Credo Wealth is proud of an investment process which shuns short-term fads and of taking a holistic view of its clients’ financial wellbeing. The result has been impressive organic growth.
We speak to Rupert Stone, Investment manager at Psigma Investment Management about his firm’s focus on risk management and targeted returns.
Psigma Investment Management was set up in 2002. The founders had worked for various boutiques which had subsequently been bought by big banking groups. They felt that the big banks couldn’t provide the kind of personal service that clients need.
Psigma was created as a bespoke, smaller and more nimble firm with the objective of providing clients with excellent service and investment returns they’d expect. We’re now twelve years in and Psigma has grown to have £2.2bn under management, serving around 7,000 clients. It’s important for us to emphasise that Psigma has remained nimble, however; we’re small enough to be able to change in response to the needs of our clients, but we also have the scale that gives us the ability to have access to great managers and create mandates exclusively for our clients.
Psigma purely focuses on investment management and within that we have two offerings: one is fully bespoke and the other is our Managed Portfolio Service, where we have five model investment strategies. They are accessible to clients who have between £50,000 and £250,000 to invest, but there’s no upper limit. For some people, that’s exactly what they want; they want Psigma’s offering, but they don’t need a bespoke service.
On the fully bespoke side, clients have £250,000 upwards to invest. This service is completely client-focused, so the client outlines what they’re looking to achieve and we give our views on how we can achieve it.
What we really want at Psigma is a combination of flexibility to adapt a portfolio to a client’s unique circumstances, but also to have a robust framework around that. We have centralised investment thinking, where the investment team and fund managers combine their expertise to develop a risk framework. Within that framework are asset allocations that are designed to achieve inflation plus a percentage, which is usually our target. Within that you have the flexibility to adapt to a client’s needs, so there will be upper and lower tolerances within each asset class.
Our forte is really trying to protect on the downside and participate on the upside to achieve “inflation plus”, rather than high risk/high returns. That’s the way we try to separate ourselves from our peers, by looking to protect and deliver a return above inflation, rather than just trying to achieve the heavy equity weighted APCIMS benchmark used by many wealth managers.
A large proportion of our clients sit in that balanced world where they are looking for inflation plus 4% for instance, and they are looking for someone who can do that while minimising the risk they take. If there’s a spectrum of cautious, balanced and growth, Psigma has shown itself to be a very sensible manager of funds in the cautious to balanced risk categories.
We attract people nearing, or at the end of their working lives, who are looking for their pension assets to grow ahead of inflation. We also have a large number of young professionals with families, whose issues might be school fees – something which they can tangibly imagine as going to cost more than it does now at a rate above inflation. We’re attracting many more young clients now because they are affected by the market corrections.
We understand that clients expect first class service. It’s about peace of mind and feeling that you can phone at any point if you are concerned about the markets or your portfolio. Psigma has kept it so the client has direct contact with their fund manager. There is no relationship manager in between as we wanted to keep things personal by ensuring there are no barriers between the client and their fund manager who has made the investments.
The structure of our teams also enables us to have more than one person who can help. Two other investment managers on my team are familiar with my clients and we also have a number of client services associates who help us to continually monitor portfolios. We’d like to feel that clients can always speak to us, but if they can’t get hold of their fund manager, there will always be someone who knows them and who can assist them.
Furthermore, we are lucky being part of the Punter Southall Group in that if a client has a question which is not investment related – such as on trusts, IHT planning or pensions – then we have the resources literally across the floor from whom we can get answers. We also have an adviser firm within the group called Punter Southall Financial Management, who can help with the aspects of clients’ needs we can’t help with.
Of course, actually managing investments is the biggest part of our day-to-day work, but a huge part is making sure communication with clients is high and that they are fully aware of what we’re doing. We have a blog, a monthly investment update and market commentaries go out with quarterly portfolio valuations and monthly performance updates so that clients can have an overview of our thought-process. We also put on seminars where we have one or two of our fund managers and then we also bring in a fund manager from one of the funds that we use. Many individuals have gone down the discretionary route because they don’t necessarily need to look at their investments every day, but there are clients who have a real interest and want to know why you’ve chosen a fund.
We’ve created an environment where our clients can judge what we’ve achieved, rather than just hearing it from us. In our six-monthly performance report, rather than saying, “We’ve achieved this versus our target of RPI plus X%”, we also put how we’ve done over that period versus a weighted benchmark of where the asset allocation is. That gives you an idea of how the underlying investments have performed in relation to the asset classes themselves. We also use Asset Risk Consultants to assess whether we are achieving close to or higher than our peers, and whether we are achieving these returns with less risk. I think that providing that level of detail is a far more transparent method of reporting on performance, and we follow a similar approach with our fees.
If you’d like to start a conversation with Psigma Investment Management please contact the Find a Wealth Manager team HERE. They will ensure you get direct access to the investment professional who matches your profile.