Integre Investment Management
"..building long-term wealth for clients""..building long-term wealth for clients"
A large-size portfolio allows a client the opportunity to choose between a "bespoke" or "custom-designed" portfolio and CIS (in effect a portion of a standardised portfolio).

Below we discuss some of the Pros and Cons of each approach.

Bespoke Portfolios: Pros and Cons

In a broad sense, equity investment can philosophically be divided into "active" or "passive" approaches. The "jury is out", and will probably remain so with both sides of the argument able to muster evidence and selected periods to make what appears to be a compelling case. These arguments are often academic and do not necessarily take into account the practicalities and costs of a real-world investment. The following is a brief and simplistic discussion of the terminology and does not attempt to resolve the complexities associated with various investment styles, holding periods, market timing, etc.

"Passive" simply means the robotic following of an index or ETF accepting, without argument, the consequences of the movements of the chosen investment vehicle.

In contrast to this 'active" investment, involves the more "traditional" approach to portfolios where investments are bought and sold based on their relative investment merits.

A sub-set of the active management style is where a portfolio is structured to suit a specific client's requirements, i.e. a bespoke or tailor-made portfolio. Compared to the other equity investment alternatives available to clients, there are advantages and disadvantages to bespoke portfolios.

Generalising, the most important disadvantages are:
  • Large portfolio size required to achieve meaningful portfolio diversification
  • Greater concentration on particular themes or styles which may result in higher portfolio risk - which may have positive or negative consequences.
  • Capital Gains Tax implications whenever investments are sold. (Note: CGT is complex and this brief sentence should not be taken to be definitive or complete - if in doubt consult with an expert.)
Again generalising, the advantages of a bespoke portfolio are potentially higher returns, individualised objectives and a regular, personal relationship with your advisor.