Our approach

Our investment approach aims to deliver competitive investment performance tailored to a client's objectives and perceived risk tolerance.

In essence, our approach is to select the most effective specialist investment managers in the world. Sector specialist investment management enables us to utilise the expertise of a wider range of investment managers that are leaders in the various domestic and international asset classes.

This provides greater diversification and the ability to combine investment managers with different investment styles.

We also seek to reduce overall volatility of investment returns by avoiding market timing in our asset allocation decisions. By using multiple investment managers we also have less 'manager specific risk'. Diversification (achieved by having multiple asset classes and multiple investment managers) has the effect of lowering overall portfolio volatility.

We have both active and passive managers in our investment structure. Where passive (or index) managers are used it is merely for purposes of risk control. Consistent with our investment philosophy we believe that consistent value can be added by active management. However, this applies at the stock selection level, not at the asset allocation level.

The proportion of each Sector Trust managed actively varies according to the nature of the asset class, its depth and liquidity and the number of different styles of management available in that asset class. Generally, the more liquid and efficient a market the harder it is for active managers to add value (especially after fees have been deducted).

The first step in our Investment Process is to translate the business objectives for each Fund into investment objectives. Then an appropriate investment strategy can be formulated for these objectives.

Factors we consider in setting investment objectives include:

• Time Horizon - this is one of the most important factors and is also integral to our financial planning approach. Time horizon intervals are defined as: short; short/medium; medium/long; and long term. These represent the number of years of access to capital required by the client.
• Risk Tolerance - the specified risk tolerance of a Fund is an important element of the investment objectives.
• Expected Return - once the risk objective has been set, the return objectives can be determined in a consistent manner.