Investment approach

The Wealth Club Portfolio Service is built for high net worth and sophisticated investors. These investors are likely to leave their wealth invested for decades and may wish to pass on a significant portion. 

We take a long-term approach to help meet those long-term needs, based on five guiding principles:

  1. A well-diversified portfolio
  2. A combination of low-cost index funds, actively managed funds and investment trusts
  3. A blend of complementary specialist active managers
  4. A commitment to low or no trading
  5. A long-term cost advantage

Important: The information on this website is for experienced investors. It is not a personal recommendation to invest. If you’re unsure, please seek advice. These are long-term investments which can fall as well as rise in value and returns are not guaranteed.

Investment approach

1. A well-diversified portfolio

Often described as “the only free lunch in finance”, diversification can improve long-term returns generated by an investment portfolio for a given level of risk.

Each of our portfolios contains a mix of 30–45 funds, providing exposure to thousands of underlying investments spread across the globe in a variety of asset classes, fund types and investment styles.

  • Different geographies: from developed markets such as the UK, US, Europe and Japan to emerging markets such as China, India and Brazil.
  • Different asset classes: government bonds, corporate bonds, equities, infrastructure, real estate, and other private assets.

2. A combination of low-cost index funds, actively managed funds and investment trusts

Whilst most online wealth managers tend to invest in just low-cost index funds, we also invest in actively managed funds and investment trusts to further enhance diversification.

  • We invest in low-cost index funds (30% to 45%) 

These are a cost-effective way of laying the foundations for a diversified portfolio. We make particular use of these in highly competitive markets, e.g. the US stockmarket, where actively managed funds find it difficult to add value.

  • We invest in carefully selected actively managed funds (45% to 60%)

We believe there are fund managers who can add value and have a long-term track record of outperformance. 

We invest in managers with a clearly defined investment philosophy, a strong track record, a well-resourced team and – perhaps most importantly – an absolute passion for what they do.

  • We invest in investment trusts (9% to 19.5%) 

We believe that wealthier and sophisticated investors should not be limited to equities and bonds, but also have some exposure to other assets such as infrastructure and private assets. 

Investment trusts are a simple and relatively liquid way to achieve this. They can invest in illiquid assets that can’t be easily purchased on public stock or bond markets. 

Investment trusts include many hidden gems. Several infrastructure trusts, for example, have long track records of paying attractive and growing dividends. Past performance is not a guide to the future. 

3. A blend of complementary specialist active managers

We favour managers with an unwavering focus on a particular investment style or niche. By focusing on a specific area, they can develop expert understanding, giving them an edge compared to more generalist investors. Over the long term, we believe this can translate into outperformance.

Terry Smith at Fundsmith is an example. Fundsmith seeks to invest exclusively in very high-quality growth businesses. Since its inception in November 2010 a £10,000 investment in the Fundsmith fund has delivered a return of £66,237 vs £35,423 for a global stock market tracker fund (December 2023).

When you back a specialist, performance can deviate significantly from the market average at times, due to conditions outside the fund manager’s control.

To mitigate the impact of this, we pair complementary funds that tend to perform differently. So, for instance, Fundsmith’s quality focus could be paired with the high-growth focus of the Scottish Mortgage investment trust and the deep value focus of Schroder Global Recovery.

This way, we can try and smooth out the impact of any one fund on the overall portfolio, aiming to deliver stronger risk-adjusted returns, not guaranteed. 

4. A commitment to low or no trading

Knowing that different positions in the portfolio should behave differently in different market conditions helps reduce the temptation to trade based on short-term performance. 

Frequent trading can cost investors a lot over time. 

Our research shows the return generated by the average investor is significantly less than that generated by the average fund. We believe this is because investors are prone to selling after a period of weak performance and buying after a period of strong performance. 

We believe having the patience to own funds through thick and thin is key to a successful long-term investment strategy. That’s why we keep any trading to a minimum within the Wealth Club Portfolios. 

5. A long term cost advantage

Wealth Club is a modern online wealth manager. Through better use of technology, we can offer more competitively priced portfolios, with costs more akin to investing funds on a DIY platform. 

In addition, Wealth Club’s size, as the UK’s largest high net worth investment service, has helped us negotiate better fees with fund managers, further reducing costs.  

These savings mean more of your wealth remains invested. The combination of these savings and investment growth can add up to a substantial sum over time, not guaranteed.

The chart below shows the impact of fees on returns, assuming the only difference between portfolios is the fees.

For instance, a £1 million portfolio paying 1.1% in ongoing fees would be £805,430 better off than a portfolio paying 2.0%, after 25 years. 

The value of a £1,000,000 portfolio over time with different charges

Source: Wealth Club. Assumes growth of 7% per annum before fees. The average ongoing cost of a Wealth Club Portfolio is 1.07% (June 2024). For illustration purposes only.

See five-year performance of the investments listed above:

Read more:

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination. 

The details

Discretionary Portfolio
Minimum investment
£100,000 (in aggregate)
Initial charge
Annual custody charge
Annual management charge
Next deadline
14 Aug 2024 (5pm)
Last updated: 20 February 2024