Performance Information

Investment Proposition

HCI and FE Investments have together created a bespoke range of portfolios, structured to the specific requirements of our Investment Committee, and using our existing portfolios as the basis. These portfolios will be run on a discretionary basis by FE Investments, but with critical, ongoing input from HCI’s Investment Committee.

Our Investment Committee will meet with FE Investments at least on a quarterly basis, to discuss markets, performance of the underlying funds, fund switch recommendations and asset allocation within the range of portfolios we offer.

As FE Investments are a Discretionary Investment Manager, the portfolio will benefit from immediate implementation of changes to your portfolios, without the need of your written assent for each individual transaction. The quarterly reviews will still be provided, but with a detail of transactions as opposed to a recommendation seeking authorisation. 

About FE Investments

FE Investments are a risk manager and provide discretionary fund management (DFM) services across the UK. The company is an award-winning provider of discretionary managed portfolios, with a track record of strong risk management and returns. Based on its unique combination of cutting-edge in-house technology, proven data heritage and a dedicated research team, FE has a track record of competitive risk and volatility manged returns. Its robust process draws on a highly qualified team of investment professionals and powerful software to manage investment risk for your investments. 

FE Investments has a team of highly qualified analysts and portfolio managers who balance numerical and non-numerical analysis to drive results. For every fund FEI invests into, they meet all the relevant teams at fund managers and questions them on a variety of areas of their fund until they are completely satisfied. 

Since launching the discretionary managed portfolios in 2015, FE Investments has won multiple awards and been named as one of the fastest growing discretionary fund managers in the UK, with around £4.1 billion* of assets under management as at June 2023. FE has been awarded Investment Research Winner by Investment Week 3 years running and most recently was rated 5 star Expert Rated by defaqto in 2023.

FEI is owned by FE fundinfo who are a global leader in investment-fund data and technology. Trusted for data, technology solutions, research and analysis, open international network and expert insights, they provide transparency and enable efficiency to unlock business potential for asset managers, fund managers, distributors and financial advisers.

Benefits of a discretionary Co-manufactured investment proposition

There are a range of benefits of working with a discretionary fund manager and below are some of the key benefits:

• Discretionary investment: instead of seeking your approval to change your portfolio on and advisory basis, we allow FEI to have discretion to act in a timely manner for your portfolio
• Expertise: there is a large, deep team of well qualified professionals overseeing your investments
• Analysis: the team analyse funds, economies and financial markets prior to making investment decisions
• Portfolio construction: building portfolios is complex. FEI have in-house, powerful software to efficiently combine your investments in a portfolio, and aim to avoid undue risk
• Scale: they have an operations team who can implement changes to your investments quickly, accurately and effectively
• Data availability: their parent company, FE fundinfo provide access to over 400,000 financial instruments which acts as a foundation to investment decision making
• Governance: once your investments are made FEI keep track of the portfolios and the underlying funds; there’s a lot of data to monitor and FEI have software and data to monitor risk
• Platform choice: FEI are flexible and can run portfolio on a number of different wrap platforms
• Independence: process reduce undue influence for fund selection
• Liquidity analysis: they can monitor the funds to allow the efficient sale or redemption of funds
• Reporting and information provision: software and data integration allow for the efficient production of portfolio reports, reviews and additional commentary
• Jargon limitation: the information provided is written in plain terms, to get the message across to you as effectively as possible

FE Investments’ philosophy 

FE Investments strives to manage your money carefully, managing risk and diversification, aiming to deliver portfolios without any undue surprises. They aim to manage the inherent risk within markets and asset classes using numerical and non-numerical data.

FEI focuses on the level of risk we take within your portfolio and target a specific level of risk. If we control the level of risk in each portfolio and aim to make each portfolio well diversified, the returns will follow over the time horizon for your investments and financial plan.

There are 5 elements to the process:

1. Asset allocation – an actuarial consultancy provides FEI with the basis for the portfolios which brings together 75 years of historical data and some of the strongest actuarial data analysis in the industry.  They use their own analysis and process to build on this foundation.
2. Fund section – FEI use FE fundinfo’s ratings to select strong fund managers, is combined with expert fund analysts to identify unwarranted risks within funds and keep investments on track
3. Investment committee oversight – attended by the most experienced individuals in the firm, leverage economic and market data insight from Zenith
4. Portfolio construction – highly trained portfolio managers use in house software to ‘optimise’ or balance the portfolio and make it diversified as possible
5. Governance – ongoing oversight of portfolios and the underlying investments, or funds, in order to identify concerns and risks that arise

Your portfolio is built balancing quantitative, data driven analysis with qualitative, research such as meeting individual fund managers. The data driven approach is unable to identify all the potential risks involved in portfolio management; this is the same for qualitative research that can be biased by the human mind. It is this combination of the two approaches that provides balance between the two methods of analysis, resulting in the careful management of risk within your portfolio.

Quantitative research (numbers-based research)

To determine the asset allocation in your portfolio, FEI undertakes quantitative and data driven analysis with the support of independent expertise from a third party actuary. The process uses powerful cloud computing that tests multiple asset allocation combinations through a range of historical and forward-looking scenarios to decide on an appropriate mix of investments.

FEI then applies a quantitative process to assess the quality of funds that we select using FE Investments’ proprietary in-house fund ratings. These ratings are then combined to develop a list of funds for our analysts to conduct deeper qualitative research.

Qualitative research (non-numerical)

Qualitative analysis relies on a team of highly skilled, highly qualified analysts who aim to uncover the information that a quantitative methodology cannot recognise.

The researched funds are shortlisted following the quantitative ratings process, and the team of analysts works through the top-ranked funds to consider reasons why they shouldn’t be included in the portfolio. This process aims to avoid funds that contain unnecessary risks, and ultimately this produces a screened list of investments.

Each fund receives over 30 hours of scrutiny per year. Typically, the analysts will read available literature, dig deeper into fund holdings and interview the fund managers and their teams. With this method we conduct over 4,000 hours of fund research annually.

Optimise

The final stage in the portfolio construction process uses technology developed by FE Investments. The optimisation tool works on the portfolio’s diversification, which aim to maximise the amount of unwarranted risk offset by combining different funds. There are 17 trillion possible portfolio combinations in a ten-fund portfolio created from a list of 100 funds, so the optimiser is designed to find an efficient route to the portfolio that has the most suitable balance of risk and return, and offers the optimum amount of diversification. In reality we set boundaries to restrict the number of calculations required to provide an efficient solution.

Scrutinise

The monitoring and review of your investments is continuous. FEI’s ‘in-house’ governance software can monitor over 60 separate measures to ensure that a fund is performing within predefined limits. Possible issues are immediately flagged up for further investigation by analysts. Portfolio managers also regularly monitor the risk within your portfolio against predefined targets and recommend adjustments at regular oversight meetings.