanical but entirely logical process to manage investment portfolios.

I am also delighted to add that the practical application of this research has been brought to WAY Fund Managers courtesy of Hasley Investment Managers (and their captive professors from the business school) and is now available to investors via the WAY Hasley Global Momentum Fund.  This fund invests in 24 mature stockmarkets via 14 low-cost ETFs, with each ETF being invested, or not, each month depending on a moving average trigger.  The process means that the fund can be up to a month or more late in joining any particular trend, depending on precisely when it started, but that it tends to fully participate in all long term up-trends and totally avoid all long-term down-trends.  The (back-tested) result shows impressive performance and great risk-aversion.  I can commend it to you as a major core holding for virtually any long term portfolio.

Associated Links:

Website: WAY Hasley Global Momentum Fund
Website: Cass Business School (City University London)
Website: Hasley Investment Management LLP

Paul Wilcox
Chairman & Technical Director, WAY Group
11th May 2011
www.waygroup.co.uk

Posted on 11th May, 2011 | Tags: Cass Business School, ETFs, Exchange Traded Funds, WAY Hasley Global Momentum Fund |
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Inheritance Tax (IHT) – Budget 2011 roundup

Inheritance Tax (IHT) – Budget 2011 roundup

1. Charity donations encouraged
2. No changes to basic rules
3. No review of IHT legislation announced

 

As far as IHT and estate planning are concerned, this was a fairly uneventful Budget.  The only real point of note is the inclusion of a tax rate reduction for charity donations.  The basic rules remain unchanged, with no mention of the proposed legislation review by the Office of Tax Simplification (OTS).

Please read on for the IHT headlines in more detail…

Charity donations
From 6 April 2012, the IHT standard death rate will be reduced from 40% to 36% when 10% or more of the net estate value is left to a registered charity.  The saving will increase the charitable donations and will not increase the amount received by any beneficiary. We note that this change and the calculations to be used are currently open to individual interpretation, and look forward to further clarification when the legislation is passed later this year.

Basic rules
The nil rate band is still frozen until 2014/15, but will then increase in line with CPI each following year. The DOTAS (Disclosure of Tax Avoidance Schemes) regime will be extended to include IHT planning via trusts from 6 April this year.  The regime will not apply to the WAY’s current range of IHT mitigation plans, but would affect any new trust based plans that we introduce.  We will of course provide as much information and assistance as we can when introducing any new plans that are subject to the DOTAS regime.

OTS review
Some expected an announcement regarding the Office of Tax Simplification (OTS)’s proposal that there should be a top down review of Inheritance Tax as a whole.  This was not forthcoming in this Budget, but may still be announced at some point in the future.  We believe that any changes would likely be made with the aim of raising more tax – the driver for change more practical than ideological.  We will of course keep an eye on this proposal and inform you of any effect this would have on the WAY range and your clients’ investments.

WAY has taken great care to ensure that our IHT mitigation plans are, and will remain, effective.  We liaise with HMRC on all new plans, concepts and subsequent changes in relevant legislation to make certain that our plans are still innovative and, above all, useful in the current financial environment.

Mark Benson, TEP CertPFS,
Technical Manager, WAY Investment Services Limited
28th March 2011
www.waygroup.co.uk

Posted on 28th March, 2011 | Tags: Basic Rules, Budget 2011, Charity Donations, Financial Planning, IHT, IHT Mitigation, Legislation |
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New fund launch: the WAY Hasley Global Momentum Fund

Today we launched the WAY Hasley Global Momentum Fund, ushering in a new era in fund management dynamics. The WAY Hasley Global Momentum Fund is a global momentum fund investing in developed markets primarily through the medium of Exchange Traded Funds (ETFs). A proprietary trading system based on specific moving averages is employed and the process is mechanical with no judgemental overlay…

1. New fund based on a trend-following momentum process
2. Low management fees through use of Exchange Traded Funds (“ETFs”) and cash
3. Investment decisions driven by academically researched rules
4. Impressive back-tested results

WAY Group and Hasley Investment Management have joined forces with leading academics from London’s prestigious Cass Business School to design and launch the new trend-following Global Momentum Fund on 28th February 2011.

The Fund – which is likely to pave the way for a new type of investment methodology in the UK retail market – is designed to offer exposure to 24 developed equity markets via low-cost Exchange Traded Funds (ETFs).

The Momentum Fund will compare indices with their moving averages on a monthly basis to determine whether investors should stay in a rising market – or move into cash to avoid market falls.

The Fund will invest in equally weighted baskets of developed world equities, but will move into cash if sell signals flash red.

“When an index goes through the moving average at the bottom, it comes out of equities, and when it’s above, it stays in,” said Professor Andrew Clare of Cass, originator of the ‘rules-based approach’, along with colleague Professor Steve Thomas.

Back-testing for the Fund has determined that it should be able to match or beat a long-term buy-and-hold strategy, yet with two-thirds of the volatility.

“In a test from 2001 to 2010, the strategy achieved a compound annual return of 6.6 per cent with 9.6 per cent annualised volatility, compared with a 1.9 per cent compound annual return with 16.6 per cent volatility from the MSCI World index,” added Professor Clare.

Investors have long struggled to find funds which consistently beat the index and this has led many toward buy-and hold (or passive) funds which can be bought at a more modest price. The difficulty here is that such funds will follow markets down as well as up and this fund will look to perceptively reduce this negative trait.

Eddie O’ Gorman, of The WAY Group, said that the Fund is the first step in a series of launches likely to alter the UK investment landscape.

“There are some outstanding creative investment opportunities out there, and with this powerhouse of academic research as a dynamic driving force behind WAY/Hasley investment protocols, we believe investors will genuinely be provided with something fresh and beneficial to begin 2011.”

References:
Data & Statistics: WAY Group Limited, Hasley Investment Management LLP

Footnote:

1. Professor Steve Thomas is a graduate of LSE and Southampton Universities in Economics and Econometrics and has published extensively in international research journals for over 25 years. He was recently ranked 11th in Europe for finance research since 1990. He has been a finance professor at the University of Wales and Southampton University prior to joining Cass, and a Visiting Professor at Queens University, Canada, and the ICMA Centre, Reading University, UK. In 1990 he was the Houblon-Norman Fellow at the Bank of England. For over 20 years he has been editor of Interactive Data’s (formerly FT) credit rating publications; he has extensive experience in professional education and training in all areas of economics and finance for banks and related institutions and is an examiner for the Investment Management Certificate of UK SIP.
2. Professor Andrew Clare is the Professor of Asset Management at Cass Business School and the Associate Dean responsible for Cass’s MSc programme, which is the largest in Europe. He is also the co-founder and chairman of Fathom Consulting, a leading London-based economic and financial market consultancy. He was a Senior Research Manager in the Monetary Analysis wing of the Bank of England which supported the work of the Monetary Policy Committee. While at the Bank Andrew was responsible for equity market and derivatives research. Andrew also spent three years working as the Financial Economist for Legal and General Investment Management (LGIM), where he was responsible for the group’s investment process and where he developed LGIM’s initial Liability Driven Investment offering. He has published extensively in both academic and practitioner journals on a wide range of economic and financial market issues. In a recent survey Andrew was ranked as the world’s ninth most prolific finance author of the past fifty years. Andrew has also recently been appointed to the investment committee of the GEC Marconi pension plan; this committee oversees the investments and investment strategy of this £3.2bn scheme.
3. Located in the heart of London’s financial district, Cass Business School is a leading provider of business and management education. Its MBA is recognised globally as a market leader, and Cass has the widest portfolio of Specialist Masters programmes (MSc) in Europe; its Undergraduate School is one of the best in the UK. It is ranked in the UK’s top 10 business and management research schools.

Associated Links:

Website: WAY Hasley Global Momentum Fund

Website: Cass Business School (City University London)

Website: Hasley Investment Management LLP

Paul Wilcox,
Chairman & Technical Director, WAY Group
28th February 2011
www.waygroup.co.uk

Posted on 28th February, 2011 | Tags: ETFs, Exchange Traded Funds, WAY Hasley Global Momentum Fund |
Comments: 4 Comments

Season’s Greetings

Merry Christmas and best wishes for a prosperous New Year from all your friends and funds at WAY…

Paul Wilcox,
Chairman & Technical Director, WAY Group
3rd December 2010
www.waygroup.co.uk

Posted on 3rd December, 2010 | Tags: Season's Greetings |
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Climate change – socially responsible investing

‘Socially responsible investing will be one of the key themes over the coming decade and provides tremendous opportunities’ 

Even people who don’t buy into the climate change argument can still benefit from putting their money into socially responsible investments. Things are happening you can’t ignore and political momentum will provoke increased legislation on issues such as water purification and timber planting. Companies involved in these areas are going to benefit from these changes and that will provide fantastic investment opportunities.

This was the inspiration for the WAY Green Portfolio fund which was launched in February this year as part of a suite of products that are exposed to what are likely to be the most interesting and prevailing themes of the next decade. The aim of the WAY Green Portfolio fund is to provide capital growth with the potential for income through thematic investment in a diversified portfolio of collective investment schemes, investment trusts and a variety of other instruments. Taking a fund of funds approach, it invests in businesses that show a consistent approach to sustainable operations which means buying into funds from groups that can demonstrate a commitment, experience and track record in this sector.

Although we are a socially conscious firm we are not painting ourselves out to be environmental campaigners. We approach the area of socially responsible investing more from an investment perspective rather than with an evangelical zeal.

So how is the fund managed?
We have a distinct three screen investment process. Although we are the fund management company behind the portfolio we employ the services of seasoned experts in their fields to ensure the selections are viable. For example, the actual discipline of ensuring that the constituent parts of the fund are being put together responsibly is outsourced to Ethical Screening, which undertakes research and analysis into the corporate issues that concern ethical investors. The role of Ethical Screening is to examine funds which have the potential to be considered for inclusion in the portfolio. It brings rigour and discipline to the investment processand ensures funds adhere to their objectives.

As the fund manager, WAY itself is responsible for marketing and distributing the fund, while its compliance department ensures the funds chosen are allowable from a regulatory standpoint.

We are quite keen to look at interesting offshore funds as well because it gives investors an opportunity to get into products that might otherwise be impossible for them. Up to 20 per cent of our fund can be invested in non-UK regulated portfolios but very often these have a very high minimum investment which means clients can only access them as part of a wider fund offering.

Vestra Wealth LLP were awarded the mandate to manage the portfolio for their given ‘fund of fund’ skills and experience of this area. They will decide where to invest based upon a list of funds that have already been vetted and screened. It’s clearly very important that proper due diligence is carried out and we believe our process works extremely well.

Success for the company as far as the WAY Green Portfolio Fund is concerned centres on providing positive returns for investors – despite the stigma that suggests profits don’t matter as long as the investments are environmentally sound. We want to dispel the myth that you can’t make money in climate change funds. This fund is not just for socially responsible investors – it is for anyone wanting to make money from this growing area of the market.

WAY is obviously very well known for its inheritance tax mitigation solutions and we’re keen to highlight these can be used to wrap around the Green Portfolio itself. If someone is putting money aside as a legacy for their daughter, for example, this allows them to align it with doing something positive for the world in which she will live. Her legacy will benefit both her environmental and financial future.

The overall message from WAY to financial advisers is clear: climate change investing is a theme that simply can’t be ignored by investors. The primary objective of this fund will be to make a good return for investors. There are going to be companies in this area that will do well and, irrespective of their beliefs, investors will profit whilst supporting the efforts of those who do believe and are delivering social benefit.

Log on to: WAY Green Portfolio Fund for more information

Eddie O’Gorman,
Group Sales & Marketing Director, WAY Group
11th November 2010
www.waygroup.co.uk

Posted on 10th November, 2010 | Tags: Climate Change, Green Fund, IHT Mitigation, Socially Responsible Investing |
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