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Bespoke Investing in the New Normal

Author: Bruce - ex City Fund Manager and Consultant

Published: 4 Dec 2020

Last Updated: 15 Dec 2020


I have discovered that investing for the grandchildren is an intensely personal thing, coloured by our particular circumstances and experiences.

When in August 2019 it became evident that long held family agricultural land was likely to be given imminent planning permission, I started to look for a wealth manager…

A Bit of Background

I was an institutional fund manager in the City of London in the 1980s and 90s. I had been a pioneer in the adoption of mathematics, so called “quant” or “history based” investing. A natural scientist in a coterie of lawyers, historians, and economists, I was always going to be different. When I left my first investment management job in 1992, disillusioned by the slow adoption of approaches which I arrogantly regarded as obviously superior, I put my money where my mouth was. I invested my pension money in the lowest cost SIPPS I could find, and placing 60% in a UK equities index fund, and 40% in equities covering the rest of world, again indexed. Sure, 100% equities was risky, but I was child of the equities cult and I planned on not touching it until 2020. A 28-year time horizon. 

It is still untouched. No rebalancing, no factor investing, no trend following, no currency hedging, no asset allocation moves. As of writing, it is 49% in the UK, 25% in the USA, 17% Europe ex-UK and 3% in each of Japan, Asia (exc.Japan) and Emerging Markets. 

And I am completely happy with it. It is our money, our future. With the pension fund, we were adequately set up for a modestly comfortable future. Yes, equity heavy, but I was a child of the equities cult and never really understood gilts…

Then out of the blue comes this potential substantial windfall.

The Dilemma

So, I started to look for a wealth manager. It has been a very disappointing experience. I discovered many managers or IFAs or private banks or family offices did not really understand from where I was coming. Their fodder was people who had lots of money, and relatively limited interest in how it was going to be managed. I actually corresponded with or met over 40 names during the Autumn and the first couple of months of 2020 before lockdown.

I knew enough about compound interest and my objectives to know that:

  1. I was likely to live to 96 (the age both my parents died).
  2. I had no great desire to amass wealth only to pay swinging IHT bills on my death.
  3. Given death was likely 30+ years away, it was obvious (wasn’t it) that 100% equity investment was what I needed. (note this was reinforced by recency bias, that my investment experience had all been in the accumulation phase, and that I had not looked at equity valuations since 1997! Nor had I have considered alternative assets, nor had I ever understood nor managed gilts).
  4. I had no great desire to give decision making responsibilities to our children who are in their 30s and otherwise rightly preoccupied, but I wanted to help them with housing.
  5. I wanted to draw a sensible per annum nominal to fund (and modestly ameliorate) our standard of living, leaving my SIPPS tax-efficiently untouched for the next generation, and to give the rest away, either on philanthropic endeavours or as annual gifts under the 7-year IHT rules to our children.
  6. This implied a withdrawal rate of 3.3% - below the oft bandied about 4% used by pensions advisors and FIRE proponents. 
  7. I was flexible – I did not need an absolute sum each year and would take less if the markets were unkind to me – aiming at that magic 3.3% overall each year.
  8. Income Tax was relatively simple – given my likely investment approach, and low or zero other income, I was unlikely to pay much tax on either dividend.
  9. I would push money down the generations in stakeholder pensions where I could (non-earning children and definitely the grandchildren) but I disliked the 18-year-old vesting power embedded in JISAs. This meant there would be no “rich kid” (or “rich grandkid”) syndrome.
  10. This left CGT as the investments grew, and IHT on my/our demise, and I knew I needed help with both of these, especially as it is likely the Chancellor will abolish CGT uplift on death.

I thought the above list to be a reasonable and pretty comprehensive job specification for my future partner in wealth management… 

So… expanding my thinking…

Bonds (GILTs)

While I understand equities and equity derivatives intimately, I have scant acquaintance with bonds of any type, which is I am sure an embedded weakness. However, not regarding myself as an expert, placing 25% in an asset class with complexities which I don’t fully understand, and which as many analysts point out is unlikely to generate significant return over the next decade, seems inherently unwise.


I came from the cult of the equity markets throughout my investment career from 1979 to the present, so recency bias is very, very strong. The 60/40 equity/bond institutional model was how I grew up. It has to be recognised that I grew into a gross return accumulation, long horizon world (especially sovereign wealth funds) where my job was seeking performance each year pretty much regardless of even 15% risk.

I did learn early on that 60% UK and 35% ROW and 5% Emerging was a sensible norm for UK pension funds and colleges. Managing my own portfolio from 1992 and with a 2020 horizon, the idea of holding gilts held no attractions. I ran a 100% global equity portfolio with that domestic market bias on a fire-and-forget basis. No turnover, no rebalancing, no attention to monthly valuations even through 2007-2009. I have no regrets.

However, it was our money. 

Suddenly in 2019 an additional huge sum appears on the horizon. And that is my grandchildren’s money (as well as some of it being ours)! My first though was to continue to run a 100% equity portfolio, but then through my research I discovered the reality behind decumulation and sequence risk. The fact that I could decimate the wealth with 15% risk portfolio in the initial years before any cushion had built up quite simply scared me. 

Credit: Ahmad Ardity from Pixabay

 However, I also realised that there was a real risk of withdrawing relatively little and thus the wealth exponentiating and my ending up with a huge fund on my death (both parents lived to 96) which rather missed the point of my next possibly 33 years of existence (one third of my lifespan!).

My new monies therefore had to be managed with lower risk than 15% to avoid sequence risk, at least for the first few years. So, 100% equities WAS too risky.

Death of the Equity Cult

Very early on in my research, I asked an older (wiser?) ex-boss of mine who was retired, to whom should I go and talk. He told me Arno Kitts was the sharpest, brightest and most scary dude in the field in the UK.

Arno is in a bear phase on equities and is a macro investor, an active asset allocator. Everything about Arno is unlike me. He believes in economics, valuations; can, I suspect, read a balance sheet, and is tolerant of compliance manuals. He has formal qualifications in fields outside of stochastic mechanics and diffusion equations, although he is a mathematician by degree. He is a highly systematic big thinker, strongly mathematical, but he believes passionately in active asset allocation and market timing. He is an aggressive manager, and seeks out the types of opportunities I would not understand and do not have the tools (nor interest) to evaluate (and has the contacts and money behind him to do so). And he has access to private investment opportunities that I don’t.

Yes, we are similar in some areas – the ones that matter. But he is supremely and strongly opposed to my views of the pointlessness of economics and valuations. That seems to make him an ideal foil to all my thinking.

I have talked to 40+ names when I look at my Outlook. Fund managers, advisors, IFAs, wealth offices, FinTwit contributors. From UK, USA, Canada, Germany, Singapore; old school wealth managers in buying me pints in New Forest Pubs (pre-COVID), or meeting me at Agricultural Shows. Earnest 55+ year olds in tiny offices in the Home Counties, with the modern equivalent of Reuters screens, picking stocks based on broker research. A scary Dr. Strangelove in a high-tech office talking about “vairey, vairey systematic” with little humour. Young men and women spouting the 60/40 equity/bond “lifestyle” ETF gospel on YouTube. Academics from a UK university believing they had discovered trend-following for the first time. Super bright Canadians who believed machine learning could predict asset returns…. but did not grasp UK regulatory implications.

As the negotiations to sell the fields progressed slowly through the latter half of 2019 and pre-COVID 2020, Arno was there in the background throwing water bombs and my latest and brightest ideas. But as COVID gripped and lockdown started, and I was increasingly doing Zoom epidemiological translations for policymakers, Arno came into his own with humanity, wisdom, interest, insights, excellent research pointers and tirelessly polite answers to my naïve questions.

And I slowly stopped believing in Equities as the panacea – where the only question was how big was your risk appetite; what was the maximum percentage could you afford to own safely?

Harry Browne

Enter the Permanent Portfolio: totally passive, totally agnostic about future asset price returns.

I borrowed unashamedly from Harry Browne and the Permanent Portfolio. My starting point was a wholly sceptical view of the predictability of the future and of market timing or active asset management. His all-weather approach of 25% each of equities, bonds, gold and cash greatly appealed.

I decided to modify this approach to reflect my UK domicile, my aversion to bonds in an environment of close to zero percent long term yield, and a belief in a degree of added diversification by including foreign equities. 


As I looked at moderate volatility asset allocations, and went through a path of being enamoured with risk parity, the Permanent Portfolio kept rearing its head as attractive. Certainly, mixing gold into the traditional mixes improved drawdowns (reduced sequence risk).

Then came COVID Armageddon – and I realised that on a 30-year horizon, gold was at least superficially rather comforting. A medium of wealth which could be physically and easily be passed onto the grandchildren…. 

I then discovered that buying UK coins of the realm (Sovereigns or Britannias) was CGT free and easily storable and transportable. During COVID lockdown this weighed somewhat heavily on my thinking.

I also discovered the security advantages of Switzerland, and learned about allocation and segregation. 

2021 Gold Britannia

Death of GILTs

As I was doing time series analysis with a bright young engineer from Belfast to occupy ourselves during lockdown, I progressively realised that Arno’s fund Perspective Investments fulfilled many of the requirements which Government Bonds fulfilled in the original Permanent Portfolio. So, my gut but previously ill-formed, desire to give Arno some money started to take on a more concrete form.


Anything approaching the Permanent portfolio would have large amounts of cash. Anyway, any financial planner I talked to wanted two (or even 5) years of projected outgoings in cash – which they placed outside the investment portfolio and conveniently ignored in their 60/40 or 70/30 equity/bonds allocation.

I had long been intrigued by P2P lending especially to small individuals. Research led me to experienced advisors who were making 12% after fees on Euro deposits by lending through platforms to companies which, in turn, micro lend to eastern European individuals and even to local Pakistanis and Filipinos!

Very attractive – until you realised that in a developing market's COVID devastation, this might not work. To say nothing about management / corruption risk at the platform / lending company level.

Another bright idea bit the dust. 

Four-Legged Stool

So now we are four…. Equities, Perspective, Gold, Cash.

Equities was largely dealt with in my SIPPS which for now I decided to leave untouched. But I needed slightly more in equities and I was overweight US and UK in my SIPPS. Enter four investments in spread betting: fully funded equity futures indices on the IG platform in Swiss, Singapore, Germany and Japan. Simple. And CGT free!

Perspective was around 35%.

For gold, I ended up talking to a number of brokers / dealers and discovered that London was expensive and only proffered what I asked for, and that Blackpool has better prices and came up with an elegant and cheaper alternative! I also decided to add a modest silver position as a diversifier, and found that silver could be bought VAT free in Germany and shipped to Blackpool. So, my physical precious metals portfolio has ended up for now in storage in Blackpool!

But gold led me to commodities and I decided to diversify by doing another exercise with IG – six synthetic commodities positions using commodities futures (oil, gas, copper, wheat, coffee, sugar). Again, CGT free.

And cash is so… boring…


I have long regarded Crypto with deep suspicion. But boredom and a need for intrigue to take my mind off the glacial progression (or lack of it) on the fields sale during the summer of 2020 has made me look at the technology and the (proto-) asset class. I had convinced myself that for technical reasons that Bitcoin was going to rise in value long term (along with ETH, its smaller pretender to become Crypto king).

Nonetheless if I am looking for the realistic possibility of 100% appreciation in five years, only Bitcoin (and possibly ETH) and gold could do it.

So, I taught myself how to purchase (Kraken), store off line in cold storage (Ledger) and protect and store my keys (Cryptosteel).

I like the idea of having a substantial sum safely offline in a little USB stick which I can pass to the next generation! It appeals for many of the same reasons as gold. 

Current Portfolio

My current portfolio introduces precious metal and cryptocurrency both of which I had not touched in my professional work.

Asset Allocation

Now we are invested.

Money arrived in September. I don’t have a conventional wealth manager. I am much more DIY (except for Perspective) than I had hoped. Why?

Because the conventional industry could not in reality get their heads around my requirements and the “New Normal”. 

My current allocation is in the table and the sharpest readers will notice I have bought some fine art. Who said wealth management couldn’t be fun?

And crypto has performed vertically – but most of that in the last three weeks

Asset Weight
Perspective Investments 28%
Equities 20%
Precious Metals & Commodities 15%
Commodities 3%
Cryptocurrency 10%
Cash 8%
UK Property 15%
Fine Art 1%

YouTube Discussion

For those interested you can watch and listen Lawrence, Bruce and Ian discuss this investment strategy and multi asset approach in 2020:

Anyone with questions or a desire for other content may contribute in the comments for future videos. 

More Information

Kraken Bitcoin and Crypto Exchange - https://www.kraken.com/en-gb/

IG Trading - https://www.ig.com/uk

Perspective Investments - https://www.perspectiveinvestments.com

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