Funds in Focus – Where to invest?

Aberdeen Standard European Smaller Companies Fund

For our Fund In Focus we are looking at the Aberdeen Standard European Smaller Companies Fund (previously the Standard Life European Smaller Companies Fund before the merger of Standard Life Investment Managers and Aberdeen Asset Management).

The European Smaller Companies Fund aims to provide long term growth by actively investing in the shares of smaller companies listed on European stock markets, including the UK.  The fund was launched in 2007 and has built an exceptionally strong outperformance record since then. Current assets under management are valued at €719m. It is important to note that while the fund invests in smaller companies, no company held by the fund has a market capitalisation of less the €1 billion.

Geographic and Sectoral Exposure

Where to invest my pension

Historic Performance Data

Where to invest my pension fund

* Source – Financial Express

Over the past five years, the unit price of the fund has risen by almost 120%,  compared with a rise of just 42% for the overall MSCI Europe Index. In addition, this outperformance has been achieved at a lower volatility than the broader index.

Investment Rationale
In our view all pension funds and other long term savings vehicles should carry some exposure to the smaller companies sector for the following reasons:

  • Over the longer term, smaller companies grow faster than their larger counterparts.
  • The ideal time to purchase smaller companies is when economies are recovering which would appear to be the case in Europe at the moment.
  • Despite, the outperformance in recent years, smaller companies are still rated lower than the average market rating i.e. they are relatively speaking less expensive.
  • The comparative disadvantages to investing in smaller as against larger companies include lower yields (companies tend to reinvest rather than distribute to shareholders) and lower liquidity (not a material consideration for longer term investors).

If you are interested in finding out more about this investment please contact us on  01 2375500 or email and we will explain more about the investment and discuss if it is suitable for your portfolio.

where to invest pension fund

Investment Broker of the Year 2018

Property Investment using your Pension

Investing pension in property

Property Investment using your Pension – Are Higher Returns on Direct Property Ownership More Apparent than Real?

Internationally, property is usually classified as an alternative asset class i.e. alternative to the mainstream asset classes which generally include equities, bonds and cash. However, interest in property as an investment is well above the norm in Ireland to the extent that it is viewed as a core asset class by many investors.

Property can be sub divided into commercial property (offices, shops etc) and residential property.

Commercial property is largely beyond the reach of individual pensions because of the large lot sizes involved but pension investors do have plenty of choice in gaining indirect exposure. For Irish commercial, options include unlisted funds such as IPUT, SSGA Windwise and the various insurance company funds and stock market listed entities such as Hibernia REIT and Green REIT. While all of these options are comparable, there are material differences between them in terms of costs, liquidity, underlying exposures and distribution policies. As a result, it is strongly recommended that investors receive professional advice before deciding which option best suits them.

For many individual pension investors, residential property has significant attractions. This has become heightened with the recovery in the residential market in Ireland over recent years. While the option of buying direct property into your pension fund may appear attractive, it does bring with it many significant drawbacks (see below). The alternative is to acquire indirect exposure to Irish residential property by way of listed vehicles such as IRES REIT, Cairn Homes and Glenveagh or unlisted structures such as Landholm. Again, there are material differences between each of these options and professional advice is an essential input in helping to decide on the most suitable vehicle.

Apart from the feeling of owning real bricks and mortar and lower costs (commonly more apparent than real), direct purchase of property by a pension fund brings the following disadvantages which should be seriously considered before opting for this route.

  1. Portfolio Risk

Having a major part of your pension fund tied up in a single asset is a very high risk strategy and flies in the face of good portfolio management.

  1. Management Challenges

Property ownership invariably brings management headaches whether they are management charges, tenant issues, property maintenance, repairs, void periods etc. all of which carry a real cost.

  1. Low Net Yield

A common complaint one hears from property owners is that while they are receiving a good headline rent much of it is being eaten up by running costs to the extent that their net yield from the property is disappointingly low.

  1. Poor Liquidity

Property is a highly illiquid asset and it can take a significant length of time to convert a property into cash. This is especially true during a period of market weakness.

Take the example of two pension investors who wanted to invest in property in 2012. One invested directly in an apartment in Dublin 3; the second invested in IPUT (Irish Property Unit Trust).

  Direct vs. Fund Purchase 2012-2017

 Property Investment using your Pension

This simple example shows that the return on a property fund can be greater than on a direct property purchase once the costs associated with the direct property are factored in.

Property is an illiquid asset and investors should only consider this asset class for medium or long term investments. If you are considering a property investment through your pension it is important to seek professional advice to look at the different options available to you to maximise your returns.


Investing Pension in Property

Why you should consider Property as an asset class for your Investment

Buying a Property through your Pension – General property investment rules 


Property Investment using your Pension

Investment Update April 2018


Investments & Market Update April 2018

We said in January that ‘….we would expect bouts of volatility in financial markets to be a feature this year……’ and this has certainly turned out to be the case over the first quarter.  The combination of internal market factors (stretched valuations) and external concerns (interest rate rises and global trade wars) brought an inevitable conclusion to the positive trend we saw up to the January 2018.  Funds on Harvest’s Recommended List of Investments fell by just over 2% on average (in euro terms) over the first three months of the year. Most equity markets fell by considerably more than that over the period.

The growth in protectionism, burgeoning regulation (most recently targeted at the internet giants) and higher interest rates are all adding up to an increasingly hostile environment for business generally and our strong expectation is for repeated  bouts of volatility in financial markets over the remainder of the year. And, as we said previously, we cannot rule out a major correction although we are attaching a lowish probability to such an event for the moment.


There were very few exceptions amongst the world’s equity markets to the negative trend witnessed in Q1 2018. China had a marginally positive outturn in local currency terms but slipped into negative territory when converted to euros. The US,  UK and Ireland all fell by around 6% over the quarter in euro terms while Europe was down by less than 4%. The trend towards euro strength seen in 2017 was much less pronounced over the past quarter and, while the euro gained further ground against the dollar, it weakened against both Sterling and the Yen. Performance data for the major markets in both local currency and Euro terms is shown below:

Q1 2018                         Q1  2018 (in euro terms)
US                  -3.0%*                                  -5.7%*
UK                  -7.2%*                                  -5.8%*
Europe           -3.7%*                                 -3.7%*
Japan             -5.3%*                                 -2.5%*
Ireland           -5.7%*                                  -5.7%*
China             +0.9%*                                -1.9%*

* Source: Financial Express Analytics

Looking out into the remainder of the year, we are maintaining our cautious, but not necessarily bearish, view on equities. In terms of new investment in equities, we continue to advise clients to take a phased approach and to lean towards funds with a focus on income.  Weak phases in markets could present good buying opportunities. Longer term, we remain most positive on continental Europe and emerging markets.


As a partial solution to the conundrum of low returns on cash, Harvest launched its Cash Alternative Strategy in 2017. This strategy incorporated a range of very low volatility funds offering a return significantly better than cash without involving a high degree of risk. The point to stress is that these are ‘low volatility’ not ‘no volatility’ funds and they will not be completely impervious to market movements. The past three months have seen the first real test of the strategy in terms of how it might behave in volatile market conditions. So how did they do? Suffice to say we were more than happy with the out-turn in that the strategy fell by just over 1% in euro terms during the quarter compared with an average loss in world equity markets of almost 4%. We continue to hold the view that cash rich clients should be looking to switch at least part of their cash holdings in to  a strategy such as this as a long term position.


The turn in the interest rate cycle is having its inevitable, and much forecasted, impact on bond markets. The switch in trend may well be slow by historic standards but it will be inexorable and we continue to see little value for retail investors in mainstream bond markets. However, exposure to some specialist areas of the bond and credit markets may well yield returns,  emerging market bonds and mortgage backed securities being two potential examples.


Property remains one of our favoured asset classes and it is one to which all clients should have a long term exposure in their portfolios. Yields on commercial property are still attractive across most of the developed markets. We favour ungeared or lowly geared pooled investments, particularly those with a visible income stream. Irish residential property is a particular hotspot at the moment, and looks to remain so for at least a couple of years. Harvest plans to bring bespoke opportunities to our  clients over the short term offering exposure to this sector.


The major currencies settled down over the first quarter compared to the volatility we saw in 2017. We would expect both Sterling and the US dollar to trade in relatively narrow ranges against the Euro over the coming months. Brexit will probably ensure that a sustained recovery in Sterling does not happen for quite some time yet.

Gold and Oil

Gold is up by 2.5%*  since the start of the year in dollars but this gain is fully neutralised when converted to euros. Further uncertainty this year is likely to be good news for gold and we may even see a partial reversal in the recent dollar/euro trend over the remainder of 2018. We would reiterate our view that a small exposure to gold in your portfolio is worth considering.  Oil markets have also been relatively flat over the first three months of the year and, barring a serious escalation of conflict in the Middle East, we see little prospect of a sustained recovery in the near future.

* Source: Financial Express Analytics


Inflation signals have reappeared in certain markets and sectors and are behind the recent pressure to raise interest rates in the US and to reduce QE in Europe. Commentators are at odds as to whether we are experiencing the thin end of a material inflationary wedge or whether this is a temporary blip with inflation receding again over the coming months.  In our view, it is difficult to see inflation having any marked impact on markets for the remainder of 2018 at least.

Contact Us

As always, you should only consider the investment views contained in this newsletter in the context of your own attitude to risk and how such choices might impact your Asset Allocation model. Should you wish to discuss your investment portfolio, please contact your Harvest Financial Services Client Manager.

Terry Devitt
Investment Director 

Solution to Low Cash Deposit Interest Rates – Harvest Cash Alternative Strategy

Property Through Pension

A Pension that puts you in Control


Investment Broker of the Year 2018

Investment Broker

Investment Broker of the Year 2018

LPI Awards Investment Broker of the Year 2018

Harvest Financial Services Limited was delighted to be awarded the prestigious title of ‘Investment Broker of the Year’  at the The Brokers Ireland Life, Pensions and Investments (LPI) Awards last week.  The LPI Awards for Financial Brokers is designed to ensure that those at the forefront of the profession are identified and commended for their efforts.

We are delighted the strength and depth of our investment advisory offering and the continued innovations and improvements we have made over the last year were recognised by the judges.

This success complements the Independent Retail Pension Broker of the Year award which Harvest received at the Irish Pensions Awards in November 2017. This rare combination of accolades reflects the breadth of the Wealth Management offering provided to our clients.

Investment Broker

Marleny Mesa – Harvest Financial Services – Investment Broker of the Year LPI Awards

Why Harvest won the Investment Broker of the Year

Getting to know our clients and their needs is the first step of our investment process. By using plain language, we aim to keep communications simple and concise to make sure that they clearly understand our proposals and recommendations. We focus on cost transparency and where possible clients will invest in the institutional share class of funds, which can significantly reduce costs over time.

Every investor’s needs and circumstances are different. Our adviser’s ability to provide advice suitable to our client’s circumstances is dependent on our knowledge of their financial position, investment needs and objectives, attitude to risk, liquidity, requirement for income, importance of capital security, etc. By working closely with our clients to really understand them we can establish this information.

Our advice seeks to optimise the investment returns in our client’s portfolio through identifying a suite of investments from our list of recommended funds reflecting their personal circumstances and preferences. We always consider the long term picture and understand that strategic investment advice relies on timing and patience allied to insight and market intelligence. Whether clients are investing their pension, corporate, personal or charity funds we take the same approach to ensure they have an overall investment portfolio that meets their investment needs and objectives.

We have developed a four-step process designed to arrive at a portfolio recommendation that meets our client’s investment needs and objectives.

The Harvest Financial Planning Process:

  1. Investor profiling and goal setting:

    Our first step is to ensure we understand your financial position, investment needs and objectives, attitude to risk, liquidity, importance.

  2. Recommendations for the portfolio:

    Based on an assessment and analysis of the information you provide, your Harvest advisor will recommend investments from our list of recommended funds which will be designed to optimise the investment.

  3. Agreement and implementation:

    Your Harvest advisor can help you select the most suitable investments for you where a number of options are available. Prior to any formal investments taking place your Harvest advisor will provide you with a detailed suitability letter taking into account the information you provided and outlining why the investments are suitable for you

  4. Ongoing review:

    You will be kept informed of the performance of your portfolio on a regular basis and your Harvest advisor will make further recommendations as appropriate.

Asset Allocation

Asset allocation is a critical element of portfolio building. Our typical recommended ranges for the four primary risk categories of investor are:


Assets in Pension

Where possible, we look across a clients total assets – personal & pension – to advise on an appropriate asset allocation to suit them.

 Investment Committee

The cornerstone of our approach to investment management is our Investment Committee. The objective of the Investment Committee is to compile and review a list of appropriate investment funds to generate consistently superior investment results for our clients over the medium term.

Investment Director, Terry Devitt heads up our Investment Committee which compiles our list of recommended funds from Irish and international fund managers. Terry has spent his career as an investment analyst and brings a wealth of experience and expertise to our investment offering. Terry regularly visits fund managers in the UK as part of his fund selection and ongoing review process.  Many of the fund managers are regular visitors to Harvest where the Client Managers have the opportunity to quiz the managers about their funds. We regularly host investment seminars for our clients where we invite international fund managers to give their view on the investment world.

We provide an unbiased view of the product providers and their funds that are considered for inclusion on our recommended fund list. We consider the merits of various fund managers and undertake a stringent due diligence process before a fund can be added to the list. This process of fund selection provides the most appropriate fund choice for our clients.

The investment committee allocates each investment on our list of recommended funds a risk rating based on its volatility. These risk ratings are provided as a guide to help clients make informed investment decisions within the context of their investment needs and objectives, with an appropriate diversification of assets.

We are constantly investing in new ways to bring our clients the most cost effective routes to market and have recently introduced an online platform. This has significantly reduced transaction costs, ongoing annual management fees and has expedited execution. The platform is fully integrated with our valuations system which provides clients with daily valuations on their funds.

Occasionally, where we cannot source the appropriate investment to meet our client’s needs from the market, or they come to us with a particular investment proposal they wish to pursue, we will develop an in-house structure that brings the opportunity to our clients.

The basics of investing never changes – it always comes down to risk and reward. At Harvest we want to tilt the balance of risk and reward in our client’s favour through appropriate advice and strategic thinking. No matter what stage in life they are at, our team of seasoned professional advisers will tailor an asset allocation for each client’s portfolio that optimises investment returns by seeking the highest possible return for the level of risk that they are willing to take. Harvest’s experience and insight guide our clients through the maze of investment options from our continuously updated list of recommended funds.


Investment Funds – A Note on Clean Share Classes


Investing in a fund? How picking the right share class can improve your return

Traditionally, when investors placed money into investment funds, the fund manager typically allowed for the payment of a trail commission to an intermediary in the fund charges. This resulted in funds charging annual management charges (AMCs) of 1.5% or higher. These charges are paid within the fund and are not charged directly to the investor. However, the level of charges is a material consideration as it will clearly have an impact on the longer term return for the investor.

As a result of the pressure from clients and regulators for greater transparency, and also because of competition from low cost passive alternatives, the trend internationally in recent years has to been to bring AMCs lower. Recent years have seen the emergence of ‘Clean’ share classes with no inbuilt charge for distribution. These clean share classes have materially lower Annual Management Charge (AMCs) and are clearly superior in terms of value for the investor.

However, it is important for clients to be aware that the traditional higher charge share classes are still widely available and are still more commonly sold to investors than the clean share classes. At Harvest, where possible we only recommend clean share classes for our clients, thus ensuring that they are getting the best value available in the market.

A survey of the funds on Harvest’s Recommended List of investments analysed the average AMCs on this list and calculated the impact on a €100,000 investment over a five year period as follows:

 clean share class

Share Class                                         Traditional                          Clean

Average AMC                                    1.52%                                    0.57%

Value of €100k at year 5                €118,219                              €124,032

(assume 5% p.a. headline growth before AMC)

As the table shows, the additional cost of the higher AMC on traditional share classes reduces the fund growth from 24% to 18% over a five year period, assuming 5% headline growth annually on the fund.

Clean share classes have the potential to benefit investors by removing opaque fund charging structures and can dramatically improve investor’s experience and their outcomes.

At Harvest we are happy to review our client’s existing investment portfolios to compare the existing cost of their funds to the clean share class. To arrange a review, contact your Client Manager or call us on 01 2375500/ email


benefits of using financial advise