Passive Investment Solutions

It is our firm belief that active management is the best approach to achieving attractive long-term investment returns.

However, we acknowledge the growing demand from investors for a cheaper way to access the investment markets to avoid the high dealing and management charges which can be a drag on investment performance, and the fact that only a limited number of active fund managers consistently outperform their comparative benchmark index. 

Over the last few years there has also been an explosion in the availability of new passive investments, such as exchange traded instruments, which has resulted in increasing investor interest in this form of investing.  For these reasons we decided to launch a Passive Investment Solution.

Because we believe that asset allocation is the primary influence in creating the balance between risk and return, our passive solution seeks, as much as it is able, to leverage off our existing asset allocation expertise and process.  It should be noted that where exchange traded instruments are included in the portfolios we only consider those backed by physical assets to reduce counter-party risk, although this narrows the range of available asset classes. Nevertheless, we seek to ensure that our portfolios are diversified across asset class, geographical focus, and the underlying investment funds to spread both the risk and the opportunity.

Our Passive solutions

We currently offer three Passive Growth portfolios:

Model Portfolio Description Performance Benchmark

Passive Cautious Growth

Designed for investors who seek a lower-cost means of achieving investment growth over not less than 5 years and who are prepared to accept the prospect of some short-term capital losses to achieve a high return.

Inflation (CPI) + 3% pa over a rolling 5yr period

Passive Balanced Growth

Designed for investors who seek a lower-cost means of achieving investment growth over not less than 5 years and who are prepared to accept periodic capital losses to achieve a higher return.

Inflation (CPI) + 4% pa over a rolling 5yr period

Passive Adventurous Growth

Designed for investors who seek a lower-cost means of achieving investment growth over not less than 5 years and who are prepared to accept the possibility of larger short-term capital losses to achieve strong market returns.

Inflation (CPI) + 5% pa over a rolling 5yr period

Core & Satellite approach

Each portfolio has both a core and a satellite element which is broadly structured as 75:25 to 65:35 to 50:50 respectively in the Cautious, Balanced and Adventurous portfolios.  The core element in each asset class provides a solid foundation of a low-cost mainstream index within the sub-sector and is unlikely to see much change over time, effectively a ‘buy and hold’ strategy.

The satellite element provides a flavour of our tactical thinking in our actively-managed portfolios and uses potentially more targeted or specialist indices, such as small-cap stocks, higher yielding stocks, shorter-dated credit etc. The cost for gaining access to such specialisation is generally slightly higher than more mainstream index instruments. Satellite holdings are likely to be more actively traded positions.