IFA OF THE YEAR | The Scotsman Special report | Saturday 14 February 20094
150
200
250
300
350
JANUARY 2008 JANUARY 2009
16.9%
JANUARY 2008 �
Aegon Sterling Corporate Bond �18,000
Aegon Global Equity �15,000
Artemis European Growth �18,000
Artemis UK Special Situations �18,000
Martin Currie Asia Pacific �21,000
Martin Currie North American �15,000
Resolution Argonaut European Alpha Income �18,000
Resolution American Growth �15,000
SWIP Diversified Assets �18,000
SWIP Absolute Return Bond �24,000
Standard Life Inv UK Equity High Income �30,000
Standard Life Inv AAA Income �18,000
Blackrock UK Absolute Alpha �27,000
Invesco Perpetual High Income �30,000
Schroder Income Maximiser �15,000
�300,000
JANUARY 2009 �
Aegon Sterling Corporate Bond �3,170
Aegon Global Bond A �4,920
Artemis New Enterprises �6,770
Artemis UK Special Situations �18,280
Martin Currie Asia Pacific �15,330
Martin Currie North American �19,360
Ignis Argonaut European Alpha Income �14,420
Ignis American Growth �5,960
SWIP Diversified Assets �15,650
SWIP Absolute Return Bond �39,400
Standard Life Inv UK Equity High Income �16,260
Standard Life Inv Global Absolute Return �10,420
Blackrock UK Absolute Alpha �43,140
M&G Global Basics �19,890
Neptune Balanced �16,240
�249,210
KEITHTHOMSON
WWIINNNNEERR KEITH THOMSON Blackadders
Diversity key to damage limitation
O
VER the last year we
have seen the booming
credit cycle dramatically
unwind, with many banks
reportingunprecedentedlosses.
Thebubblesinhousing,commodi-
ties,consumerconfidenceandindus-
trial production all deflated rapidly.
Interest rates have been slashed and
both investors and savers have suf-
fered a torrid year. Almost all asset
classes have fallen with surprising
correlation, but diversification has
helpedlimitthedamage.
We agreed at the outset that the
remit was to achieve capital growth
until the retirement benefits are
taken in ten years' time, but the port-
foliowouldneedtogrowat9percent
a year, which would require accept-
ing a degree of risk greater than
Angus MacDonald would be
accustomed to taking. Phasing in the
annual �10,000 pension contribu-
tion from a pension cash fund may
wellprovetobethesensibleoption.
Since we invested in January 2008,
the Cautious Managed and Balanced
Managedsectorshavefallenby14per
cent and 19 per cent respectively,
whiletheFTSE100indexfellby25per
cent and the FTSE World ex UK index
by 34 per cent. Angus's pension port-
folio has declined in value by 19 per
cent over the same time period but
withlowervolatility,therebykeeping
withintheoriginalremit.
Overtheyearwereducedourexpo-
sure to the higher risk fixed-interest
and equity funds and increased our
positions in risk-controlled funds
such as the SWIP Absolute Return
Bond fund and the Blackrock
Absolute Alpha to protect against
downside risk. We also added to the
Neptune Balanced fund and M&G
Global Basics to benefit from any
sustained market recovery as many
holdings were beginning to look
oversold, although the timing was
perhapsabitearly.
We expect markets to remain
highly volatile before gradually re-
covering in the second half of 2009.
We expect higher yields from fixed-
interest and equities will become
increasingly important to investors,
especially if deposit-based interest
rates remain suppressed. Yields may
wellpushthemarketforwardanden-
courage cash investors to return to
traditionalinvesting.
KEITHTHOMSON
Whatthejudgessaid...
FROM the outset, Keith seemed
determinedtoremainasclosetohis
original asset allocation as possible
and avoided making any changes to
his portfolio until the third quarter
of the year. The judges felt that this
approach was very much in keeping
with the spirit of the competition
and in line with the case study remit
which was based on a ten-year
retirement objective.
IFAs must continue to look at the
bigger picture and educate clients
to do the same � the services
offeredbyamodern-dayIFAinclude
a long-term working relationship
and a strategic plan that can be
adapted to suit any significant
changes to a client's
circumstances. Unless long-term
economic circumstances dictate
otherwise or the client's risk profile
changes significantly, asset
allocation should remain fairly
close to its original shape. Keith
only started to make more use of
absolute return-type funds in
September/October, when all four
asset classes started to be affected
by the malaise in the marketplace.
"We expect markets
to remain volatile
before gradually
recovering in the
second half of 2009"
Keith Thomson fared better than
any of the other IFAs during a
particularly difficult year

Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9Page 10Page 11Page 12Page 13Page 14Page 15Page 16 Produced by PageSuite