Investment Principles

Our investment philosophy is based on four main principles:

  • A diversified approach to asset allocation
  • Thorough research leading to the identification of investment funds providing consistently above-average performance
  • Active investment management
  • Risk management to soften the impact of market downturns

Asset Allocation

Research indicates that achieving the correct asset allocation is the most important factor in generating long-term returns, and that diversification is the best way to achieve risk-adjusted target returns. The ‘heat map’ shown below illustrates the variation in return of the primary asset classes over the last ten years and the corresponding challenge in identifying which will be the top performing asset classes in the coming year.

Our role as investment managers is to constantly determine the appropriate blend of asset classes for a given portfolio. This is termed a ‘multi-asset class’ approach, based on the rationale that in most market conditions at least some components of a portfolio should be delivering positive returns. However, it should be noted that in extreme market conditions, especially when market liquidity is low, some asset classes can display high levels of correlation.


Fund Selection

Selecting the right fund across asset classes can mean the difference between average and good performance. We constantly research, monitor and review investment funds to identify consistent performers and only select funds which meet our stringent investment criteria. Our analysis encompasses both quantitative and qualitative techniques using a range of analytical tools as well as face to face meetings with investment managers. We identify managers with a clear investment process and evidence of how this has translated into performance. We pay close attention to whether investment decisions adopt a team-based approach or are dependent upon the skills of one investment manager.

We only choose investments that can be bought and sold easily. Furthermore, if we cannot properly analyse or research an investment fund we will avoid it.


Active Management

We seek to add value through our tactical asset allocation and our investment fund selection. This means altering the blend of asset classes in different market conditions and then expressing this through our investment fund selection. This process ensures that we do not alter our portfolios’ long-term risk and return profile, but simply seek to enhance returns as well as reduce any possible losses by making active changes.

Our portfolios are rebalanced approximately four times each year, although interim rebalances are made should we decided to adopt tactical asset allocation changes or add or withdraw any of the underlying collective investment funds.


Our primary asset classes

Timeline

All data is provided by Financial Express Analytics. Performance is stated in Pounds Sterling.

INDEX INFORMATION: Global Bonds – Barclays Global Aggregate Gilts – FTSE Actuaries UK Conventional Gilts All Stocks UK Equities – FTSE All Share Hedge Funds – HFRX Global Hedge Funds Property – IPD UK All Property Cash – LIBOR GBP 3 month Global Equities – MSCI World Commodities – S&P GSCI Commodity