Michael Grech

Chairman, Michael Grech Financial Investment Services Ltd

Discretionary portfolio management in these unprecedented times

Sunday 28th June 2020

Following the COVID-19 outbreak and the measures taken by authorities and governments all over the world, there has been a significant change in how people and organisations interact with each other and function.

This change, coupled with the sheer amount of state aid and market intervention that continues to grow as the days unfold, has had a very big effect on the markets. It has made it both more difficult and important than ever for one to choose their investments wisely and re-balance their portfolio in a way that considers the many factors that are being affected by the unfolding scenario.

This is a service that Michael Grech Financial Investment Services Limited (MGFIS) excels at, with a mature and highly knowledgeable team that has been offering its services for over 20 years.

The company is made up of a team of 18 professionals, including 8 experienced investment advisors, each with a minimum of 10 years’ experience within the field.

When it comes to investment services, there are different types and the highest level that any investor (individual or entity) can receive is that of discretionary portfolio management. A simple execution only service might be good for those who like to carry out their own research and have a higher level of investment knowledge.

An advisory service is more suited for those who need guidance on how to choose the investments that are most suitable for their needs. The portfolio management service takes the advisory service to the next level and puts more onus on the investment services company. For this reason, the portfolio management service is much more comprehensive and requires us to conduct daily monitoring.

Moreover, every investment decision taken by our portfolio managers must be carried out strictly in line with the agreement signed with the client. The discretionary service also requires a higher level of client reporting and transparency, where third party inducements are strictly prohibited, bar some minor nonfinancial ones. Another great advantage is that this service takes a portfolio view to choosing investments.

This means that when choosing to trade an investment the portfolio managers will assess the effect that such a move is expected to have on the entire portfolio, and they would not just consider the particular investment in isolation.

Hence, they would carefully consider how the returns of different investments move together with other investments, keeping a watchful eye on the expected risk of the overall portfolio. Some investors may consider this level of service to be unnecessary, especially since the added work and higher quality service would necessarily be more expensive than a simpler one.

However, never has a portfolio management service been so important as it has become recently. The aftermath of the pandemic is very uncertain and any investor attempting to do their own research will soon understand how conflicting analysts’ reviews can be. This is where engaging an experienced investment team becomes paramount. The portfolio managers at MGFIS have over 13 years’ experience each in investment services, with a background also in banking services.

They are overseen by an investment committee which is governed by a board of directors whose senior members have over 40 years’ experiences in banking and finance.

Even if an investor simply buys into a well-diversified fund or exchange traded fund, the current situation warrants further research into the underlying investments the fund holds within its portfolio.

Our portfolio managers employ a five-stage process to construct any portfolio they manage which incorporates both macro (general) economic analysis and research on particular investments, assessing both quantitative and qualitative elements. More importantly they will assess the underlying holdings together as one portfolio to understand their combined expected risk-adjusted returns.

Michael Grech Financial Investment Services Ltd is licensed to conduct investment services in Malta by the Malta Financial Services Authority under the Investment Service Act, as regulated under the laws of Malta.

For further information, contact T: 2258 7000; E: info@michaelgrechfinancial.com; www.michaelgrechfinancial.com