Designed and run by Southbank Investment Director John Butler, Wealth Advantage is a portfolio-oriented service employing a macro-thematic investment process. Based on the benchmark UK FTSE 100 stock market index, this service allocates across all 11 so-called market “supersectors” according to our big picture, macroeconomic views, combined with major investment themes.
It then takes the additional step of pushing these macro-thematic views through a portfolio optimisation, based on the historical correlations and volatilities of each market sector.
All sector and company allocations are done without regard to market capitalisation. There is a long-running dispute amongst academics regarding whether or not stock market indices should be market weighted or not. It is an important debate because some indices – and this includes the FTSE 100 – are dominated by a small number of companies.
In the case of the FTSE 100, five companies alone comprise nearly 1/3 of the market-weighted index. Investing by market capitalisation, therefore, severely restricts the implied portfolio diversification benefits. By weighting sectors according to their relative risk contributions in a combined portfolio, rather than by market capitalisation, Wealth Advantage extracts, ex-ante, greater diversification benefits.
That’s no guarantee of higher returns, but it does imply, ex-ante, a superior risk-reward mix.
Wealth Advantage is designed to help you conserve your assets and build your wealth while protecting you from the hidden dangers of inflation. The goal is to outperform the FTSE 100 over the medium and longer term, ideally with both higher returns and slightly lower volatility.
please call 0203 966 4580