Investment Philosophy.

Our core investment philosophy can be summarised as follows:

1. Markets work.

2. Asset Allocation primarily drives performance.

3. Costs matter.

Markets Work

We believe that publicly available information, as it arises, is quickly incorporated into the prices of assets, such as shares and bonds. Therefore no amount of analysis can give investors or fund managers an edge over all of the millions of other investors who also have access to the same information. Therefore, finding mispriced anomalies while possible, is highly unlikely, especially in today’s climate where technology holds a distinct advantage.

While markets are ‘efficient’, this does not necessarily mean that they are rational, or that they always price assets accurately. In the short-run, investments can become over-valued or under-valued. However, over long periods of time, investment prices will eventually and accurately reflect the earnings growth of their underlying assets.

Asset Allocation drives performance

There is strong evidence to suggest that the vast majority of gains (or losses) an investor experiences in a lifetime relate to the ‘asset allocation’ of their investment portfolio, and not the stand-alone individual investments made (like shares or fund managers) or market timing.

For clients, we prefer to focus on the things that we can control, like asset allocation. Knowing a client’s attitude towards risk and volatility, coupled with their investment and lifestyle goals, allows us to construct an investment or superannuation strategy that financially and emotionally suits each individual client.

Costs matter

In the drive to achieve superior investment results, costs are often ignored or treated as a peripheral issue, but unfortunately costs can significantly erode value over time. Where sensible, we favour using financial products and platforms that deliver sound results over the longer-term, but at a lower cost. Again, sometimes you can’t control investment returns, but you can control costs, and it all adds up.