New research from Willis Owen, the leading UK online investment platform, reveals that only 24% of retail investors think fund managers are clear in explaining the risk profile of their funds; while 59% of them describe the industry as being poor at this, with 12% claiming they are ‘very unclear’.
Furthermore, as the industry invents relatively new investment strategies such as smart beta and factor investing, 52% of retail investors believe this has meant they have become more confused, compared to 14% who say they have a better understanding.
To help tackle this issue, Willis Owen has launched a range of starter portfolios that combine the investment expertise of its own research team, and the extensive tools provided by Morningstar DirectSM. These portfolios are designed to help new, or indeed existing investors, get off to a good start when building a diversified portfolio and avoid some of the common mistakes. They comprise of three active, three passive and one income product. The active and passive portfolios are split into cautious, moderate and adventurous risk buckets. Novice investors using the starter platforms will gain access to Willis Owen’s platform as well as educational support for a minimum of 12 months.
Adrian Lowcock, Head of Personal Investments at Willis Owen, said: “The investment management industry needs to do more to help investors feel more confident about their risk profile and where they should be investing. This is in everyone’s interest as people will then invest more, and fund managers will grow their business.
“However, our research shows that there is a lot of work to be done in this area, and this is one of the main reasons why we launched our starter portfolios.”
Willis Owen starter portfolios
These portfolios are designed to help people who want to make their own investment decisions but require support with getting started. They are comprised of three active, three passive and one income product. The active and passive portfolios are split into cautious, moderate and adventurous risk buckets. Novice investors using the starter platforms will gain access to Willis Owen’s platform as well as educational support for a minimum of 12 months.
They have been selected by the Willis Owen research team—Liz Rees head of research and Adrian Lowcock Head of Personal investing—using the Morningstar team of over 100 analysts to narrow down the range of funds available.
The funds have been selected primarily on long term performance potential and with an eye on costs, especially in the passive range where costs are an automatic drag on performance. We have also considered the overall risk of the combined funds to ensure they are complementary and suitable for the target market/investors.
Meanwhile, in adding Morningstar to its service to provide enhanced analytics, Willis Owen clients will have greater functionality and more detailed information on funds and equities. The new tool provides greater transparency on the underlying holdings of funds, enabling Willis Owen investors to determine the extent of any overlaps.
Investors can also use it to assess the styles of funds, to determine whether they aim for ‘growth’ or ‘value’, their sensitivity to interest rate movements and sector and geographical exposures. Those who want environmentally-friendly portfolios can check the carbon ratings of the funds they hold. Investors can also drill down to individual stocks, assessing whether their prices offer fair value based on their long-term intrinsic values.