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Why DG Financial Services Ltd?

Our Investment Philosophy

D G Financial Services Ltd strongly believes in keeping investments and investing clear and uncomplicated.

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Clear and uncomplicated

To this end, we believe that the best potential for reward when investing can be achieved through the use of well-diversified, low-cost funds that simply follow established market indices.

The evidence from UK and sterling-based funds consistently shows that the vast majority of funds run by active managers fail to beat their benchmark over time.

In 2024 alone, 72% of UK equity funds failed to beat the market index they were measured against, while 76% of UK Large and Mid-sized Company funds underperformed. The picture worsens over longer periods: over 10 years, 82% of UK equity funds underperformed, with only 46% of funds even surviving the full decade—the rest were merged or shut down, typically due to poor performance.

For UK investors seeking international exposure, the results are even more concerning: 90% of sterling-based Global Equity funds underperformed in 2024, rising to 97% over 10 years. Similarly, 79% of pound sterling-denominated US Equity funds underperformed in 2024 and 93% over 10 years.

While funds run by managers who actively try to beat the market have a place in the investment universe, we feel that these funds do not align with the goals and ambitions we have for your future, particularly given the significantly higher costs and consistently lower returns compared to simpler alternatives.

Our Core Beliefs

We will apply the following principles when recommending any investment solution.

For all investments into Pensions, Individual Savings Accounts and General Investment Accounts excluding investment bonds:
  • All funds will be selected from low-cost options that simply track market indices, chosen based on their accuracy in following the index, their fee structure, and the reliability of the provider.
  • All custom portfolios will be entered into our risk assessment system to ensure they meet your agreed risk level.
  • Index-tracking funds will form the core of our recommended portfolios, selected based on:
    • How closely they follow their target index
    • Total annual charges
    • Provider reputation and fund size
    • Tax efficiency
    • Protection by the Financial Services Compensation Scheme where applicable
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The Evidence for Simple Index Investing: UK Focus

Research from S&P Dow Jones Indices provides compelling evidence specific to sterling-based funds:
UK Equity Performance:
  • Over 10 years, the average UK Equity fund delivered 5.33% per year versus 5.99% for the market index
  • This 0.66% annual underperformance compounds to a significant wealth reduction over time
  • More than half (54%) of UK equity funds didn't survive the 10-year period
  • Europe Equity funds: 70% underperformed (1-year), 85% underperformed (10-year)
  • Global Equity funds: 90% underperformed (1-year), 97% underperformed (10-year)
  • US Equity funds: 79% underperformed (1-year), 93% underperformed (10-year)
While bond funds showed better relative performance, with only 38% of Corporate Bond funds underperforming in 2024, the 10-year figures tell a different story: 68% of Corporate Bond funds and 92% of Government Bond funds underperformed over the decade.
  • Lower Costs: Index funds typically charge 0.1% to 0.5% per year compared to 1% to 2% or more for actively managed funds
  • Transparency: You know exactly what you own at all times
  • Consistency: Index funds deliver market returns reliably, which historically beat most active managers
  • Survivorship: Index funds don't get merged or shut down due to poor performance
  • Tax Efficiency: Lower trading activity typically results in fewer taxable events within Individual Savings Accounts and general investment accounts

Investment Vehicles We Will Not Consider

There are some investments we will not consider as they do not meet our core beliefs of clear, uncomplicated, and cost-effective investing:
Actively Managed Funds (in most cases)
Given that 72% to 90% of actively managed equity funds fail to beat their benchmarks depending on the category, and that this underperformance increases to 82% to 97% over 10-year periods, we believe the higher fees charged by active managers (typically 1% to 2% per year versus 0.1% to 0.5% for index funds) are not justified by their performance. The rare exceptions where active management has consistently added value will be considered on a case-by-case basis for professional and very high net worth clients.
While investment trusts can sometimes trade below their actual value, the additional complexity, potential for significant price swings unrelated to the underlying investments, and borrowing to invest do not align with our philosophy of clear and uncomplicated investing for most clients.
We avoid platforms with excessive transaction fees, custody charges, or hidden costs that eat away at investment returns.
While we will consider these for certain clients (for example, professional clients and very high net worth individuals) for their specific tax benefits, these are complex financial instruments. They offer limited ability to access your money and limited flexibility as well as unclear charges and investment goals. On the rare occasion that these may be suitable, they may be offered to a limited number of clients.
While we will consider these for certain clients (for example, professional clients and very high net worth individuals), in the main we will not consider them due to their complex nature, lack of ability to access your money, and lack of transparency on costs and charges.
The research demonstrates a clear pattern: the longer the time period measured, the worse active managers perform compared to their benchmarks. This is particularly true for UK and sterling-based funds. By focusing on low-cost index investments, we aim to:
  • Capture market returns consistently
  • Minimize costs that compound negatively over time
  • Provide transparency in portfolio holdings
  • Avoid the risk of fund closure or merger
  • Allow you to benefit from long-term market growth
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Further Reading

For comprehensive evidence supporting our investment philosophy, including detailed UK and pound sterling-based fund performance data, please visit: https://www.spglobal.com/spdji/en/research-insights/spiva/#europe

What to expect when you work with us

Our process is structured to provide guidance and ease every step of the way:

Initial consultation

We’ll start with a confidential, no-obligation meeting to listen to your situation, understand your concerns, and identify your immediate priorities.

Financial review

Our team will conduct a thorough review of your shared and individual finances to create a complete picture of your assets, liabilities, and future needs.

Strategic plan

We will develop a clear, personalised financial plan with actionable steps, helping you move towards financial independence.

Ongoing support

As you implement your plan, we remain available to answer your questions, adjust to any changes, and provide continuous guidance.

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