We aim to develop an investment strategy to enable you to meet your financial planning objectives…

…we will consider your individual circumstances, your attitude to risk and other preferences. Once the strategy has been agreed and implemented, we will have regular meetings with you to ensure that the portfolio is performing as expected and to make any necessary adjustments to reflect changes in your circumstances or in market conditions.

Our Investment Philosophy

Our success is built on a talented team guided by a robust investment philosophy and process. The investment process combines asset allocation, portfolio construction, fund selection and risk management. Diversification is a fundamental aspect of our investment philosophy. This includes diversification of asset class, region, sector, investment style and process which are combined within individual holdings in portfolios.

We believe in taking a comprehensive view of the marketplace which complements our whole of market research process. The Investment Committee engage in extensive reading of research material and the financial press to assist in forming a balanced view of global financial markets. They frequently meet with fund managers of existing and potential investments providing further market insight and contributing to expectations over the coming periods. The Committee advocate an active investment strategy, taking the view that good managers can deliver above market returns over the long-term but accepting that some markets are more efficient than others.

We advise on collective investments such as unit trusts, OEICs, investment trusts and Exchange Traded Funds rather than direct equities. We consider that collective funds offer key advantages compared with direct equities, with regard to diversification and risk management, tax mitigation, charges and administration. We also work with a number of stockbrokers if a portfolio of direct equities is considered to be appropriate.

The Investment Committee partake in continuous discussion and debate but formally meet on a fortnightly basis to discuss market conditions, portfolio positioning and the broader investment strategy.

Discretionary and Advisory Investment Services

Historically, as Independent Financial Advisers (IFAs) we have offered investment advice on an advisory basis. This means that we make suitable recommendations, based on your particular circumstances, which we then implement after discussing them with you and securing your agreement.

The Discretionary Portfolio Service complements the existing advisory option. This means that you appoint us to manage your portfolio on your behalf in accordance with agreed parameters, such as your risk tolerance, income requirements and tax position. We then take responsibility for making all investment decisions at our discretion, and report to you periodically on progress.

The benefit of discretionary management, and a key reason for offering the service, is that it eliminates delay when implementing investment decisions in today’s fast moving markets that is increasingly important. It also provides other benefits such as more streamlined administration and consolidated reporting.

Asset Allocation

We believe that the main driver for investment returns over time is asset allocation. Your portfolio may include the following different types of asset (the exact proportions will depend on your personal circumstances, risk tolerance and tax position, and on market conditions):


All portfolios maintain a cash buffer which is generally targeted as 1.25% of the portfolio. This is used principally to cover fees, which are taken on a monthly basis. For clients with income requirements, an additional earnings portfolio features alongside the dealing portfolio, which accumulates any income from holdings. The cash weighting may be higher at times, taking a tactical view to avoid market downside or elevated volatility. Cash and money market funds may also be used if appropriate.

Fixed Interest:

This includes bonds which are issued governments and companies, generally categorised as being investment or speculative grade. The issuer pays the investor a coupon until the bond matures, where longer duration bonds are inherently more sensitive to interest rate movements. The predominant factors affecting bond prices are interest rates and the credit-worthiness of the bond issuer. Historically bonds have displayed a low/negative correlation to equities with lower levels of volatility over the long-term.


This includes direct investment in ‘bricks and mortar’ via a property fund, as well as investment in the shares of property companies such as Real Estate Investment Trusts (REITs), both in the UK and overseas. Sector exposure is commonly broken down into; offices, retail, industrial and leisure within commercial property. Returns are generated from both capital appreciation and rental income, where a proportion of rents are often linked to inflation.


These are shares quoted on stock markets in both the UK and overseas. Investors earn a return in equities through a combination of earnings growth, dividends and expansion in valuation. Portfolios will invariably have a UK bias due to being the domestic marketplace, where overall geographical and sector exposure will be a consequence of the investors risk tolerance as well as market outlook. Equities offer the potential for longer-term capital growth, although capital and income are subject to fluctuations over shorter time periods.


These include additional assets which may not be considered as a core asset class including; hedge funds, commodities and private equity. Alternative investments can have a low correlation to more traditional assets, as well as a varied risk/return profile.

Portfolio Construction

The process starts by making long-term assumptions around investment returns, volatility and correlations of assets. This data is then optimised to construct a portfolio which maximises the potential return for a given level of risk. This means that we seek to combine asset classes in the most efficient manner to construct a portfolio which has the potential to produce competitive returns in accordance with your risk tolerance. This is the basis for strategic asset allocation.

In the next stage, the Investment Committee take a view on the assets within portfolios and adjust weightings based on their views on market conditions and outlook. This process is known as tactical asset allocation. While this is continually monitored, the Committee hold a quarterly house view meeting to rigorously assess markets within the broader marketplace. Portfolio rebalancing is carried out periodically to maintain desired weightings of assets, following changes in market value over time.

Risk controls are in place in order to limit concentration including a maximum holding within the portfolio of 15% in any single position and 30% maximum exposure to a single asset management group.

Fund Selection

A dynamic selection process is used to choose suitable funds within asset classes. This starts with a whole of market assessment to consider the type of investment vehicle deemed appropriate. This includes; UT/OEICs, investment trusts, ETFs and structured products among others.

Where applicable, initial screening is used to search through the widespread marketplace to pick investments which meet external rating, size and manager record criteria. Funds are then selected based on a combination of quantitative and qualitative research techniques:

Quantitative: This involves carrying out ratio analysis on funds over multiple time horizons. This includes examination of some of the industry’s key financial ratios such as; alpha, beta, r-squared, and standard deviation as well as broader performance analysis. Additional numerical factors are considered including fund size, charges and yield where applicable.

Qualitative: This covers in-depth analysis of the fund’s investment philosophy and process, fund manager profile, level of supporting resources, risk management process and portfolio positioning among others.

Assessing the risks of the funds is integral within the process. This includes, but is not limited to, evaluating a funds constraints on capacity, currency risks, systematic risk, portfolio concentration and any style or portfolio tilt which may influence returns within particular market conditions.

Selected funds are added to the CFM fund panel and are regularly monitored for performance/ratio analysis, liquidity, concentration, sector positioning and additional factors dependent on the type of market in which the fund invests.


We believe a key part of the ongoing investment management process is measuring performance against a benchmark. A benchmark provides a clear and transparent target against which to measure the relative success of our approach to investment management over time. We will discuss and agree on a suitable benchmark with you.

We issue portfolio valuations every six months, together with commentary on performance both in absolute terms and compared with the agreed benchmark.

Portfolio Reviews

We consider that regular reviews of your investment portfolio are key to successful investment management, so as to be in a position to react to any changes in your circumstances, your risk tolerance and market conditions.

Accordingly, we report and make recommendations at least annually in the case of portfolios where we act on an advisory basis. Discretionary portfolios are monitored continuously, and we will make any changes to the portfolio at our discretion. We will agree the frequency of review meetings with you, although these are generally held either every six months or annually.


We aim to deliver strong investment performance, and the service that our clients expect, through the strength of our investment process and the quality of our team.

Cathedral Financial Management Ltd is authorised and regulated by the Financial Conduct Authority. We are not authorised to hold client money, so all investment cheques should be made payable to the investment administration company and not to Cathedral Financial Management. Please be aware that as with all real assets the value of your investments can fall as well as rise. Past performance is not necessarily a guide to future returns.