Over the past 15 months we have been looking in more depth at individual Model Portfolios, assessing their aims, the type of investor they might suit and how they can be used. Our last two portfolios to be given the once-over are Echo and Alpha.
The Model Portfolios are a collection of 12 theoretical investment portfolios, each consisting of six or seven funds and trusts and designed to meet different investment objectives and suit different risk profiles and timeframes.
Over the past year (to 10 February), Echo has returned 30.5 per cent. The portfolio is designed for investors with a higher-risk profile and aims to deliver growth over the medium-term.
ECHO MODEL PORTFOLIO
It has HSBC FTSE All-Share Index at the base of the portfolio, which provides investors with broad exposure to UK companies of all sizes. It is complemented by the actively managed CF Miton UK Value Opportunities, which focuses on undervalued companies.
The largest part of the portfolio is invested in global funds with different strategies to provide diversification: Old Mutual Global Equity, Ardevora Global Equity, RIT Capital Partners, Caledonia and F&C Global Smaller Companies.
To top it off, there is a holding in Stewart Investors Asia Pacific Leaders.
This model portfolio could suit investors who wish to accumulate a nest egg for grandchildren through a Junior Isa, or those in their early 50s with adequate pension provision, who want to grow extra savings for their retirement in an Isa.
Echo has returned 8 per cent over three months and 21.5 per cent over three years.
Disappointing performance from some of the funds chosen when the fund launched in 2012, continues to weigh down the three-year performance figure somewhat.
ALPHA MODEL PORTFOLIO
Meanwhile, the Alpha portfolio has returned 22.4 per cent over one year. It is suitable for medium-risk investors looking to grow their capital over at least five to 10 years.
With the aim of protecting investors from excessive volatility, this portfolio has three core holdings.
Each invests in a mixture of bonds and equities: Artemis Monthly Distribution, Fidelity Moneybuilder Balanced and Royal London Sustainable Diversified Trust. Bonds tend to fluctuate less in value than shares, while the equity exposure in these funds provides growth potential.
The portfolio also holds the HSBC FTSE All Share Index fund to access various UK companies. To spread risk further two internationally invested funds, Fundsmith Equity and Lindsell Train Global Equity, are included.
The managers of these two funds are highly experienced and focus on well-established companies that are leaders in their fields.
This fairly steady portfolio may suit parents investing to pay for the education of a young child, or maybe young investors building a deposit for house purchase. Alpha has returned 4.2 per cent over three months and 35.2 per cent over the last three years.
All of the Money Observer Model Portfolios can be bought through Money Observer's sister website Interactive Investor, for a flat fee of just £10 each.
This represents a £40 saving on the standard charge of £10 per fund purchase.