In this article, we cover the following questions:
- What exactly is an investment plan?
- How is my investment plan executed?
- How can I adjust my investment plan?
- Why are all my goals integrated into a single investment plan?
- What is a risk profile?
- What is the feasibility of my goal and how does it come about?
- SaxoWealthCare advises you: 'action advised'. What does that mean?
- SaxoWealthCare advises you: 'action necessary'. What does that mean?
- My investment plan is 'on track'. What does this mean?
- My investment plan 'needs attention'. What does this mean?
- What kind of investment instruments does SaxoWealthCare invest my money in?
- How are my equity investments managed?
- How are bond investments managed?
- How sustainably does SaxoWealthCare manage my investments?
What exactly is an investment plan?
An investment plan is a link between your goals and financial needs and the portfolio required to achieve them. Think of it as the roadmap for how your money should be invested. Investment plans can be difficult to build but with SaxoWealthCare we make it easy.
Before SaxoWealthCare builds a plan for you, we need to know more about you. Using a simple digital app we help to understand:
- Your financial goals and ambitions
- Your knowledge of and experience with investing
- Your investment preferences
- Your attitude towards risk and how you feel about losing money
- Your financial situation
The above information lets up build a customised plan just for you. Once you confirm and invest in your plan, SaxoWealthCare keeps an eye on your progress and makes any changes to help keep you on track. We ensure that your investments are monitored, adjusted and reinvested.
How is my investment plan executed?
Your investment starts with your investment plan. Within the plan, SaxoWealthCare will determine the asset allocation and investment selection that best fits your needs.
Once you accept the plan and begin funding SaxoWealthCare will invest your funds across a range of ETFs to capture opportunities and diversify. We do this in partnership with leading Asset Managers. Saxo implements all your initial trades for you and shows the results of your portfolio daily on the SaxoWealthCare platform. You can even see how close you are tracking to your goals.
As you add more funds, either regularly or as a one-off, Saxo will invest these new funds with a view to keeping your portfolio aligned to your future goals.
SaxoWealthCare monitors your portfolio daily and automatically keeps it in balance, even when you are not adding new funds. Trades can occur daily but are only triggered when required.
Even the way SaxoWealthCare implements your trades is different to other digital wealth managers and robo-advisors. While others may rely totally on investments from asset managers Saxo is able to offer a more directly invested portfolio. Rather than just buying an ‘off the shelf’ investment from an asset manager, Saxo works cooperatively with these managers for your benefit. Saxo receives IP (intellectual property) in the form of trade signals which are then used to buy and sell on your behalf. This means that when you invest in SaxoWealthCare you are directly invested in the underlying ETFs - no middlemen involved. It also means that SaxoWealthCare can continue to adjust your portfolio to target your goals without the constraints of a third-party asset manager.
While Saxo conducts trades on your behalf you don't pay any brokerage; all these costs are managed for you as part of our SaxoWealthCare management fee.
What Investment Strategies does SaxoWealthCare use?
SaxoWealthCare does not use just one investment strategy as it seeks to cater for different types of investors with different needs, goals and preferences.
For investors with a long-term investment horizon and no defined goals beyond wealth accumulation, SaxoWealthCare will employ Fixed Mix as your investment strategy.
Fixed mix allocates your investment portfolio based on a selection of risk profile-based portfolios with varying allocations to equity ETFs and bond ETFs. Each available risk profile consists of a different fixed mix, and thus has a different risk distribution and expected return.
For investors with varying allocations to equity ETFs and bond ETFs, each available risk profile consists of a different fixed mix, and thus has a different risk distribution and expected return.
When an investor identifies their goals using SaxoWealthCare we know these are very precious to them and we want to maximise the chance they are achieved. In addition to employing a risk profile based portfolio approach, similar to the Fixed Mix model, SaxoWealthCare also implements Risk Reduction as an investor approaches their goal. This ensures that if the markets experience wild swings or heavy falls just before the goal is expected to be achieved then the impact of these market moves on the goal achievement is minimised. In short, we reduce your risk as you get close to your goal.
If in addition to having clear goals the investor also shows a heightened sensitivity to losses then SaxoWealthCare automatically offers a Portfolio Protector solution. Portfolio Protector monitors your portfolio in relation to the market and when the market is showing signs of significant losses the solution reduces the allocation of ‘risk on’ assets in the portfolio, moving these funds to ‘risk-off’ assets. This has the effect of limiting losses versus the market but it will also reduce the potential gains achieved when and if the market rebounds. As market conditions normalise the portfolio moves back to a ‘non-protected’ allocation.
For investors that are identified as loss averse but do not identify clear and significant goals, SaxoWealthCare will implement a combination of risk-profile-based investment along with Portfolio Protector (should the investor choose to implement the solution).
In short, SaxoWealthCare uses four different investment strategies, these are automatically selected for the best fit of each investor and result in a minimum of 40 different starting portfolios, each of which then is customised over time. In the end, every investor will have a portfolio that is customised and suited to them.
How can I adjust my investment plan?
Time does not stand still. And of course, your goals and wishes can change over time. In SaxoWealthCare, you can easily change your investment plan at any time by logging into SaxoWealthCare and selecting Update Plan.
You can then go on to change your goals and objectives, investment and risk preferences or financial situation. You will receive an updated plan proposal for approval. When you approve your updated plan proposal, we will update your portfolio within a few days.
Why are all my goals integrated into a single investment plan?
SaxoWealthCare brings all your goals together in one account. By including multiple goals in one investment plan, the feasibility of all your goals is increased as Saxo can develop a portfolio that is optimised for all your goals and more efficient than individual portfolios for each goal. Read more here.
What is a risk profile?
Your risk profile is a representation of your attitude towards risk and the likelihood of losing money. The risk profile is important in determining the initial distribution between equity and bond ETFs in your portfolio. In general, the more risk you take, the more chance you have of a higher return. Of course, it also applies that with a higher risk you are more likely to experience negative returns and losses.
What is the feasibility of my goal and how is it determined?
The feasibility of your goal is the probability that you achieve the goals that you have set out in your investment plan. To test the feasibility, we simulate 1,000 scenarios based on your current situation, contribution and future expected distribution between shares and bonds.
Using these scenarios, we manage your assets, distinguishing between scenarios that have a greater chance and scenarios that have a smaller chance of coming true - both in a positive and a negative sense.
After creating these scenarios, we check how many scenarios you will achieve your goals, taking into account the importance you have assigned to each goal. The more important the goal to the investor the more scenarios we ensure meet or exceed the feasibility.
SaxoWealthCare advises you: 'action advised'. What does that mean?
The feasibility of your goal is the probability that you achieve the goals that you have set out in your investment plan. To test the feasibility, we simulate 1,000 scenarios based on your current situation and the future distribution of returns and risk between shares and bonds.
If "action is advised," it means that the chances of achieving your goal are lower than the desired level for the importance of your goal and your goals may no longer be achievable.
It is recommended that you make the necessary changes to your investment plan so that your investment plan becomes feasible again. If you want to read more about how to change your investment plan, click here.
SaxoWealthCare advises you: 'action necessary'. What does that mean?
The feasibility of your goal is the probability that you achieve the goals that you have set out in your investment plan. To test the feasibility, we simulate 1,000 scenarios based on your current and future distribution between shares and bonds.
If 'action necessary' is advised, it means that the chances of achieving your goal are too small. In this case, we ask you to adjust your investment plan, contribution, time horizon or the goal itself so that your investment plan becomes feasible again. If you want to read more about how to change your investment plan, click here.
My investment plan is 'on track'. What does this mean?
The feasibility of your goal is the probability that you achieve the goals that you have set out in your investment plan. To test the feasibility, we simulate 1,000 scenarios based on your current and future distribution between shares and bonds.
If your investment plan is on track, it means that the chance of achieving your goals is high enough to feel a level of confidence. No action is needed right now and you can continue your investment in its current form.
My investment plan 'needs attention'. What does this mean?
If your investment plan needs attention, you will be asked to go through the questionnaire again because the investment plan may be out of date or need a refresh. You will be notified by email when it's time to update your investment plan.
We ask you to update your investment plan at least once a year. The process is quick and easy. If your goals, risk attitude, investment preferences and financial situation have not changed, you can easily confirm your previous answers for each section and approve your updated investment plan.
What kind of investment instruments does SaxoWealthCare invest my money in?
Your funds are invested in Exchange Traded Funds (ETFs). These listed funds aim to closely monitor the performance of a basket of shares or bonds. In addition, our asset management partners have the opportunity to respond to opportunities or threats in the market by adjusting the allocation within the equity ETF portfolio. Our partners will work on your behalf with the aim of achieving better returns where possible and limiting risks if necessary. At every stage, your investment preferences are guiding this process.
Saxo has chosen to use ETFs for your portfolio as they:
- are publicly traded
- combine the benefits of stocks and bonds with those of a mutual fund.
- are competitively priced
- are tradeable on a daily basis which offers excellent liquidity
- are transparent with no hidden fees or performance charges
How are my equity investments managed?
Your equity portfolio is constructed using ETFs that invest in companies with a better sustainability profile than their peers in the broad stock market. In practice, your equity portfolio aims for an ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) rating of at least A on a scale from CCC (lowest rating) to AAA (highest rating).
SaxoWealthCare provides you with the opportunity to select an equity style that you feel is most appropriate for you. You can read more about the equity styles available here.
You can choose from three options:
| Equity Style | Description | Rebalance Frequency |
| Global Growth | Ideal for growth investing with an international focus. Our Global Growth equity style benefits from analysis of market megatrends and themes while ensuring you take advantage of opportunities across global markets. | Monthly |
| Asian Growth |
Ideal for investing with a clear focus on Asian equities. Our Asian Growth equity style provides an easy way to invest in growing companies around the world, with a higher percentage than usual drawn from Asian markets. |
Monthly |
| Sustainable Growth |
Ideal for growth, while letting you make an impact with your investing, our Sustainable Growth portfolio keeps your investments focused on the future by investing only in companies with the highest sustainability ratings. This style has an above average AAESG rating. |
Monthly |
How are bond investments managed?
Your bond portfolio is invested in the global government and corporate bond ETFs. The bond portfolio is intended to strive for more stable returns than an equity portfolio can usually give. This can therefore result in more stable, but also lower returns than investing in shares.
How sustainably does SaxoWealthCare manage my investments?
SaxoWealthCare invests in ETFs; listed investment funds that aim to efficiently track the overall market. SaxoWealthCare invests your assets sustainably (ESG A) as standard. All our portfolios have a higher ESG rating than the general stock market. ESG stands for Environmental, Social and Governance.
For investors that seek a more sustainable portfolio than that of our standard portfolio, we provide that option in SaxoWealthCare. You can find out more about the more sustainable portfolio here.