Metcalfe, who is investment director at the research firm, says it is important his interests are aligned with those of his clients and he therefore puts all of his savings into his own model portfolios that are used by IFAs.
He says that, as his retirement is still a long way off, he wants his ISA to be in the portfolio that prioritises capital growth the most.
“This is our highest risk portfolio and so it’s all about cooking what we are eating,” Metcalfe (picture) said.
“I’m 48 now, so I don’t know how many years I’m looking at [before I retire]. Despite that, I don’t want to be 100 per cent in equities and that is just because I’m not that comfortable taking that amount of risk.”
“These are all reasons I give to clients and any changes we make to the portfolios are with them in mind.”
The portfolio comprises 34 funds and Metcalfe says that no fund will ever make up more than 4 per cent.
Here are some of his largest individual weightings.
Source: IBOSS
Metcalfe has told FE Trustnet in the past about certain themes that he and his team use at IBOSS. One is that they avoid giant funds as they believe a fund’s performance will be affected by a growing AUM.
The largest portfolios he uses are the Jupiter European fund at £2.4bn and the Threadneedle European Select fund at £2.1bn.
This can also be seen with his weightings to UK funds.
He uses primarily large-cap equity funds such as JOHCM UK Opportunities, Jupiter UK Special Situations, Liontrust UK Special Situations and Standard Life UK Equity Unconstrained for exposure to the FTSE 100.
All four have been top quartile performers in the IMA UK All Companies sector and have beaten the FTSE All Share over the seven years.
Performance of funds vs sector and index over 7yrs
Source: FE Analytics
However, given that the outlook for smaller companies still looks uncertain with generally weak sentiment and the prospect of higher interest rates in the UK, he doesn’t want to make a call on an IMA UK Smaller Companies fund.
As he has told FE Trustnet in the past, he uses genuine all-cap managers instead which he hopes will be able to find pockets of value in the FTSE 250, Small Cap and AIM indices.
For that exposure, he uses FE Alpha Manager Andrew Jackson’s Ecclesiastical UK Equity Growth fund, SVM UK Growth and Franklin UK Managers’ Focus which, combined, make up 10 per cent of his savings portfolio.
Outside of the UK, his other regional equity funds include Jupiter European, Baillie Gifford European and Threadneedle European Select.
Metcalfe added: “We only use the one US fund, however, which is Franklin US Opportunities.”
The reason for that, Metcalfe says, is because he and his team find it very difficult to identify managers who have consistently outperformed in the IMA North America sector.
A recent FE Trustnet study highlighted that only 25 per cent of funds had managed to beat the S&P 500 over the last five years.
Nevertheless, Metcalfe wants exposure to the US and therefore uses a collection of global funds, which tend to have a high weighting to that part of the market due to the benchmarks they use.
The funds he uses are Old Mutual Global Equity, Invesco Perpetual Global Equity Income, Standard Life Global Equity Unconstrained, SVM World Equity and Threadneedle Global Equity Income.
Emerging markets also make up a significant portion of Metcalfe’s ISA.
He uses Invesco Perpetual Pacific, Baillie Gifford Developed Pacific and Schroder Asian Alpha Plus from the IMA Asia Pacific ex Japan sector and takes more tactical exposure for his global emerging markets weighting.
For instance, he uses FE Alpha Manager Ed Lam’s five crown-rated Somerset Emerging Markets Dividend Growth fund – which has comfortably outperformed its sector and benchmark since launch in March 2010 – because the fund group specialises in that area of the market.
“Emerging markets is what they do and if they underperform, we know that it isn’t down to a lack of concentration,” Metcalfe said.
He then uses FE Alpha Manager Nick Price’s Fidelity Emerging Europe Middle East & Africa as he wants exposure to the highest growth areas. However, he points out that this fund has struggled recently.
“One of my worst performing funds recently has been Fidelity Emerging Europe Middle East and Africa, but I don’t think you need to be rocket scientist to work out why.”
According to FE Analytics, the five crown-rated fund has lost 8.71 per cent over the past 12 months with the tensions between Ukraine and Russia, along with growing instability in the Middle East, weighing on performance.
However, it has still outperformed its MSCI EM EMEA benchmark over that time.
Performance of fund vs index over 1yr
Source: FE Analytics
The fund has also comfortably beaten the index since its launch in January 2008 with returns of 38.40 per cent. Its benchmark has lost money over that period.
Another of his funds which has struggled recently has been FE Alpha Manager Stewart Cowley’s Old Mutual Global Strategic Bond.
Metcalfe is quite bearish on bonds and only uses Cowley’s fund, PFS TwentyFour Dynamic Bond and Baillie Gifford Corporate Bond for his traditional fixed income exposure.
However, while the Baillie Gifford fund has performed well for him because the managers are quite long-duration, Cowley’s portfolio has struggled because he has been preparing for higher yields in the bond market; an event which hasn’t happened this year.
Performance of fund vs sector in 2014
Source: FE Analytics
The £652m fund has lost money year-to-date, but Metcalfe isn’t going to be getting rid of it.
“We have had a number of meetings with Stewart Cowley and we know how the portfolio is set up,” Metcalfe said.
“They have been short duration for a while and it just hasn’t happened yet. Cowley isn’t alone in making this decision and he likes to run a high conviction fund, but he is going to need yields to normalise – which we expect will happen.”
Metcalfe also uses alternative strategies within his fixed income allocation.
These include niche bond funds such as M&G Short Dated Corporate Bond, M&G UK Inflation-Linked Corporate Bond, Insight Absolute Insight and even the Henderson Money Market fund.
The other alternative asset class he has exposure to is property. Most of the four funds he uses are property shares funds, though HSBC Open Global Property invests in bricks and mortar funds as well.
