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Our Core Investment Beliefs

Your goals are as unique as you are and therefore your personal investment strategy needs to reflect where you are headed, how you plan to get there, what your specific objectives are, when do you want to achieve them by, what level of risk are you willing to accept in order to reach your goals.

Successful investing requires Patience, Action, Intelligence and Discipline. We call this PAID. By understanding our investment beliefs and methodology you will have greater peace of mind and pass the important ‘sleep at night test’ while we work hard to help you reach your financial and personal goals.

 

Here are our 14 Core Investment Beliefs:

 

Preservation of capital is key

Preserving the real value of your capital after fees, taxes and inflation is crucial so that you can live the lifestyle you desire.

 

Risk and return are related

To achieve a return greater than the rate of cash requires you to take on risk, but it only makes sense to do so when the rewards from taking on the risk are greater than the risk itself.

 

Markets are efficient over the long term

There is a lot of volatility in the investment markets, however over the long term the growth asset classes (Australian shares, International shares, Listed property) have tended to offer returns that have outpaced the impact of inflation, taxes and fees on your portfolio.

 

Market timing does not work

We do not speculate on where the investments market will be this month or next month. We do not feel anyone can do this with any certainty and therefore we stick to proven principles of long term investing when managing your capital. This also means we invest for the long term and not short term.

 

Diversification reduces risk

We believe in diversification at three levels. Diversification across asset classes, diversification across fund managers and diversification across investment styles. By utilising this approach we can reduce risk, as well as get a smoother investment return for you.

 

Active management and passive management can work together

Although over the longer-term markets are efficient in the shorter term there are opportunities for the astute asset manager to take advantage of any inefficiencies in the investment markets. A neutral position would be to have half your portfolio actively managed and half passively managed.

 

Currency management is important

We must look not only at the investments themselves but also peripheral aspects such as currency and liquidity. With currency, our neutral stance is to have half our international share and property portfolio hedged and all of our fixed interest exposure hedged.

 

Liquidity is important

When choosing investments, we look for investments that have a high degree of liquidity as we do not want to be in the position of a forced seller due to some assets within a portfolio being illiquid. We saw this through the global financial crisis and we will happily take less return in order to have liquid assets.

 

Fund managers can add value

Professional fund managers can add value over time through their superior research capabilities, knowledge and experience and can play an important role in the ongoing management of your portfolio. The benefits can be through decreased risk exposure in terms of not owning specific stocks that an index manager may have to own.

 

Monitoring investment market matters

With market volatility so high monitoring the market as well as your asset allocation is critical to long term investment success. It could mean that stocks are not longer fit for purpose or a fund manager has left a fund which would necessitate a review of the ongoing suitability of that fund among just two examples among many.

 

Fees and taxes matter

our first role is to maximize the probability of you achieving your goals. Our second goal is to try and get you the best return after fees and taxes possible. to do this we will go and negotiate discounts on your behalf with investment platforms and fund managers and look to use low cost funds when we feel it is prudent to do so.  We will not ever invest your money to only reduce fees and taxes as that is not the way to investment success but is is certainly a thought as we build your portfolio.

 

Rebalancing portfolios matters

Intelligent investing says to buy low and sell high yet most investors do not achieve this. By having a disciplined approach to portfolio rebalancing we are able to do this at set time periods for your portfolio. This achieves the ability to buy assets that have underperformed and sell assets that have outperformed. This reduces style drift as well as investment bias to want to hold onto winners.

 

Total return is the main metric

Many investors build a portfolio to give a certain amount of income which is problematic whether it be dividends being reduced or rents not paid. After building the right structure for your portfolio the goal is total return and having a portfolio system that can continue to pay you income as well as have capital there should you need to access lump sums from time to time.

 

Third party custodians provide peace of mind

Using a third party custodian to hold your investments which goes through a strict ongoing management assessment, to ensure that you can have peace of mind that the investment strategies we are pursuing are reputable.