Investment Philosophy

Investors should focus on the long term when investing, as markets can be subject to extreme volatility in the short-term.

When faced with this short term volatility investors let their emotions govern their investment decisions, and usually this is the worst time to change your investment strategy or sell poor performing assets/investments. Then inevitably, markets change and the best performing asset class or manager(s) become the worst performing.

We call this common flaw “buying high” and “selling low”.

We believe that markets are inefficient and as a result believe that managers with skill and a track record of delivering that skill can consistently outperform the targeted index, or at least can reduce volatility of the portfolio. Therefore we base our investment philosophy and strategy upon the following principles:

• Cost is important, but the value delivered for the cost is more important
• It is important to understand the tax implications of various investment vehicles
• Markets are inefficient.
• Risk and return are equally important in a portfolio
• Where possible we like to invest directly, rather than through expensive intermediary
• Diversification is used to reduce risk and enhance returns.

To practically implement the key tenants of our investment philosophy, we:

• Recommend a mix of direct stocks and managed funds.
• Focus on managers with a proven track record of delivering either a reduced risk, or better returns for the same risk budget.
• To outperform the market, we include an exposure to a full service stock broker, and use managed funds where we cannot assess specialised markets and skill sets.

Importantly, we find it necessary where appropriate to make small tactical asset allocations to protect your wealth as significant parts of your risk and return are derived from asset allocation.

Like any solid investment strategy, one should not run it like a sprint, but rather like a marathon.