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Investment process An invester without investment objectives is like a traveller without a destination. RALPH SEGER
   

Investment Portfolio Construction
The investments we have recommended have been selected following a detailed process of research and analysis. The first step in this process involves the construction of a Preferred List of investments. The Preferred List is made up of one or two investments representing each asset class, sector, style, region etc. This is our best of breed selection and investments are included in this list because they are considered to be the most likely to consistently outperform their peers. This list is constantly reviewed and modified. It is from the Preferred List that portfolio recommendations have been made.

In drawing up the Preferred List we focus on identifying outstanding qualities through understanding investment manager’s philosophies, processes, people and capabilities. Our process is robust and includes consideration of the following criteria:-

  • Ratings and commentary by our panel of research and stockbroking houses
  • Other industry data, reports and articles
  • Size and experience of the investment team
  • Size of fund
  • How the fund operates in different market conditions
  • Investment style
  • Sectoral and regional weightings
  • Specialisations and particular expertise
  • Past performance

Portfolio Blending
The portfolios we recommend are comprised of a combination of investments. When selecting and blending investments from the Preferred List into the final portfolio our first consideration is a clients' tolerance for risk. We ensure that the mix of investments matches the clients' objective for growth within the risk parameters that have been set for us. 

Diversity is a key tool in our aim to be at the “efficient frontier” for a clients' portfolio. This is a technical term where the portfolio is blended in a way to give the optimal performance with the minimal risk for a clients' risk profile. To achieve this result the portfolio must be diversified across many different levels. Blending investments with low correlations helps reduce portfolio volatility. Consideration is given to diversity across each of the following areas:-

  • Asset classes (e.g. shares, fixed interest, income and hybrid securities, hedging strategies, property and cash etc)
  • Fund Manager Investment styles (e.g. growth, value, GARP, style neutral, index, bottom up, top down, quantitative etc)
  • The correlation between different investments
  • Investment Sectors (small caps, large caps, media, resources, retail, industrial etc)
  • Regional allocation (Australian, International including regional diversity Asia, Europe, other emerging markets)
  • Fund manager diversity – Ensuring there is no overexposure to any one manager

A further element in the portfolio construction is weighting. The risk profile of the portfolio is designed to match a clients' risk profile by adjusting the percentage weightings to each of the abovementioned sectors to appropriate levels. These weightings will change with changes in market conditions.

The final and most important part of the process is the portfolio review. We review each of the individual investments, and the weightings regularly to ensure the portfolio continues to meet a clients' objectives and is representative of contemporary best of breed investment offerings. This is a dynamic process that requires an ongoing enthusiasm for inquiry and an awareness of what is happening around us.
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ABN: 71 089 066 955  |  AFSL: 222 132