Investment Philosophy

Given the importance of what these funds represent, we believe that it is essential that we, as a firm, have a clearly defined methodology for investing this capital over time, and that we share this investment philosophy with our clients. This philosophy is based on a number of key tenets

Best of breed managers with a strong investment philosophy

We believe that within each asset class, there are a small number of investments that stand out from their peers. We seek investment managers that have a clear investment philosophy that they can articulate simply and apply consistently. It is these ‘best of breed’ investments that we combine to build our client’s portfolios. Each portfolio is tailored to suit a client’s individual risk tolerance as defined by their needs, time horizon and appetite for risk.

Diversification

Some asset classes are negatively correlated, such as shares and bonds. When one is producing high returns, the other is typically producing low returns. It is therefore vital to maintain exposure to a variety of asset classes to ensure a smooth return. The same principle applies to different investment styles and sub-sectors, within the same asset class. Diversification reduces risk and thereby increases the potential to preserve investor capital in the long term.

Active management and Dynamic Asset Allocation

We do not believe all information on markets is readily available to all investors and we do not believe all investors behave in a rational manner when presented with information on markets. Therefore we believe there are advantages to be gained through stock picking and active management. This same principle applies to asset class selection.

Research shows that 90% of portfolio returns come from picking the right asset class not the right individual share or investment. Dynamic Asset Allocation advocates investing in a wide range of asset classes, but rotating the allocations to these sectors based on the market. When sharemarkets are peaking, the weighting to shares is reduced in favour of more defensive assets like cash. In contrast when markets are down, growth assets are favoured in preparation for the recovery. This flexibility and high level of activity translates to smoother more consistent returns over the investment cycle.

When investing our client’s funds we are focused on creating a balance between capital preservation and the potential for long term returns. While we cannot control market performance, we aim to deliver our clients peace of mind that their portfolios are being managed using a robust and well-defined philosophy.