Investment Philosophy Document

Our Investment Philosophy document is given to clients when we meet them. Essentially, it expands on the following beliefs about investing:

Markets Work – Prices for financial assets find an equilibrium level quickly and it is difficult consistently to predict and profit from any perceived inefficiencies in these prices. Importantly, the capital market rate of return is available to every investor and, over the long term, has proved to be attractive.

Risk and Returns are Related – The higher the risk, the higher the potential return. The logical extension of this is that the only way to outperform the market as a whole is to accept increased risk. However, not all risks are worth taking. Certain risk factors can be controlled to reduce risk and aid long-term return. Remaining invested is a key risk management tool.

Diversification is Essential – Concentrated, non-systematic risk in investment portfolios tends not to be rewarded over time. Diversification is the antidote to many avoidable risks. Therefore, investment portfolios should be broadly diversified across and within asset classes.

Portfolio Structure (Asset Allocation) Explains Performance – The main contributor to portfolio performance is the relative exposure of capital to the various asset classes. The use of strategic asset allocation, together with periodic rebalancing, is likely to be more rewarding in the long run than speculative strategies such as market timing or tactical asset allocation.

Costs and Taxes Matter – Costs and taxes are a drain on performance. Hence investment portfolios should be constructed and maintained with a view to minimising them, where possible, to the benefit of long-term returns.

Our approach is clear and disciplined and designed to help our clients achieve their financial goals