⌟ Investment Management
By partnering with one of the world’s largest asset allocation consultants owned by Morningstar Inc., we help mitigate our clients’ long-term risk. We buy assets direct, avoiding the potential risk that happened during the GFC, where fund managers and property syndicates experienced capital lockouts and ‘frozen’ accounts that saw their client’s portfolios decimated.
Our dynamic investment strategy has, at its foundation, a belief system of what drives markets and investment outcomes. Along with this philosophy, a structured decision-making framework serves to remove the emotional (and at times frightening) elements of financial markets from rational decision making. This framework provides the requisite flexibility to respond to the dynamic nature of markets and new unforeseeable situations, while maintaining the direction and structure that a well thought out and disciplined investment process provides investors.
The following key beliefs drive our investment philosophy and process when managing client portfolios:
- Markets are inefficient over the short to medium term
- Mean reversion drives capital markets over the long-term
- Reward for risk from investing varies through time
- Potential capital loss is the most appropriate measure of investment risk
- Valuation strongly influences the reward for risk and potential capital losses
- Investor behaviour and sentiment can drive asset prices to extremes
- Consistent returns with focus on capital preservation
We aim to deliver consistent returns using a medium-term approach with a focus on real capital preservation. This means we will adjust our risk depending on the opportunity set. Our approach will lead to large deviations to our competitors at times and this will mean performance will also deviate significantly. While we are not confident in our ability to predict when the markets will price assets on the basis of their valuations and underlying fundamentals, we believe that using a patient and disciplined approach provides superior long-term real returns.
Over the medium term, we acknowledge that individual asset classes’ market values may deviate materially from their implied long-term valuations and in order to capture these deviations we use our Dynamic Asset Allocation (DAA) framework.
The process also seeks to identify assets that may be subject to extreme levels of optimism or pessimism, as reflected by market sentiment and/or investor positioning, as at extremes these can materially impact an assets future returns. The DAA process is, therefore, a multifaceted process but its ultimate goal is to identify those assets, regions or sectors which currently present the most attractive risk reward profile and then look to construct the portfolios predominantly exposed to these assets. By building our portfolios on this basis we aim to deliver clients a more consistent return stream, while also seeking to preserve underlying capital in periods of equity market downturns.