Our Investment Approach.

Diversification

We believe that all investors should allocate their capital between different asset classes in order to achieve their chosen objectives, in line with their risk profile. Academic analysis has shown that diversification across multiple asset classes with varied correlations will increase the risk adjusted return creating a more “efficient” portfolio. This could also be described as common sense, in that having all the investment eggs in the same basket does not seem sensible. Diversification also leads us to suggest that pooled investment or mutual funds such as unit trusts, investment trusts and similar are the most appropriate vehicles for most private investors. The case for diversification also stems from the fact that it is all but impossible to predict which asset classes will perform best in a given period. It is rare for the same asset class to be the best performing in consecutive years, depending upon how widely or narrow asset classes are defined. Strategic asset allocation is about finding the right blend of assets to produce the right risk/reward result for each client, accepting that at any point in time some asset classes will be performing better than others.

Accessibility/liquidity

We believe that an investors capital should remain as accessible as possible. We have an inbuilt aversion to any investment product or fund that requires investment for a defined period, or imposes restrictions on capital being withdrawn. This belief stems from experience, with many investors unhappy about restrictions placed by fund managers in relation to property based investments and similar. During the downturn of 2007 to 2009 many property funds and hedge funds did not allow investors to exit, placing many people in a difficult position.

Security

Security of capital is clearly important to all investors. Security can mean different things to different people. It might mean that the capital value will not decline in value, or it might relate to the financial standing of the management company. For us, security includes the regulatory environment and the protection afforded to investors. We believe that the UK provides a secure environment for investors, which is not necessarily matched in offshore jurisdictions. The availability of UK registered funds is now sufficiently large that there is rarely any need to look elsewhere for the majority of investors, and we therefore select mainly from the pool of such funds when making investment recommendations to our clients.

Simplicity and transparency

We have a strong belief in keeping it simple. Investing capital is inherently simple and we believe that there is no need to make it complicated. We will not recommend investment funds to our clients that cannot be easily understood both by us and our clients. This transparency relates to the investments being made by the fund managers that we recommend and the techniques that they employ. We want to understand what they are doing so that we can understand the risks, and communicate them to our clients along with the perceived benefits. We do not wish to be in a situation where an investment falls in value without us or our clients being aware that such an event might occur. The problems experienced in the period 2007 to 2009 exposed the fact that many investment managers did not understand the risks that they were taking, resulting in substantial losses for investors.

Proven track record

All of the funds included in the model portfolios either have 3 year track records confirming that the managers are able to deliver both positive returns and capital protection, or are managed by individuals and teams with proven records in relation to similar funds. This may include managers with proven records in hedge fund management where the fund being recommended is effectively a retail version of such a fund.