Odd IFA Fund choice

Imnoexpert_2

An IFA rebalancing a portfolio has done the following.

Sold Invesco Asian

Sold Stewart Investors Asia Pacific Leaders

Bought Schroder Asian Income Maximiser

Q1 Why do you think has he reduced the amount of money in the specialist asia funds by 80%

Q2 Why has he chosen a fund which seems to have performed modestly in the past compared to the two he has sold. I've done a comparison on trustnet and  the Schroder fund has had not only much poorer performance, but is unfavourable on virtually every metric.

I am though no expert! And of course the past is no guide to the future....

Someone will say "have you asked him". I haven't yet but he will say - "It's all done by the investment committee at head office"

Thanks for any thoughts

tacpot12

The answer to Q1 might also depend on what they have invested the proceeds of the sale in. If they have invested the money in less specialised Asian funds, they may just regard those two funds as less well suited to exposing you to the asian market. If they have invested the money in, say, a US-focused fund then they might be thinking that the asian markets might have problems over the next 10 years or so. 

Regarding Q2, even if he says that the decision is taken at head office, he should still be able to find out from the investment committee why they picked that fund. There is an issue here though about why you are paying someone to manage your investment and then questioning their decisions. If I was on the investment committee, I would welcome the question, because I understand that a customer who understands what we do, and how we do it, and values our work is the best customer we can have, but perhaps not every member of the committee will see it that way.

It might also be that you are beginning to outgrow your IFA, and could start to manage your portfolio (or part of it) on your own. 

Thrugelmir

If your exposure to Asia has been reduced what areas have been increased? 

Quick glance suggests that performance for the Schroder Asian Income Maximiser fund is satisfactory. The other two funds being accumulation distorts the 5 year returns. A different picture if the income from Schroders had been reinvested. 

Appears to be a defensive move with a focus on income. While reducing exposure to India and China. Covid is challenging many Asian economies now despite the early success. 

dunstonh

Q1 Why do you think has he reduced the amount of money in the specialist asia funds by 80%

What does the IFA say when you ask them that?

Stewart Investors Asia Pacific Leaders failed to retain Asia sector classification as it includes companies from outside of Asia but trade within it.   It dropped off our list a few years back as it failed to meet our criteria.    

Q2 Why has he chosen a fund which seems to have performed modestly in the past compared to the two he has sold. I've done a comparison on trustnet and  the Schroder fund has had not only much poorer performance, but is unfavourable on virtually every metric.

Again, what does the IFA say when you ask them that?

It may well be a risk balance and focusing on the underlying assets within the portfolio.  Has some of the weighting towards emerging markets?

Someone will say "have you asked him". I haven't yet but he will say - "It's all done by the investment committee at head office"

I had to say it to keep you happy
However, if it's done by an investment committee at the head office then are you sure you are using an IFA?   Most IFAs are small localised firms of 1-5 advisers and have no head office.      That answer you were given is not good enough.  Whether its an IFA or FA, the investment committee will give the reasons and all the adviser has to do is relay them to you.    IFAs have to justify recommendations.    Saying its head office would not be sufficient justification.

Diplodicus

The good thing about keeping an IFA is you can think about other things while s/he expertly manages your fortune.

But best just check s/he hasn't started "de-risking" on account of your age. Unless you feel ready for the rocking chair!

maxsteam

Imnoexpert_2 said:

Someone will say "have you asked him". I haven't yet but he will say - "It's all done by the investment committee at head office"

If you can't get a better explanation than that, you should ditch the IFA. You can certainly keep asking "why" to any responses that aren't a proper answer but it sounds to me like you have a better understanding of funds than your IFA.

A brief glance at the funds shows that you've sold two funds with a lowish yield and bought a fund with a high yield. This could be justified if you have inadvertently grumbled about low interest rates or reduced dividends.

Diplodicus

May be wrong but I believe the OP has no interest in succeeding his adviser and no interest in questioning the wisdom of "rebalancing."

So no point arguing the cases on this thread.

maxsteam

OP is clearly wanting to question the wisdom of IFA. The IFA cannot justify taking a fee without being willing to give a straight answer to a straightforward question. I am alarmed that the OP feels more comfortable asking the question here than approaching the IFA. If the IFA is not approachable or gives silly answers to sensible questions, then the fee cannot be justified and the IFA should be ditched.

Diplodicus

The OP is an economics graduate playing dumb. 

Thrugelmir

Diplodicus said:

The OP is an economics graduate playing dumb. 

A very old joke

If all the economists were laid end to end, they would not reach a conclusion

maxsteam

Diplodicus said:

The OP is an economics graduate playing dumb. 

Maybe OP simply doesn't have time to chat with rude people.