Investment Philosophy

We believe that the prime objective of investment is to achieve returns ahead of inflation.  This might not sound particularly ambitious, but by achieving this apparently modest goal we are achieving what we consider to be the first goal of wealth management – wealth preservation.  If clients have sufficient wealth to fund their required lifestyle adequately by keeping all funds in deposit investments, we see no reason why any of this wealth should be exposed to riskier asset classes.

Unfortunately, for most of us, our capital reserves are unlikely to be sufficient to fund the lifestyle to which we aspire.  If deposit returns are low then inflation will erode the value of even that capital that is not exposed to investment risk. Without exposing at least a portion of the capital to more adventurous and therefore riskier asset classes we will be unable to achieve the returns we need.

We believe that the behaviour of the markets is far more random than most analysts are prepared to admit.  Markets are not subject to the same sort of immutable laws that govern the natural world and whereas a physicist can calculate the energy required to put a spaceship into orbit with the help of a few reliable equations, a financial analyst is never going to be able to predict reliably how a fall in gilt values will affect inflation over the next 6 months.

For the same reasons we do not pretend that we can dive in and out of markets, picking winners from thousands of individual funds by applying foolproof analysis techniques.  Instead we rely on straightforward principles of asset allocation that avoid unnecessary trading and minimise the costs associated with frequent buying and selling.  We recommend that a portfolio should have exposure to all of the main asset classes, in varying proportions according to the investors attitude to risk.  Within the asset classes we will select funds with solid track records that occupy a defined  sub-sector of that class (for example, in our Equity asset class we will have separate funds based on the UK, Europe, Asia, North America and the world as a whole; we will include both active and passive investment vehicles).  We will then give the recommended portfolio time to work.  We will not expect every fund to deliver above average performance every month.  We will monitor progress on a monthly basis but will only recommend a fund switch if we are convinced that an alternative is a better long term prospect than the current investment.  We believe that the worst possible way to manage wealth is to continually switch investments in pursuit of an illusory performance ideal.