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Pearson Jones
This short note is intended to provide an introduction to new clients of the Pearson Jones Investment Process. It may also be of interest to existing clients to review in more detail how we select investments and then monitor them on an ongoing basis.
Our Core Investment Philosophy
We are conservative investors. We do not recommend investments which we do not understand. We are reluctant to recommend new or esoteric investment fads.
We seek to add value by maximising gains and minimising losses within agreed risk parameters through:
We invest for our clients to deliver either superior relative returns (measured against a suitable benchmark) or absolute positive returns.
Our view is that clients should not invest in Index Tracking funds in most core areas as we have evidence that, when portfolios are actively managed, our process delivers superior returns.
We do not out-source investment decisions to discretionary managers (e.g. stockbrokers) because we are our clients’ advisers, we know our clients’ objectives and risk tolerances and we know our process delivers good returns. Our experience (and that of our clients) tells us that few (if any) discretionary managers have the ability to understand all markets to the same degree as the specialists who are employed by fund management groups.
Our Investment Team
Our Investment Team is overseen by our Investment Director, Peter Heckingbottom and our Investment Manager, Nick Pike. Peter holds the Investment Management Certificate. Nick holds the Investment Portfolio Management Advanced Diploma. Both Peter and Nick are Chartered Financial Planners, the pinnacle of professionalism in UK financial services qualifications.
Peter and Nick are supported by a team of 10 researchers who each have responsibility for certain areas of investments. Their role is to analyse research produced by some of the best external fund assessment organisations (such as Old Broad Street Research – OBSR and Citywire). They then identify the funds and fund managers who have a consistent, established track record of superior past performance and who are most likely to maintain this in the future. These funds are identified on our “Buy Lists”.
Ongoing Investment Monitoring
Crucially, when we recommend funds to clients, we commit to monitoring these moving forward. If this monitoring process highlights any deficiencies in funds we have recommended, our Investment Team will make a decision as to whether the fund should be retained or sold. If the Team decides the fund should be sold, we commit to contacting all clients investing in that fund with a recommendation that it be switched into a fund which in our view has potential for better future returns.
Does It Work?
This is probably the question that is least-asked by any client to any adviser, despite being more important than any other. It is genuinely difficult to prove because portfolios vary from one client to another. Nevertheless, we have analysed the performance of our “Buy List” for each of the last 6 years and, more significantly, on a cumulative basis over the same period. We have identified the sectors where our process has delivered returns superior to an equivalent Index-Tracking fund and those where it has not.
In short, about 85% of Pearson Jones’ recommended investments have out-performed their benchmarks over this period.
This is an excellent result but we would like this to be even better whilst still maintaining our Core Investment Philosophy of conservatism.
In the meantime, existing clients may see us recommending more changes to their portfolios to ensure they remain invested in “Best of Breed” investment funds delivering superior returns for their benefit.
PETER HECKINGBOTTOM FCIB APFS
Chartered Financial Planner
Deputy Managing Director & Investment Director
