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INVESTMENT OBJECTIVE
ANALYSIS KEY POINTS
Capital Preservation is the stated
investment objective of 79% of the
products in the market
80% BPR products investing in
unlisted assets are solely focused on
capital preservation
24% of AIM based investments focus
on capital growth as well as capital
preservation
TARGETED RETURNS
This section looks at the range of
targeted returns in the BPR product
market. With most investments focused
on capital preservation, beating
inflation to maintain spending power
is essential. Some investors may still
want to achieve some level of growth
in their portfolio as well. It is important
to note that returns are not guaranteed
or assured by the providers - the returns
are a stated target and the capital is still
at risk.
While many products do not quote a
target return (nearly 60%), those that
do tend to target returns in the low
single digits. Taking the market as a
whole, the lowest targeted return was
2.5% per year, the highest was 12% and
the average 4.5%. The most quoted
targeted return was 4% and returns in
this region make sense - likely to keep
up with any inflation we experience but
not a stretch that requires excessive
levels of risk.
When comparing the BPR structures
side by side, the returns can also help
give us an indication of which structures
tend to have a higher level of risk.
Personal trading companies had the
highest quoted target return of 12%,
with the low end of the range still
relatively high at 5% per year.
Single company investments were the
next highest quoted returns in the
market, ranging from 3% to 6%, with the
average just over 4% per year.
Discretionary portfolios have the lowest
targeted returns, ranging from 2.5% to
7% and averaging 4% per year.
Target returns on AIM focused
investments in the market were not
quoted by the majority of providers,
perhaps a reflection of the volatility on
AIM and the lower levels of control the
managers have over the underlying
investments. Of the two that did quote
targets, one targeted 4% per year
and the other aimed to provide index
beating returns.
TARGETED RETURNS
TARGETED RETURNS BY STRUCTURE
Targeted returns range from 2.5%
to 12% per year, offering
opportunities for investors to find
market beating returns
Personal trading companies have
the highest quoted returns of 12%
per year which could signal that
these tend to take on more risk than
other structures
AIM portfolio providers generally
did not provided target return figures
RETURNS KEY POINTS
Personal Trading Company
Single Company
Discretionary Portfolio
RETURNS
12%
10%
8%
6%
4%
2%
12%
10%
8%
6%
4%
2%
