Our Philosophy
Strangely we do not have the intention or desire to act as fund managers on behalf of our clients. Our main function is overseeing and monitoring the performance of the paid professionals we select to do this job, whilst ensuring that you have the right overall asset mix. We believe that we have a fundamentally different approach to investment, in that we do not assume the standard asset allocation models and we look for absolute returns.
Global Asset Allocation
Traditional views of asset allocation are generated by investment companies that have a vested interest in the type of investments they deal in, which of course is understandable. So, in general, a bank manager will be happy to discuss cash related products, an estate agent only property and a stockbroker - bonds and equities.
We believe there are essentially 4 different asset classes which can have little or no correlation to each other :
- Cash and cash related instruments
- Business (shares, private equities etc.)
- Property, both residential and commercial
- Hedge Funds / Alternatives
Holding a mix of these assets (the proportion varies upon tolerance to risk) should mean that you are shielded against downturns that happen over the economic cycle, and over varying inflation environments. In fact they often act in a contra-cyclical fashion, i.e. if one asset class is in depression another will be in an upturn. This approach should have the effect of producing a much less volatile rate of return.
As we view our client's assets in the round, our models provide the guidelines to revise existing holdings, and tailor future investments, to a more structured and stress free strategy.
Absolute Returns
Our primary aim for choosing investments, or fund managers, is to maintain and increase your wealth on an annual basis. Traditionally most fund selection is made on a relative basis i.e. the fund's prior performance has been better in comparison to its peer group. This is fine when the benchmark has gone up by 10% and the fund manager has returned 15%. Unfortunately a return of -10%, when the benchmark was -15%, is still classed as a relative success - although not for you.
As a result we choose funds or strategies that can produce absolute returns, whereby, the aim is to only produce positive returns regardless. We prefer to be judged over a period of 5 years whereby the total value of your investments, after management charges and reinvesting income, grows by more than an agreed increase above the Index of Retail Prices over the same period.
Tax
We aim to limit or defer the amount of tax payable on investments by using whatever tax efficient vehicle appropriate for each situation. Although saving tax should never be the overriding reason for looking at an investment, it is important. If, for example, we managed to achieve a 7% per annum gross return over 5 years and ignored the tax, a higher rate tax payer could have voluntarily sacrificed up to £16,102 to the HM Revenue and Customs - per £100,000 invested.
If this is how you would want your wealth managed, please contact us via the client login.