Last updated on January 9, 2022
Rathbone Funds Review – is this a good option? That will be the topic of today’s article.
Rathbone is a UK listed company on the FTSE250, and their funds are widely sold in the expat market as well, through platforms such as Novia.
This article will review the option. If you have a Rathbone connected policy, or have been proposed one and want a second opinion, you can contact me on the chat function below or via email@example.com.
In general there are better options available, especially in the expat market.
Table of Contents
What are the costs?
The costs will partly depend on how you gain access to these funds. If you access them in the expat market, you are likely to pay fees such as:
- Advisor management fees – 1%+ a year
- Commissions – 0%-5%
- Platform fees – 0.2%-1.5% per year
- Rathbone fees – more on that below
Added together, these fees can be substantial and will compound. In terms of Rathbone’s fees, they have a sliding scale.
For accounts above 1.5M the fees are just 0.5% per year. On smaller accounts, the fees are lower, with 1.2% charged on the first 250,000GBP.
What are some examples of Rathbone funds?
The Rathbone Global Opportunities is a great example of one of their options.
This fund seeks options which are off the beaten track in the global market. This has been one of their better performing funds in recent times.
In comparison, their Ethical Bond fund, aims to give investors a steady return, whilst investing in “ethical” projects.
How about some of their recent underperforming funds?
Some of the worse performing funds have been:
- Rathbone UK opportunities – it is no secret that the UK market hasn’t done great compared to their US counterpart in the last decade or two, but this fund hasn’t done much better.
- Rathbone Strategic Bond – This bond also focuses on British Pound investments in the bond market. The weakness in bond returns hasn’t helped this fund.
- Rathbone Total Return Portfolio – this fund has regularly underperformed the sector.
What are the options available to investors in terms of portfolio types?
For expat investors, the options are usually sold together with other platforms.
If you go to Rathbone directly, you can get access to multi-asset portfolio if you have 1,000GBP or more to invest.
If you have 100,000GBP or more to invest, you have additional options at your disposal.
They also offer Discretionary Fund Managers (DFMs) from 500,000GBP.
So alongside lower fees, they have enhanced service levels for larger account holders.
What are the benefits of this option?
The main benefits are:
- This is a “secure” option in the UK. In reality, though most options are now regulated.
- The account minimums are low. This makes this a decent option for beginner investors that can’t get access to cheaper, and better, investment options.
- Some of Rathbone’s funds have done very well recently, such as one of the ethical funds. With that being said, today’s winners can be tomorrow’s losers. Historically, some of Rathbone’s best performing funds, have ended up losing to the market in recent years. So past performance really isn’t an indication of future returns in this case. This is often the case in the investing world.
- Numerous currencies are available, such as GBP, USD and Euros.
What are the drawbacks of this option?
The main drawbacks associated with this option is:
- Sold in conjunction with some of the expensive expat products mentioned in the article at the bottom of this page, this can indirectly become an expensive option.
- Size isn’t always great. It is true to suggest they have assets under management of £40 billion +, but that isn’t always a great sign. Many larger firms see clients as a number and rely on their size. Boutique providers can often give higher net wealth clients more care.
- You are unlikely to beat the market with this option.
- They don’t have a comprehensive high net wealth solution despite the DFM option.
- Your mileage will vary in two ways. Firstly, some of Rathbone’s funds are much better than others. Second, your advisor’s decisions will affect your returns, especially in a mixed portfolio, where Rathbone is just one component. This is especially relevant in the expat market.
- It is highly unlikely, that in a world of open information, that the research team at Rathbone, will be able to continuously pick out great undervalued “global opportunities”
- Many “ethical funds” and bonds, are very subjective. To person A, what is ethical, might be different to person B. So some of these ethical bond funds should be taken with a pinch of salt. Besides, it is usually better not to mix investing with morals. One of the advantages of index funds is that you aren’t taking a moral position. In other words, you are buying the haystack, and not the needle. That haystack might include oil firms on the FTSE100, or big healthcare stocks, but this approach reduces risk compared to investing in a niche area like ethical companies.
- Some of the online reviews from customers is very hit and miss, and indeed the advisory firms that are selling this fund option. That is normal – you can’t make everybody happy all at once. What seems very clear though, is again “your mileage varies”.
- Many of the investment platforms that accept this option, have many restrictions based on clients, living in certain places. In other words, if you live in Switzerland or Dubai, you are likely to be accepted. If you are working in oil & gas, in a far flung location, you are less likely to be accepted.
There are significant differences between investing in this option through a UK provider, and as an expat living overseas.
Rathbone isn’t a bad company but far better options exist, especially in the expat market, for both small and high net worth investors.
They aren’t a terrible option if you have a small percentage of a portfolio in their funds.
I am the most viewed writer in the world on Quora.com for personal finance and investing, with over 221 million views to date.
In the article below I list some of my answer views from the platform.
Here is a preview
Realistically, you can avoid most of the pitfalls of investing by:
- Reading and implementing
- Delegating to somebody who knows what they are doing
What is the biggest reasons why investors, newbies and even experts fail?
Lack of knowledge? Lack of ideas? No! Lack of implementation, especially during the bad periods. Emotional control is difficult in those periods.
Let me make a comparison for you. If you go to medical school and study nutrition in your spare time, it doesn’t guarantee success in terms of weight and health.
Only self-control can do that. That self-control gets harder after bad life events such as divorce, depression and losing your job.
That’s why even some doctors hire a personal trainer, for the emotional support:
In investing too, many more people these days know the basics because of the internet.
However, what usually happens is people don’t follow through. Like a person going to the gym who makes New Years Resolution and briefly feels motivated on January 1, many people start investing but then get into bad habits.
I can’t tell you how many people have told me that they have done things which they know, deep down, are silly.
Things like selling stocks during a crash, speculating on 1–2 individual stocks and so on.
So what I would do is read if you have time. Don’t just read pure investing books though.
Those books only focus on investing knowledge. Read some “behavioural finance” books as well like these ones:
If you start investing for yourself, watch yourself carefully during the first stock market crash.
Do you panic or stay calm? If you stay calm, maybe you have the emotional stability needed to invest by yourself.
If you panic you either shouldn’t be investing in the first place, or you need to delegate your investments to somebody that can help you.
Everybody says they won’t panic during a crash, but look at what happened in March.
Some early reports by companies have suggested as many as 30% of people sold out within a month in March and April! It is silly decisions like that which you want to avoid.
So if you want a step by step guide I would:
- Read if you have time. If you don’t have time delegate.
- After reading, ask yourself some questions honestly, such as “am I really emotionally ready for seeing big stock market swings”. If the answer is yes, try investing yourself. If no, try another route.
- Actually observe your own behaviour from an unemotional point of view once you start investing. See how you react to huge swings.
In terms of the don’t….
- Don’t assume you can predict when a bear market will come and go, and how long it will last. Look at the last 12 years as a great example. Most people didn’t expect markets to recover from 2008–2009 so quickly. Almost “everybody” didn’t see the huge falls of March coming. Even fewer saw the big increases after that slump.
- Assume that a bear market is a bad time to invest. It isn’t. It is a great time to invest if you are a long-term investors as you are buying units at cheaper prices. Imagine how much money you could have made if you were an investor in the 1930s………10 years of cheap valuations.
- Don’t panic if a bear market starts. They are a part of investing. If you invest for your whole life, which is recommended, you will face 5–10 bear markets most likely. Look at the last 50 years. So many bear markets yet a buy and hold investor has done well
- Listen to the media. If they could accurately predict these things they would be too busy making money from timing the market. Study after study has shown that stock market gurus that come on TV can’t help you beat the market.
- Fail to reinvest your dividends and be diversified into both stocks and bonds.
- Assume that a bear market is more likely to happen in a country with weak GDP. The Shanghai Stock Market has had one of the biggest bear markets in the world since 2006, but growth has been good in China.
- Following on from number 6, don’t assume there is any correlation between GDP and markets, or markets and most variables. That is one of the reasons why it is almost impossible to time the markets long-term.
- Forget history. Every time, whenever there is a bear market, we will hear this old chestnut which is nonsense.
That doesn’t mean that we can predict how long a bear market will last based on history.
I am merely saying be sceptical of anybody who comes out with this statement. It was said in the 1930s, oil hitting $8 in the 1970s, after 9/11, in 2008, after the lockdown etc.
9. Forget that almost anybody who has gotten rich investing has done it with a patient approach.
10. Forget the basics. Remember things like how much you invest and for how long is more important than short-term investment returns. Yet few people worry about their spending habits or how long they will invest for, even though these things indirectly affect total returns a lot. Investor A that invests $1,000 a month for 40 years, getting 6% per year (4% lower than the average for the S&P500 and Dow Jones) will still do better than Investor B who invests just $500 a month for 15 years, getting 13% a year for that shorter time period.
So basically, don’t be afraid of bear markets or think you can predict when they will come and go.
Therefore, that leads me to the dos’. Do keep investing every month, into both stock and bond market indexes.
Do rebalance from the winnings and losers every year. Do completely ignore anybody claiming they can predict when bear (or bull) markets will start and end.
So the fundamentals of good, long-term, investing stay the same through bull and bear markets.
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