Tony Moss, a partner at Cumberland Place, answers this week’s questions from Frances Hughes.Q: What type of clients do you have? A: Most of our clients are entrepreneurs, directors of small to medium- sized companies. We also have a high number of barristers. They are all sizeable investors, with a typical investment of between 300,000 and 1m. Some clients are running between 3m to 4m. Q: What is your minimum investment? A: $30,000 [16,000]. Q: What are the benefits of having larger individual investments? A: Diversification becomes less meaningful in smaller portfolios. Q: How important is asset allocation for you? A: It is the key to everything. It is very hard to do what we do without asset allocation. But we are highly technical as well. We believe that most advisers in the marketplace do not have an understanding of asset allocation. But it is no good giving good technical advice without good asset allocation. Q: How do you decide where to invest? A: We place a lot of emphasis on fund selection and asset allocation, to protect clients and pick out opportunities. We are not frightened of taking a view on investment themes. That is what clients pay us to do. We also examine our macro and our global views, looking for where the opportunities are in the medium term. Then we try to pick up on the shorter-term trends. Going further and deeper is part of our research. In property, for example, lots of markets are looking overpriced. But within commercial property there are geographical sub-sectors, in particular London and the south-east, that are buoyant at the moment. The M&G Commercial Property fund is something we invest in because of its bias towards these areas. Banks and financials within the Equity Income sector are another example of where we have gone below the surface to find the right sector. It is all part of drilling down deeper and becoming more specific. Throughout the past year we have also had strong views on Europe and Germany. We got into Germany before everyone else – about 18 months ago. We try to stay ahead of the game. Our global allocation is mostly in Europe, with the countries in Europe bunched together, but for Germany we have a specific allocation. It has been a good call. We have held the Barings Germany fund since January 2005 and it has done very well. The Far East is another example. We are not keen on China, but we are interested in countries around China, so we currently hold a specific South Korea fund. Q: What services and products do you offer? A: We are quite unusual in that we are both an IFA and a fund manager, so we will give fee-based advice. Over the past year or so we have helped a lot of top-end directors, who invest more than 1.5m, change their pensions to a cash alternative. We also advise on inheritance tax and effective trust management. We are helping people understand the changes from the Budget and are explaining how these could have an impact on them. We also offer a protection service against loss of income in the event of death or illness. It is not our main thrust, but we can do it. It has to be a service we offer, so people can come to us with any financial query. We are a holistic service and we see ourselves as a hub. We have built up a range of contacts, so if we do not do it in-house we will field it out. Q: How do you determine levels of risk in each portfolio? A: We look at what kind of risk the client is prepared to take and what risk we think they should take, and we advise them accordingly. We take into account their desire, their capacity and their “sleeping at night factor”. We could have a client who is extremely wealthy and has great capacity to take risk, but he would not be able to sleep at night. We look at all the factors when we advise someone. Q: What is your approach to investment management? A: We are more about protecting clients’ assets, so we are quite cautious. We are highly diversified in asset classes. We hold commercial property, equity income, Europe, Far East, bond funds, commodities and hedge funds. We also like asset classes that have a lack of correlation. For example, we like to hold Man-AHL Diversified in our portfolio, which trades a whole range of futures. It gives an alternative asset class to anything else, especially equities and property. In itself it is high risk, but it is an extremely useful ingredient in larger portfolios. Q: Are you in close contact with clients and the underlying fund managers? A: We spend much of our working week doing two things: seeing clients and seeing fund managers. We probably see two or three fund managers a week. We do not tend to go to big conferences. We tend to see fund managers one to one. We pick up on themes as early as we possibly can. We have our own ideas, and fund managers either challenge them or back them up. Germany was probably one of those ideas that came from meeting fund managers, as well as reading about Germany ourselves. Although we diversify, we still take views. For our clients we run an ongoing service because we are interested in the long term. We have regular contact with them and regular reviews. How often we speak to them is set out from the beginning and it comes from them. We also have our own valuation system that updates our clients’ valuations weekly. We send out quarterly valuations to our clients, along with a market commentary. Q: What are you overweight or underweight in now? A: We are positive on Germany and positive on gold. We are negative on the American market and the dollar, and also on US and global interest rates. We are also negative on long-only gilts, as we think yields will rise. Q: Has depolarisation affected you or do you remain whole market? A: We are completely open to the whole market. We are not tied to anybody. We hate the idea of anyone controlling anything we do. It is all about investment and value for the client. High commissions are not synonymous with that. We work on a very simple basis. We make a small initial charge to our client, for setting up the fund and doing research, and then we charge an annual management fee of 0.5%. Companies that are multi-tied to a panel of providers are restricted from the wider market. They are squeezing people into funds available, rather than the other way around. Cumberland Place was set up in June 2002. It has about 300 clients, which includes fee-based clients as well as investors. It has just over 80m in assets under management and serves both private and corporate clients. The company consists of three partners, two advisers and five support staff.