Low Cost
Portfolios

Low fund charges and predictable performance

These portfolios have been designed for people who prefer the lower cost of passive funds and the greater certainty of tracking index performance:

  • They’re built using efficient tracker funds
  • They apply the EQ strategic asset allocation model to optimise risk and return
  • They’re a one-stop-shop investment solution
  • Suitable for ISAs and pensions

Low cost

These portfolios are typically invested across 10-15 index tracking funds to provide a broad spread of different assets. The asset allocation is regularly reviewed and adjusted to reflect our views on the potential returns from each market.

Passive investment

Passive funds and exchange-traded funds (ETFs) seek to replicate the performance of a benchmark index by owning all, or most, of its constituents. This reduces cost and the risk of underperformance.

Tax efficient

The Low Cost Portfolios are available for Individual Saving Accounts (ISAs) and Self-Invested Personal Pension (SIPPs) as well as General Investment Accounts (GIAs).

Your risk profile

We operate several versions of the Low Cost Portfolio to suit differing levels of risk. Scroll down to see how we can help design the most effective and affordable portfolio for you.

Our investment strategy

We’ll start by distributing between each of the main types of investments, including:

  • Equities (shares in companies based anywhere in the world)
  • Bonds (short, medium and long term debt)
  • Commercial property (offices, shops, warehouses etc)

We set a level for each of these types of investment which varies depending on the risk profile selected. Typically, there will be a lower allocation to Equities for the lower risk portfolios.

We regularly adjust the amount allocated to each asset depending on our views on the various markets. Periods when the overall trend in stock markets is upwards are called Bull Markets, and the opposite Bear markets. It would be very helpful if we could predict accurately when those changes are going to occur, but markets don’t work like that. They consistently reflect the views of all those participating and we believe that it is nigh on impossible to predict with any consistency the timing of changes in direction.

However, we do seek to have an opinion on whether the value of an asset is cheap or expensive: this is at the core of our investment research analysis. History shows that if you buy assets when they are cheap and wait long enough you will earn excellent returns.

A strong track record

Select a risk grade to see how our Low Cost portfolios have performed:

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Past performance is not a guide to future performance. The value of investments and the income derived from them may go down as well as up, so you could get back less than you originally invested.

Model portfolio performance is shown in sterling, net of underlying fund charges and an annual management fee of 0.39%, with all income reinvested. Actual client returns and the levels of fees will vary. Annual management fees will vary depending on assets under management and the level of service. We use Asset Risk Consultants (ARC) to benchmark the performance of our portfolios; ARC benchmark figures are based on participating investment managers' actual performance data, net of fees, following the last quarter end. Data sources: EQ, Morningstar.

How we choose funds

We review the market of passive funds and carry out a rigorous examination to identify those that:

  • Are run by fund managers experienced in managing tracking funds
  • Minimise tracking error so that performance is an accurate and up to date reflection of the asset class being tracked
  • Offer competitive management fees

In almost every case we will invest in funds that actually buy the individual stocks or assets that they set out to track. This reduces risk when compared to ‘synthetic’ tracking funds which use derivatives and so are exposed to the risk of a default by the derivative counterparty.

Keeping your portfolio balanced

Assets move in value across time and this will change the proportion allocated. For example, if the value of the equities in the portfolios grow, those asses class will eventually form a proportionately larger segment of the overall total value and so increase the risk.

Every quarter we rebalance the portfolios. Studies suggest that this not only helps control risk, but also increases returns because it leads to assets being sold when they are expensive and bought when they are cheap.