Our Investment Philosophy
We favour a mainly passive-based investment approach - the bulk of the portfolio will track the performance of global equity and bond markets. However, we do overlay this with some active features - portfolios are skewed towards certain factors (more on this shortly) and tactically rebalanced based on performance (rather than some arbitrary time period).
Why?
Because most active managers underperform after costs. The evidence is incontestable.
But…
We also think it’s important to acknowledge that the balance of power between active and passive investing could change. At present, the vast majority of investments are actively managed, which means that profit opportunities are scarce (as there are lots of people competing for them). Hence we think passive is the place to be for now.
But as the popularity of passive investing continues to grow, this could mean that markets become less efficient (as passive investors are less concerned about individual company fundamentals). In turn, this could present greater opportunities for active managers.
We don’t think we’re there yet, but may well be in the future.
Our 6 Core Principles
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 assets, most of the time.
2. Consistent Outperformance Is Rare
It’s difficult to consistently beat the market, and there is overwhelming evidence that the vast majority of active managers don’t. We prefer a mainly passive-based investment approach, one that largely tracks the market, but with a ‘tilt’ towards certain ‘factors’.
3. Asset Allocation Is The Key
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. And these should be rebalanced in a consistent manner- driven by market movements.
4. It’s Time In The Market, Not Timing The Market
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.
5. Costs Matter. A Lot
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 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.
And Finally…
We can’t say whether now is a great time to invest or not. And we can’t predict the ‘next big thing’. Instead, we focus on what we can control:
Creating an investment plan to fit your needs and risk tolerance.
Structuring a portfolio that is positioned to capture long-term returns.
Diversifying globally.
Managing costs, turnover and taxes.
Staying disciplined through market peaks and troughs.
Disclaimer: When investing, your capital is at risk. The value of your investment (and any income from them) can go down as well as up, and you may get back less than you invested, particularly where investing for a short timeframe (we normally recommend a horizon of at least 5 years). Neither simulated or actual past performance are a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Outsourcing Investment Management
WHAT WE DO
We’ll work with you to identify your investment goals and establish an appropriate risk profile. That will determine the asset allocation of your investments, which evidence suggests is the main driver of return.
We’ll recommend the best structure for investment, i.e. in whose name should it be held, and in which type of account (ISA, pension, GIA, etc.).
We’ll recommend a specific investment solution, comprising the appointment of a third-party manager and an underlying model portfolio or fund, one that is aligned with our own investment philosophy.
We’ll monitor the investments and update you on how they’re doing, and we’ll review the investment solution regularly to ensure it remains suitable for you.
WHAT WE OUTSOURCE
We outsource day-to-day investment management responsibilities to an appropriate specialist third-party manager. They will be responsible for underlying fund selection and portfolio rebalancing.
WHY WE OUTSOURCE
There are two reasons – cost and specialism.
Cost
You would pay higher underlying fund charges and fees as we would not have access to the same institutional share classes that specialist investment managers do.
Specialism
Our value add for you lies in the creation, implementation and review of your overall financial masterplan, which incorporates much more than just the investment piece.
Where you hold a portfolio (eg within an ISA, a pension etc) typically matters much more than the portfolio itself.
Most financial advisers and stockbrokers who claim to add value at the portfolio level simply do not, and yet you are charged significantly more for the privilege. With passive, rules based approaches available, the investment management piece is a commodity in today’s world - our value add lies in the planning itself.
How We Think About Risk And Volatility
A crucial part of your financial plan is determining an appropriate level of ‘investment risk’.
But in the context of investing, when we say ‘risk’, what we’re really talking about is the volatility of returns, i.e. the extent to which your investments are going to fluctuate in value (or as one client put it, ‘how squiggly the line is’). More volatile portfolios are considered higher risk, whereas less volatile ones are considered lower risk.
Balancing Risk & Reward
It’s crucial to acknowledge the trade-off between risk and reward.
For example, a higher allocation to equities (aka. shares) vs bonds will lead to a more volatile portfolio, but this has historically delivered far superior returns over the long-run. This point is well illustrated in the chart below which compares the ten-year performance of five model portfolios with varying equity vs bond weightings. For example, ‘80/20’ implies an 80% global equity allocation vs 20% bond, ‘60/40’ a 60% equity allocation vs 40% bond, and so on.
As you can see, as the equity content increases, so too have long-term returns, albeit with a ‘bumpier journey’ along the way.
We believe that investment risk, or more precisely, volatility of returns, should be considered your admission ticket to superior long term return potential.
Your Risk Profile
A key part of your financial plan is determining the right level of investment risk for you.
When we talk about investment risk, we’re mainly referring to volatility – how much your portfolio’s value may rise or fall over time. Markets don’t move in straight lines. Periods of growth are often punctuated by short-term declines, which are a normal part of investing. Tolerating these ups and downs is effectively your ‘admission ticket’ to better long-term returns.
As such, our goal isn’t to eliminate risk — that would also eliminate the return premium that investing offers over cash. Rather, we aim to manage risk in a way that’s appropriate to your personal goals, timeframe, financial situation, and comfort with market movements.
How We Assess Risk
We consider three key inputs when determining your recommended risk profile:
1. Risk Capacity – Your Ability to Take Risk
This refers to your financial ability to withstand temporary market declines without needing to alter your plans. It’s influenced by:
Your investment timeframe – not just when you’ll start drawing on your portfolio, but how long the funds are likely to remain invested thereafter
Your wider financial situation – including cash reserves, income surplus, and access to other liquid assets
The longer your timeframe and the stronger your wider financial position, the greater your ability to take on investment risk.
2. Risk Tolerance – Your Willingness to Take Risk
This reflects how emotionally comfortable you are with market volatility.
Short-term dips in the market are completely normal – they’re part of the investment ‘journey’. The real risk comes not from the dips themselves, but from how we respond to them. If a market drop feels so uncomfortable that you feel compelled to liquidate your investments, that’s when lasting damage can occur. Selling during a downturn means you may lock in those losses, rather than giving your investments time to recover.
We aim to recommend a risk profile that stretches you, but never breaks you, ensuring you can ‘stay in your seat’ when markets are turbulent. This is assessed through a structured questionnaire and our ongoing conversations.
3. Risk Requirement – Your Need to Take Risk
This is the level of risk required to help meet your financial goals.
All else being equal, taking more risk increases your expected return — which can create more flexibility, optionality, and scope for generosity in future years. But if you can achieve your objectives without high risk, it might make sense to consider a more measured approach.
Our role is to strike a balance: taking enough risk to get you where you want to go, without taking on more than is necessary or tolerable.
Keeping This Under Review
Your risk profile isn’t fixed. Your capacity, tolerance, and requirement for risk may shift over time as your circumstances and objectives evolve. As part of our ongoing relationship, we’ll review this regularly and adjust your investment approach as needed.
Investment Fire Drill
A final word on volatility. As per the previous chart (see returns in a ‘very bad year’), you should expect your portfolio to fall in value from time to time — sometimes sharply. That’s not a sign something’s gone wrong; it’s simply how markets behave.
Investing comes with periods of discomfort. Some years feel great, others less so. But long-term success isn’t about avoiding the downturns (which are impossible to predict) — it’s about staying invested through them.
If you panic and move to cash during a dip, you risk missing the recovery, which often begins when things feel most uncertain. History shows that some of the best days in markets come just after the worst — and missing those can be extremely costly.
Volatility never feels good in the moment, but it’s a normal and necessary part of the journey. Our role is to ensure your investments are set at a level you can stick with — not without ever feeling uneasy, but without feeling the need to act.