Our Investment Philosophy and Process

Our objective is to achieve a healthy rate of return, in a consistent manner, that allows our clients to achieve their financial dreams without exposing them to unreasonable risk.

We believe in a methodical and uniform approach to investment. This means:

• Investing only for the medium to long term: We recommend that clients hold funds required for short term objectives in cash or cash-like accounts.
• Prioritising asset allocation that matches a client's tolerance for investment risk: Since we understand that asset allocation is responsible for the vast majority of out-performance in any fund or portfolio.
• Diversification: by spreading investment across a number of asset classes (eg. cash or cash-like, fixed interest, property, equities) as well as across a number of geographic regions, volatility of the portfolio is reduced and, in general, returns enhanced.
• Rebalancing investments to take profits from asset classes that are doing better to boost asset classes that are not doing so well: This provides a smoothing of returns and reduces volatility of the portfolio as a whole. It also provides a control over the exposure to risk of a portfolio.
• Reducing the cost of investment as far as possible: Since cost reduces the return available to the client.
  

We do not believe in:

• Effective market timing: We do not believe that it is possible to accurately predict the best time to invest or disinvest. The level of risk associated with market timing does not warrant the potential rewards, therefore, we do not attempt to time the capital markets.
  

A Continuous Process

Risk Assessment: To ensure consistency, we follow the same risk assessment process with all clients:

Having clearly understood what your dreams and ambitions are, we seek to assess your views on investing money by completing with you one of our attitude to risk questionnaires.

In doing this, we do recognise that risk is a relative measure and therefore a key part of our discussion with you about investment risk, will be to actively inform and educate you about the relationship between risk and return.

We assess your answers using our sophisticated risk profiling system and present you with your own personal risk score, from which we can then assess the most appropriate way to invest your money.

We adopt the same process with every client, so we can be assured of outcomes that lead to clients with similar views on investing money having portfolios of a comparable investment risk.

Asset Allocation: Having established a client’s acceptance of risk and determined a personal risk score, our next step is to design a risk graded portfolio that blends and allocates the money available for investment across all major asset classes with the aim of maximising returns for that given level of risk.

We use the following main asset classes when building a portfolio:

• Cash / Money Markets
• UK Fixed Interest
• International Fixed Interest
• Property
• UK Equity
• International Equity

Although International Equity is modelled together, it’s further sub-divided into North America, Japan, Europe, Far East, Emerging Markets and Global / Specialist.

Fund Selection: Although asset allocation is core to our investment process, we do not believe that markets are 100% efficient and as such there are likely to be inefficiencies in the distribution of information in any market.

That said, we do believe that fund managers and investment houses have the ability to outperform the market over the medium to long term. Our fund selection process aims to select those managers that have the ability to exploit these inefficiencies and deliver medium to long term out performance of a given sector.

Our investment committee follow a stringent and robust process when assessing investment funds. Our focus of attention is:

• Consistency of performance over revolving three years periods relative to a benchmark.
• Representativeness of the asset class category the fund is in.
• Fund assessments by leading Rating agencies.
• Risk adjusted returns.

Monitor: Keeping a close eye on funds and their performance over a period of time is just as important as the initial fund selection, as a mix of funds performing well today is highly unlikely to be doing the same in five years time. Our Investment Committee meets on a quarterly basis to perform the following functions:

• To decide whether to apply any changes to the underlying asset allocation mix for each risk score.
• To review our investment fund buy list.

Review: Each of our client’s is offered at least an annual money management review.

During this review we will provide a detailed assessment and appraisal of your portfolio, focusing on portfolio performance relative to our agreed benchmark.

Risk is a relative measure and a client’s attitude to risk can change over a period of time, as needs, objectives and aspirations change.

Mindful that views on investing money do change over time, where necessary we will complete a new attitude to risk questionnaire as part of the client review. Where the reassessment results in a change in risk score, we will communicate this and recommend a portfolio re-alignment to ensure the correct allocation of assets for the revised risk profile.