EXCITING CHANGES TO HOW WE MANAGE YOUR INVESTMENTS, YOUR QUESTIONS ANSWERED

1. I am not sure I understand what this means - can you explain it simply?

This change will allow us to respond to market movements in a faster, and more granular way than we can do today, and this should help us create more value for you.

We will move away from our current model portfolio system, into two dedicated funds:

  • Market Growth (focused on equities) and

  • Market Defensive (focused on bonds), which TCFP will directly manage.

Each fund will hold around 20 carefully chosen investments. This allows us to be more precise with asset allocation than our current four-fund model. We will have more flexibility to make tactical adjustments and take advantage of opportunities as they arise.

2. Why this, why now?

Advances in technology and platform functionality now allow us to do this.

This is a natural evolution from our move to 'Discretionary Permissions’ in 2020.

This will make us nimbler, reduce admin, and give us more investment flexibility.

3. What is actually changing?

Your existing investments will be transferred into the two new funds mentioned above, but the way we manage your money, and your overall strategy will remain the same.

You will still be invested in a mix of equities, bonds and cash tailored to your needs.

4. What is staying the same?

  • Who your accounts are with – Fidelity or Raymond James for most of you.

  • Your financial plan and risk level.

  • The same TCFP team you know and trust, will be managing your plan and investments.

  • We will continue to oversee everything as we always have.

5. Will this cost more?

Costs will go up slightly (by around 0.3% pa), but we expect this to be more than offset by better performance (not guaranteed) and efficiency.
Here is how:

  1. We can access institutional pricing.

  2. The larger scale of the funds will help keep overall costs down.

  3. Investment changes will not trigger capital gains tax, meaning fewer tax implications for you.

  4. Our investment approach can be more responsive and nuanced.

6. Who is managing the funds?

We have partnered with Margetts, a company with a proven record in fund administration. They will oversee the day-to-day running of the funds, while we will continue to manage investment decisions.

7. What if something happens to Jeremy?

We have a succession plan in place. Both Steve Williams (Cormorant Capital Strategies) and Scott Mordrick (Barras Capital Management) are ready and qualified to step in immediately if needed. We also have external backup advisers as an extra layer of security.

8. What about risk?

This change is designed to reduce risk by making us more agile and efficient. You will still be invested in a well-diversified portfolio and managed in a smarter way. Investor protections will be the same as they are now.

9. Does this mean we are moving away from Fidelity / Raymond James?

No. Your account providers will remain the same, it is only the investment approach within your accounts that will change.

10. Will the Town Close Portal still show the value of our investments managed by Margetts?

Yes — the portal will continue to show the full value of your investments, including those managed within the new Margetts funds.

11. What if I would rather leave things as they are?

We understand change can be unsettling. If you still have concerns after reading the information we have shared, please contact us via the portal and we can set up a meeting with your financial planner.

12. Are other IFA companies doing this - is it a trend?

Yes, many companies now do this, and the trend is clear - more will adopt these methods in time.

13. When is the planned switch-over date?

The current plan is for the switch to take place over the first or second weekend of November.

We will do rigorous pre-switch testing, starting with staff and personal accounts to make sure everything runs smoothly.

14. Will our money be uninvested for a period?

Yes, but only very briefly.

15. Who actually governs the funds?

That sits with Margetts who are the Authorised Corporate Director (ACD) of the funds. They, like us, are authorised and regulated by the FCA. They made the application to the FCA stating the scope and nature of these funds, and now they are responsible for ensuring they are run as per the approved application.

As ACD they:

1. Are the legal director of the fund.
2. Handle compliance, governance, reporting, and investor protection.
3. Appoint and oversee the fund manager (which is TCFP), depositary, and other service providers.

Being an ACD is what Margetts do. With the funds we use in the model portfolio the ACD and fund manager are often in the same group - e.g. for Vanguard funds, Vanguard Group (Ireland) Limited is the ACD and the fund manager is Vanguard Investments UK Limited.

We are using the same structure but with a completely independent ACD and fund manager.

16. What safeguards will keep the funds aligned with risk profiles?

The same as exists now with the model portfolios, i.e. we will keep well within our comfort zone and make sure enough cash exists in clients’ plans for short term needs.
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And Margetts will provide a layer of governance and oversight that did not exist before.

The aim is to produce inflation beating returns over the economic cycle net of all costs, not to “shoot the lights out”.

We think that is more easily achieved in the new fund structure than in the model portfolios because we can be more flexible and act quicker.

The aim of the TCFP funds it to fine tune the model portfolio philosophy and processes to capture more of the relatively available total market return.

It may feel like wholesale change but this is a renovation as opposed to a rebuild.

17. How will calls be made on rebalancing?

The TCFP Investment Committee decide the makeup of the portfolio and what changes (including rebalancing) should be made and when. Jeremy Askew has the final “sign off” authority.

This is the same way the model portfolios are run.  But with the funds Margetts providing compliance, oversight and governance, which is, effectively, what TCFP did for the model portfolios.

None of the investment decision making TCFP has for the model portfolios will be handed elsewhere for the funds.

18. How often do we expect rebalancing in practice?

The TCFP Investment Committee will meet monthly. We can probably expect a tweak or two each month, leaning into / away from investments that are relatively more / less attractive.

For example, looking back over the previous three years,  there were 3 changes to the model portfolios,  with the funds that would have been more like 12 to take advantage of smaller movements than the model portfolios could take advantage of.

Full scale rebalances will be at least annual, if they have not happened in the previous 12 months.

In times of market stress, you can expect more meetings and more moves.

19. How/when will changes be communicated?

Margetts will create a microsite for our funds. There you will be able to fund the factsheets and other literature.

The microsite should provide more visibility than the model portfolios. Every holding will be listed along with the % held and how that consolidates by sector and region etc.

There will also be updates regarding portfolio changes, economic and political outlooks etc., as written and approved by the TCFP Investment Committee.

The microsite will be updated every month, probably in the last week each month. That's more frequent than the model portfolios where we do the same each quarter.

As always, your Town Close team are ready and happy to discuss any aspects of this proposal with you at any time, so please do not hesitate to contact if you would like a chat.