With Christmas just around the corner, January 2018 is looming on the horizon. One of our discretionary partners, Vertem Asset Management, is already preparing for change in the coming new year. In this article John Dance, CEO, talks us through a campaign Vertem will launch in January where they will begin to market themselves as ‘very different stockbrokers’. He explains why he feels that a lot of clients have been let down by the larger investment houses when it comes to their stock portfolios and sheds light on the breadth of stock research Vertem do as a boutique DFM and how this can benefit advisers and their clients.

New year, new start

The New Year is often a time of change, a time of new starts, of resolutions and for us lucky participants in the finance sector a change in regulatory requirements. Yes, 3rd January sees the introduction of MiFID II and all that goes with it. But thankfully this isn’t another MiFID II related article.

For Vertem though, the New Year also sees the launch of a new service directly to private clients and whilst you may be wondering why we would DISCUSs this here, the background to the answer is meaningful in explaining part of our USP for adviser offerings.

Vertem: very different stockbrokers

During the first quarter of next year we will be launching our “Vertem: Very Different Stockbrokers” marketing campaign and introducing a stockbroking service to direct clients. We have long been aware that there is a large number of investors who feel somewhat trapped at the larger firms, who no longer offer either the ideas or investment service these clients are either used to, or more importantly that they desire.

Although we don’t offer any financial planning advice, attracting them without looking like we were treading on the toes of our introducers was always a challenge. By focusing our campaign on ‘stockbroking’ as opposed to a more wide-ranging investment campaign we are targeting a specific part of the market, whose interests lie in stocks and who wouldn’t ordinarily be able to be serviced by the adviser market. With any luck we may in fact be able to generate referrals on to our adviser contacts!

What makes Vertem a ‘very different stockbroker’?

First, it is the breadth of coverage our analysts, all based in our Newcastle office, conduct across the UK market. At any given time, the team are analysing a fluid list of over 500 UK listed companies, the contents of which (aside from the FTSE 350) will change from time to time based upon our interest in the companies themselves and the share price potentially generated via our own proprietary valuation system. This is already a huge advantage over many larger investment houses whose coverage has shrunk in recent years and most will often only cover around 100 different names, almost always through the most liquid and over researched stocks available.

Herein lies the other ‘difference’ at Vertem – we can invest in companies of any size, whether £100bn market cap giants or £50m newcomers. A client’s original investment of £10,000 into Sage when it first floated on the stock market with a market cap of £20m would now be worth £4m, and whilst others may be willing to miss out on these opportunities in the future we are very keen not to.

Aside from the potential for enhanced performance, or the extra interest some clients gain by being invested in stocks rather than funds, the reason direct stock research is so fundamental in our process are the benefits we believe are gained in managing all portfolios, including multi asset portfolios introduced by adviser firms. Knowledge of stocks and therefore the underlying holdings within a fund manager’s portfolio allow us to make more educated due diligence and rationalise whether past performance can be repeated in the future. Interrogating company accounts allow us to spot vital information in assisting our asset allocation process, such as identifying which global geographies are accelerating or decelerating economically, whether property disposals are being made above or below book value or sectors and services that may be struggling or thriving.

This adds less subjective inputs to increasing or decreasing geographic equity weightings, commercial property exposure and even fixed income and alternatives content. Additionally, by having a strong valuation and target price discipline we can use the number of stocks with upside in our coverage as a gauge for whether we should be buying the market as a whole.

Stockbroking and stock research is a narrow part of the universe, but the benefits for performance and overall portfolio management are considerably wider.


This post was created for the DISCUS website by John Dance of Vertem Asset Management. You can find out more about Vertem’s investment services here ›