We make intelligent investing simple. You get the best of both worlds: proven strategies without the costs usually associated with them.
Access to High-Level Strategies
When you invest through Lexo, you do so with:
Strategies that have consistently delivered competitive returns, see for yourself, albeit we can’t promise future returns.
The expertise of one of the country’s leading financial advisors (don’t just take our word for it!)
A market-leading custodian management firm, with over £20bn under custodial arrangements in the UK – check out their industry awards
Exclusive online access to strategies usually reserved for high-level investors
Why would you invest anywhere else?
How We Work
We provide simplicity, discipline and security when an investor doesn’t want to travel the do-it-yourself path or be sold ‘the next best fund’. This is achieved through efficient, risk-calibrated portfolios.
We build investment portfolios backed by years of Nobel Prize-winning research, with an asset allocation that offers you the highest potential return for the lowest risk, while keeping fees to a minimum. Our portfolios aim to provide the best investor experience.
Lexo provides you with online access to some of the best advancements in investing history whilst keeping you in control with transparency and access. We were established by FCA regulated and Chartered Wealth Manager Warren Shute of Lexington Wealth Management.
We have created, with the aid of Nobel Prize-winning research, 10 asset-backed, risk-rated Dimensional Fund Advisers’ portfolios that comprise of equity (stock market)-based funds specially targeted towards smaller companies and value companies to optimise your returns. We balance this with our targeted fixed interest (bond & gilts) funds, with a focus on short to medium-term duration maturities to reduce your portfolio volatility.
We offer these to you at a fraction of the price you would get elsewhere – because fees matter.
Our Investment Beliefs
When it comes to investing online, we passionately believe in the following things. If you do too, then we should work together.
If on the other hand you look in the mirror and you think you see Warren Buffett looking back, then we’re not the right firm for you.
1. We believe that capitalism works
Capitalism is what underpins the world’s economy and is overwhelmingly the most successful economic model that mankind has devised. The free market is a simple mechanism that brings together ideas for products and services, and the investment required to get them off the ground.
People who invest in an enterprise are taking a risk with their capital and are therefore entitled to share any financial rewards – just as they should accept any losses. This simple principle is followed in every corner of the world from the dusty markets of third-world villages to the boardrooms of the world’s richest corporations. In more sophisticated markets, the rules of this process are codified by formal capital markets and most investors participate through tightly regulated exchanges of shares and bonds.
2. We Believe that Risk and Return are Related
We believe it is impossible to improve your investment return without taking more risk. In other words, the potential for financial loss you expose yourself to in taking a risk is also the reason you earn a return. There is good risk and bad risk and higher exposure to the right risk factors leads to higher expected returns, but is no guarantee of them. Risk is the premium investors pay for the expectation of a greater return.
Our role at Lexo is first to identify which risks offer consistently higher expected returns and which do not, and then to offer you exposure to those risks in a structured, disciplined and cost effective way.
3. We Believe that Markets Work
Capital markets are the best mechanism we have to calculate the value of an asset. Many investors believe they are able to price assets more accurately than the market. They perform research and analysis to arrive at a price for an asset. If the market price is below their calculated price they might buy that asset to make a profit when it rises.
But however carefully they make their calculation; it is never more than an estimate upon which they base a prediction. Some estimates will be right; some estimates will be wrong.
Very few people are able to make consistently accurate estimates over a reasonable period of time so we do not use predictions about markets or prices in our portfolios. This principle applies across our investment philosophy which means we do not buy individual funds we think will outperform the market; or weight investments towards countries or regions we expect to do well. Instead we use investment funds with broad exposure to the whole market and allocate assets to countries in proportion to their relative size in the global market.
We therefore accept that the market, powered by the wealth-generating capability of capitalism, provides an adequate rate of return. We do not try to beat the market with predictions; instead we harness the returns of the market through discipline and structure.
4. We Believe that Diversification is Essential
Diversification is the principle of spreading your investment risk around. Our investment portfolios therefore hold the shares and bonds of many companies and governments in many countries around the world. Because we believe in the power of capital markets rather than individual predictions or judgements, we are able to invest our clients’ assets in many thousands of individual investments. This means the negative and positive influence of each individual investment is reduced, producing, on aggregate, less risk in our portfolios.
“Diversification is your buddy.”
— Merton Miller
5. We Believe that Costs Matter
Management fees, taxes, expenses and transaction costs incurred in the management of a portfolio have a direct impact on returns so managing costs is as important as managing investments. Good investment performance can be wiped out by high costs or a failure to seek tax efficiency. All other things beings equal, we seek the most cost-efficient route to market returns.
Passive investments generally cost less than the average actively managed investment by minimising trading costs and eliminating the costs of researching stocks.
6. We Believe that you should listen to Information not Noise
Markets are frenetic, energetic, ever-changing entities that require people who are actively involved in them to be constantly plugged in and switched on. But this does not mean that as an investor you must be too. This is a mistake many investors make – believing that to be a successful investor they must have their finger on the pulse all the time.
The investment management industry and financial press perpetuates this myth with daily chatter that offers rolling tips, predictions, warnings, speculation and advice. This material is produced by competitive media and fund sales industries that survive by attracting attention to themselves. But virtually none of this information is of use to investors; in fact, it is distracting noise that can bully people into taking ill-advised actions. It is entertainment, not information.
Our investment philosophy is based on information, not noise or entertainment. Its roots are in the work of cool-headed academics with no vested interest in selling investments or filling column inches.
7. We Believe in Passive over Active investing
Investment styles are often categorised as active or passive. An active investor is one who makes decisions about holding one investment over another. Passive investors are willing to accept the market rate of return and usually enjoy paying smaller fees than active investors.
Our investment philosophy is passive to the extent that we are not making judgements on the relative merits of one investment over another, but we are not willing to accept the market rate (less fees) for our clients. Our investment process targets market-beating performance through structured exposure to dimensions of higher expected return, and uses methods of portfolio construction and implementation that enhance performance relative to the average investor.
- the average active investor will do worse than the market because they are paying the highest fees;
- the average index investor will perform slightly better than that because their fees are lower than the active investor; and
- that our investment approach will outperform both due to reasonable fees, exposure to dimensions of higher expected return, and intelligent portfolio implementation.