Our Investment Philosophy

1. Capital markets work

We believe that capital markets are pretty efficient. Every day, global equity and bond markets process billions of dollars in trades between buyers and sellers. They’re not perfect but generally do a good job of fairly pricing all available information.

2. Outperforming consistently is rare

As a result, it’s difficult to consistently beat the market. This works against traditional active managers, whose objective is to do just that – beat the market. But there is overwhelming evidence that the vast majority don’t. We prefer a mainly passive-based investment approach, one that largely tracks the market, but with a ‘tilt’ towards certain ‘factors’ (see point 6).

3. Asset allocation is the key to returns

The most crucial factor determining portfolio returns and the variability of those returns is asset allocation, i.e., the split between equities and bonds, and the geographical spread within these. 

Historically, equities have delivered the greatest long-term returns, but these can vary significantly over shorter timeframes.

4. Time in the market, not timing

The financial markets have rewarded long-term investors and we see no reason for that changing. Time in the market is key and far more impactful than trying to time market entry and exit. As Warren Buffet says:

'If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes.'

5. Costs matter

Costs reduce an investor’s net return and represent a hurdle for a fund - before it can add value, the fund must first cover its costs.

Sadly, most professional fund managers fail to add value and high cost has been a strong predictor of poor fund performance.

6. There's good risk and bad risk

Within the equity asset class, there are higher-risk sub-classes (aka. ‘factors’) that should, over time, compensate investors with higher returns. 

We advocate portfolios that mainly track the market, but with a ‘tilt’ towards small caps, value stocks and consistently profitable companies.

7. Diversification

You never know which market segments will outperform from one year to the next. Diversification is the principle of spreading your investment risk around so that you’re well-positioned to seek returns wherever they occur. 

Your portfolios will hold the shares and bonds of many companies and governments in many countries around the world.

8. Smart rebalancing

Rebalancing is crucial to ensure portfolios remain aligned with their risk mandate. It also provides an automatic buy low / sell high mechanism.

However, we believe this should be driven by market movements rather than at some pre-determined period (e.g. monthly/quarterly). The latter can lead to over-trading (at extra cost) and selling winners too early.