Investment approach - Diversified

Investment philosophy

Our diversified investment philosophy is based on two key principles:

 We believe that market prices tend to over and under-shoot fair value. Given this, a focused and active approach to asset allocation is likely to add value for investors over time.  

 We believe that through fundamental research we can select quality, well priced securities. This minimises the risk that investments will not perform well and is likely to add value for investors over time.

Investment approach

We ue both quantitative and qualitative analysis to make investment decisions. Qualitative input is critical to understanding the characteristics of our market and active exposures. It is also important for understanding structural changes over time which may mean that historic relationships have become less meaningful.

The objective discipline of quantitative analysis is also important.

 Analysis of historic returns allows us to test portfolio allocation changes objectively.

 Forward-looking risk budgeting allows us to test whether the beliefs embedded in our assumptions and portfolio allocations are consistent. It also allows us to view portfolio risk and return drivers and the contribution of each to overall portfolio risk and return.

We seek to construct portfolios that are as broadly diversified as possible, without detracting from the end outcome to investors. However we recognise that diversification between a range of market exposures and active risk exposures is not sufficient to protect against significant down markets, so we take a tactical asset allocation approach (TTA).

Unlike standalone TAA, our goal is not pure alpha generation. Rather, our goal is to supplement long-term returns and to manage risk. By managing risk, we mean to reduce exposure to assets when fundamentals are poor, or take advantage of market conditions when favourable. Our TAA activity is focussed on asset classes where we believe we have a strong competitive advantage.

For more information

Contact our Institutional sales and servicing team.