Spring 2018

Welcome to the SPring 2018 Finance Shop Wealth Management (FSWM) Quarterly Review.

The aim of the Review is to give you a general feel for what’s happened in the financial world over the last three months and how this may have affected your pension or investment.

A key part of the reporting is the colour coding. Each FSWM portfolio is colour coded to enable you to spot which category applies to you. The relevant information is then presented in a clear and easy to understand way. However, if you require any further clarification, please do not hesitate to get in touch.


Markets suffered their first negative quarter since 2016 as concerns over a trade war and a sell-off in large technology stocks pushed indices downwards. The year began with a bang as the positive reaction to President Trump’s tax cuts and strong corporate earnings numbers pushed markets around the world to a series of all-time highs. However, at the beginning of February the calm was shattered as concerns over higher inflation in the US caused markets to sell off sharply and whilst things calmed down fairly quickly, initial worries have persisted.

More recently Donald Trump has created more uncertainty, led by his trade tariffs which has stoked concerns that we could see a trade war leading to a slowdown in global growth.
It is perhaps not surprising that heightened political tensions across the globe have shaken markets, the question is will this lead to a more serious downturn for equities. On the one hand valuations in the US remain above long term trends, whilst on the other hand global growth continues to look robust and company earnings numbers are set to rise strongly.

Despite the rhetoric, it appears more likely that President Trump’s trade tariffs will turn out to be fairly limited and will therefore pose little risk to long term growth. Given this backdrop, outside a serious deterioration of relations between China and the US, we believe that sentiment will improve and markets will regain their upward trajectory, however volatility appears set to remain elevated.

Finance Shop Quarterly Review Spring 2018 P3 graph2


There are seven portfolios in the FSWM range, four growth and three income which are detailed below. Your FSWM pension or investment will be invested in one of these categories. The tables show the aggregate composition of the portfolios with some figures to show the potential risk and return of each category.


Finance Shop Quarterly Review Spring 2018 P4 Cautious

Finance Shop Quarterly Review Spring 2018 P4 Balanced

Finance Shop Quarterly Review Spring 2018 P4 Strategic

Finance Shop Quarterly Review Spring 2018 P4 Global Ops


Income portfolios

There are three income portfolios which aim to produce an income within a target range as highlighted in the table below. The three portfolios cover the Cautious, Balanced and Adventurous Finance Shop risk categories.

Finance Shop Quarterly Review Spring 2018 P5 Cautious

Finance Shop Quarterly Review Spring 2018 P5 Balanced

Finance Shop Quarterly Review Spring 2018 P5 Strategic


The graphs below show how the FSWM portfolios within the four Finance Shop risk categories have behaved over the last three months. The first graph shows the total return for the quarter whereas the second graph illustrates the “month by month” performance. The performance figures are aggregated so, for example, the green bar is made up of all the FSWM Multi-Asset Balanced portfolios across all product types. If you require specific performance figures for your plan, please contact your adviser.

Finance Shop Quarterly Review Spring 2018 P6 graph4

Finance Shop Quarterly Review Spring 2018 P6 graph2 v4



The first graph below shows how the FSWM portfolios have performed over 12 months. For comparison, the returns of cash (MoneyFacts 90 days notice 10K) and inflation (UK Consumer Price Index) are also shown. As with the graphs on page 6, the figures for each category are aggregated.

The second graph illustrates how the portfolios have performed since launch (1st November 2008).


From Launch Performance


The first quarter saw a sharp pick up in volatility and much weaker markets led to all of the portfolios producing negative returns. As you would expect, Global Opportunities suffered most with the more defensive make-up of the Cautious portfolios offering greater downside protection. 2018 may well turn out to be a more challenging environment, however this does not mean we cannot produce positive returns overall.


A key part of the FSWM service is to monitor the underlying performance of each fund within the portfolios for both risk and return. We have selected quality funds with strong track records and therefore do not envisage a high turnover of holdings. However, there will be occasions when the performance of an individual fund will lead to its expulsion from the portfolio(s). There are a number of factors that determine this decision, for example consistent under-performance, change of management team etc. It is also important, however, to have patience with a fund that is just suffering short-term under-performance.

We operate a “traffic light” system and will move a fund from a “green” to “amber” rating if the fund requires closer scrutiny at the next review. If a fund shows sufficient improvement, it will move back to “green”. If the fund consistently under-performs without good reason its status will change to “red” and the fund will be removed from the portfolio(s). A replacement fund will be selected and all clients holding the fund within their portfolio will be notified. Upon receipt of their authority, the client’s funds will be switched accordingly.


The Investment Committee meets on a bi-monthly basis and one of its primary functions is to review our existing fund range.

Within this meeting we scrutinise any funds which we feel are performing significantly differently to their peer group or benchmark, with a number then run against our internal performance and risk measurements.

Following recent changes to the portfolios, we have reassessed our fund holdings with the following moving to amber status and on to the review list:

  • Fidelity Moneybuilder Dividend
  • Fidelity Enhanced Income
  • Henderson Cautious Managed
  • Invesco Perpetual Distribution
  • Invesco Perpetual Income
  • M&G Global Macro
  • Newton Global Income


The maximum quarterly gain and loss figures in the asset allocation tables on pages 4 & 5 are taken from Financial Express based on the last 36 quarters of the longest running FSWM portfolios (up to February 2018). For the table on page 5, the figures are based on 18 quarters.

FE Risk Score: Financial Express have introduced FE Risk Scores to provide a single, easy to understand measure of risk across a range of investments. In the UK, Risk Scores measure the riskiness of any given investment in relation to the FTSE 100. Weekly volatility is measured over up to 3 years, with recent behaviour counting more heavily than earlier behaviour. The Risk Score is calculated weekly, and can be tracked over time. Cash type investments will have scores near zero, investment funds will tend to have scores in the 0 - 150 range.

The FTSE 100 is always 100. There is no upper limit to the scores.

The asset allocation figures on pages 4 and 5 are aggregated based on the current holdings within the FSWM portfolios for a new investor as at 2nd February 2018. They will vary on a daily basis subject to market fluctuations. Rebalancing will be recommended if equity content exceeds the benchmark maximums. There is no guarantee that any of the model portfolios above will achieve their stated objectives. Each model portfolio may also experience more or less volatility than expected. The value of investments will fall as well as rise and are not guaranteed. Past performance is no guide to future performance. The Finance Shop Risk Categories are graded from 1 to 7. The above portfolios cover categories 3 to 6. For further information on all categories, please speak to your Finance Shop Independent Financial Adviser.


This report has been issued by the Investment Committee of the Finance Shop Wealth Management team using data provided by Financial Express. Care has been taken to ensure that the information is correct but Financial Express and Finance Shop neither warrants, represents nor guarantees the contents of the information, nor does Financial Express or Finance Shop accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein.

Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Currency fluctuations can also affect fund values. The above report does not constitute advice and you should speak to your Independent Financial Adviser before you make any alterations to investments or pension plans.

The instruments recorded above are weighted model portfolios created using Financial Express Analytics. Performance figures shown are based on the weighted models and may differ from the actual returns achieved by investors. Performance figures shown are based on bid to bid gross returns and do not include plan, contract or ongoing adviser charges / commission. Please refer to your policy documentation for further details.

Financial Express Limited Registration number: 2405213. Registered office: 7 Chertsey Road, Woking, Surrey, GU21 5AB. Telephone 01483 783 900. Website www.financialexpress.net

Finance Shop is a trading name of Finance Shop Limited. Company Number 07535053. Registered in England. Registered Office:
North Wood Place, Octagon Business Park, Little Plumstead, Norwich, Norfolk NR13 5FH.

Finance Shop is authorised and regulated by the Financial Conduct Authority.


Formed in 1990, Finance Shop has grown to become one of the region’s leading firms of Independent Financial Advisers.

As a locally owned, genuinely independent company, we pride ourselves on the quality of our advice and service to both personal and corporate clients. With over 150 years of financial services experience within the firm and over half a billion of assets under management, we have the expertise, experience and knowledge to be able to advise on all aspects of financial planning.

Our belief is that access to quality, independent advice is more important than ever and that is why we spend the majority of our time face to face with new and existing clients, explaining the key issues of today and helping them plan for the future.