Our Investment philosophy

Asset allocation is the primary driver of performance in a managed multi asset class investment portfolio. Asset classes move between being overvalued and undervalued and portfolios need to be constructed with an element of flexibility to take advantage of periods when assets are undervalued.

Emotions are a factor that negatively impacts the investment process resulting from fear and greed and therefore the investment process should exclude emotion as far as possible. Our asset allocation is quantitatively driven. The process starts with the analysis of the two main asset classes being equity and cash to determine the level of aggression to be applied to a zero constraints portfolio, i.e. how much to allocate to growth and how much to preservation assets.

Once this is determined, each of the main asset classes will be broken down into their sub asset classes to determine if enhancements can be made to the allocations. This analysis is done on a zero constraints basis, i.e. 0% to 100% allocation range. Once the overall allocation is determined then the constraints of the various portfolios will be overlaid onto the zero constraints allocation to determine the structure of the applicable portfolio.

Asset allocation is monitored monthly and applied rigorously. Managers and funds are rigorously screened prior to investing to determine a potential buy list of managers. The buy list is then analysed to see which managers best fit together to potentially deliver returns in line with the investment objectives.

Following the quantitative analysis of managers we visit the potential managers to gain a deeper understanding of their processes and risks as discussed above. This visit will take the form of a meeting face to face for a few hours. Only if we are satisfied will we then invest with a manager.

After investing we monitor the performance of the manager and compare it to our expectation of performance to determine any meaningful divergence which would highlight a potential problem. Due Diligences and fund analysis updates, by the fund managers, are attended regularly. However, should there be a change in the key qualitative selection criteria or a meaningful divergence between expected and actual performance we will schedule a visit to gain insight into the situation and make changes if necessary.