Our Edge

Our Edge

It is our endeavor to continue thinking progressively in all the facets of financial planning. This includes how we deliver services to you, and importantly, how we manage your investments. For investors, today’s financial environment is cluttered and volatile. The economy is increasingly dynamic. Markets are global and there are tens of thousands of investments from which to choose. With so much at stake, there’s no better feeling than finding an experienced adviser you can trust.

  

We take the task of managing risk very seriously and subscribe to the belief that risk management of your capital is first and foremost, attaining returns on capital is secondary.

  

The traditional investment process (Static Asset Allocation) tailors the mix of asset sectors to each client and their specific situation, and the portfolio is then regularly reviewed and rebalanced, but the asset allocation mix rarely changes significantly.

The four core asset classes are:

  • Shares
  • Property
  • Fixed Interest
  • Cash.

  

As we know however, times continually change, and the move towards a global economy and a global village through the incredible speed of the world wide communication network, and the abandonment of financial controls between different countries, may have diminished some of the benefits of the traditional investment process.

  

Portfolio performance during the market meltdown of 2008 is clear evidence that the commonly used asset allocation methods were ineffective, even independent of investor behavior. The Static asset allocation and diversification strategies were based on uncorrelated asset classes that in 2008 became highly correlated, thus rendering all such strategies moot.

  

While the traditional investment process seeks to avoid future forecasting by maintaining an exposure to each of the core asset types at all times, an alternative process does exist. We call this our Dynamic Asset Model.

  

The alternative process is primarily based on the view that 80% of returns will come from being in the right asset mix regardless of fund manager and specialist stock picking.

  

A nominated return needs to be established so that the asset mix reflects the mix that will generate the return in the easiest method. (e.g. if an investor requires a 7% return and cash will give us 5% then 80% of the funds will be in cash).

  

As a general rule, no one of these core assets is excluded at any particular time. All four are recommended to be held even if in varying amounts.

  

Historic evidence points to the overwhelming success of this investment process in providing a measure of security whilst achieving worthwhile returns.

  

One advantage to the investor is that we can now measure a result that is not based against an index. We can also measure the downside, so the investor is aware of the expected negative performance of their portfolio. By concentrating the attention on the asset mix the client has agreed to an expected return or loss.

  

The benefits of the Dynamic Asset Model to clients are:

  • Confidence: Whether your investments are with leading managers or held directly (listed securities), they are not only diversified for security, but also that they are actively monitored for profits.
  • Reduced Relative Risk: You are much more likely to know of significant downturns that suggest a change.
  • Increased Profits: You are much more likely to know of significant upturns that offer buying opportunities.
  • Knowledge: of actual investment events.
  • Timely Communication: of actual events in your portfolio.
  • Reassurance: that your investments are being closely reviewed.