Investment Approach and Beliefs

We believe that being strategic about investments gives the best results. This involves setting a strategic asset allocation and then managing your investments within that framework.

Strategic Asset Allocation

We believe that the most important factor in making sure that clients achieve their long-term investment goal is making an appropriate asset allocation. A strategic asset allocation to a mix of the main asset classes being shares, bonds, cash and property is the best method of setting a framework around which individual investments can be set. It is the most powerful way that the overall risk of a portfolio can be managed. In essence this helps solving the “don’t put all your eggs in one basket” problem as it diversifies a client’s portfolio. The main advantage of this diversification is that because the asset classes tend to perform differently in different market and economic conditions the returns are smoothed out over time.

We believe that the setting of a Strategic asset allocation has more effect on the overall performance than any other investment decision. Generally investors that want more income, have a lower risk tolerance and require less volatility in returns have a greater allocation to cash, bonds and property. Those that require higher returns and are comfortable with more volatility and risk have a greater allocation to equities and alternative investments. By way of contrast our most conservative standard strategic allocation has 80% of assets in cash and fixed interest while our most growth focused has 90% in growth assets.

Our expertise enables us to develop a highly personalised strategic allocation for our clients, thereby giving them a framework within which to develop their investment portfolios through Investment Management.

Investment Management

Once a strategic Asset Allocation has been set our approach is to improve performance of the portfolio by providing investment selection advice within each asset class as well as possibly deviating from the strategic allocation tactically to take advantage of market opportunities.

Investment Selection : Accessing equity and fixed interest research from several of the world’s best research houses enables us to deliver the best opportunities for our clients. We monitor these investments carefully through tracking research reports, market data and company news in New Zealand, Australia and globally to enable us to recommend changes when required.

Tactical Asset Allocation: The strategic allocation has a necessarily long term focus which is designed to ride out business cycles. Tactical allocation is making specific changes, based on economic circumstances and perceived investment opportunities, relative to the long term strategy. For example an allocation to cash can be increased when fast declining and unstable market conditions exist. It is important to use and time these re-allocations carefully and we can provide you with timely advice in this regard.

Investment Beliefs

  • Asset Allocation Vital: The most important decision in enabling an investment portfolio to achieve what you want it to is by setting an appropriate asset allocation. It is the decision involved around what proportion of your money is invested in each of the main asset classes: equities, fixed interest, cash, property and alternative assets.
  • Diversification Lowers Risk: Having a well-diversified portfolio, both between as well as within asset classes, spreads investor’s risks and thereby lowers the overall risk of one type of asset class or particular security under-performing.
  • Risk and Return are related: All investment carries risk. We believe that returns are related to risk. Investors are rewarded with returns on their money because they are willing to take these risks. We also believe that, over the long term, the more risk an investor is willing to take, the greater the potential returns.
  • Research based advice is essential: We believe that investment advice which is backed by in-depth research and analysis delivers the best performance for investors. We have access to research from a number of international investment banks and some of the best financial analysts in the business.
  • All investors are different: We do not believe in one size fits all and that all individuals should have the ability to completely customise their portfolio to exactly fit their needs and preferences.
  • Valuation is crucial: the business underlying a company may be doing extremely well but if its shares are overvalued then this present a risk to investors. We believe investors should be careful not to over-pay for investments.
  • Liquidity: We believe that a significant portion of investments should be able to be converted to cash quickly. This gives investors flexibility should they require funds themselves or if they would like to change their approach. We generally recommend investors have the majority of their investments in direct listed securities as this generally affords them the quickest and best form of liquidity.
  • Quality Focus: We like to invest in companies with strong financial positions that do not carry high levels of debt, have attractive and stable dividend returns and whose management has a strong track record.
  • Buy and hold: We like to recommend investments that investors will potentially hold for a long time, subject of course to them retaining an attractive valuation. Investments that can be held for the long term reduce trading cost thereby improving returns overall.
  • Minimisation of Costs: Many financial service providers offer services and products that have many layers of fees, some of which are hidden, that can have a significant effect on returns over time. We believe that investing directly in markets or where appropriate, cost-efficient investment funds will ensure best returns for investors.