Core Assumptions
Our investment philosophy is anchored by our analytical model and portfolio construction methodology. Our investment process is based on three core assumptions:
1. No river flows in one direction. Markets, asset classes, countries, industries and sectors move up and down over many time horizons based on many fundamental and mass psychological factors. We thus reject buy-and-hold as a legitimate investment strategy;
2. Your portfolio must result from the intersection of market realities and personal needs. Ignoring one or the other will produce sub-standard results;
3. Structure, discipline and process are must-have elements for any investment plan.
Three Frameworks To Work With
KYC Framework
Your portfolio is your personalized investment solution meant to help protect and grow your wealth in all and any environments in a way that would matter most and make the biggest difference to you.
We listen to your needs and wants and we take an unconventional view on the meaning of risk tolerance. Everything we propose is a realistic path towards what you are trying to achieve while unequivocally defending the idea that capital preservation comes ahead capital appreciation in absolutely all circumstances.
Market Analysis Framework
Our market model is a unified framework reconciling market fundamentals with actual market psychology and behavior. Our research extends way beyond what we can define as permissible investment universe for a very simple reason: in today’s globalized and interconnected world, some markets you may invest or may have to be present in are oftentimes impacted by developments in those you don’t or should not invest in. Ignoring or paying attention to such correlation patterns ends up being the difference between long-term success and failure way more often than casual observers realize.
Portfolio Construction Framework
Astute market professionals know there is a big difference between conducting analysis and actually making trading or investment decisions. This is because committing capital to a specific idea must account not only for how much return potential there is – and thus how much money you can make – but also for how much risk there is – and thus how much money you can actually lose.
Our portfolio construction framework is entirely driven by the firm belief that investment strategies must be judged based on the return per unit of accepted risk. This is why we re-balance portfolios based not only on what we can infer from our global capital markets research but also based on a number of rule-based statistical systems whose role is to maximize your portfolio’s return-to-risk ratio.
Investment Process in Five Steps.
- ANALYZE: We implement an entire system of holistic, data-driven market analysis. We review and analyze your current investment strategies and their appropriateness in the prevailing market context. We re-anchor the conversation to our risk-management focused approach and peg expectations to realistic absolute return models.
- PLAN: We prepare a personal financial plan to help you achieve your goals and dreams using a personalized Wealth Management strategy. We also create an investment policy statement (IPS) which will underlie the entire investment management process – which is the engine moving forward your entire financial plan.
- ADVISE & BUILD: We guide you through the evolution of your strategy at various stages in your life. We try to prepare you for and help you navigate through different market conditions and circumstances. All along the way we keep a sharp risk-management focus and remain faithful to our absolute return mandate.
- REVIEW: We adjust your plan depending on how your personal or family circumstances change. We fine tune your investment policy statement (IPS) based on big picture changes in market circumstances, personal circumstances, or both. We reflect IPS changes in your overall investment strategy.
- COMMUNICATE: We keep you informed about your investments, market trends and financial concepts that help keep you on track. We pro-actively interact with you for periodic KYC / suitability updates and needed changes. We ensure proper reporting according to regulatory requirements and the highest of industry standards.
The Core Strategies Underlying Our Investment Process.
BUY & HOLD
What is Buy and Hold
Buy and hold is a passive investment strategy in which an investor buys stocks (or other types of securities such as ETFs) and holds them for a long period regardless of fluctuations in the market. An investor who uses a buy-and-hold strategy actively selects investments but has no concern for short-term price movements and technical indicators. Many legendary investors such as Warren Buffett and Jack Bogle praise the buy-and-hold approach as ideal for individuals seeking healthy long-term returns.
Key Concepts
- Buy and hold is a long-term passive strategy where investors keep a relatively stable portfolio over time, regardless of short-term fluctuations.
- Buy and hold investors tend to outperform active management, on average, over longer time horizons and after fees, and they can typically defer capital gains taxes.
- Critics, however, argue that buy-and-hold investors may not sell at optimal times.
How Buy and Hold Works
Conventional investing wisdom shows that with a long time horizon, equities render a higher return than other asset classes such as bonds. There is, however, some debate over whether a buy-and-hold strategy is superior to an active investing strategy. Both sides have valid arguments, but a buy-and-hold strategy has tax benefits because the investor can defer capital gains taxes on long-term investments.
To purchase shares of common stock is to take ownership of a company. Ownership has its privileges, which include voting rights and a stake in corporate profits as the company grows. Shareholders function as direct decision makers with their number of votes being equal to the number of shares they hold. Shareholders vote on critical issues, such as mergers and acquisitions, and elect directors to the board. Activist investors with substantial holdings wield considerable influence over management often seeking to gain representation on the board of directors.
Recognizing that change takes time, committed shareholders adopt buy and hold strategies. Rather than treating ownership as a short-term vehicle for profit in the mode of a day trader, buy-and-hold investors keep shares through the bull and bear markets. Equity owners thus bear the ultimate risk of failure or the supreme reward of substantial appreciation.
ABSOLUTE RETURN
What Is Absolute Return?
Absolute return is the return that an asset achieves over a specified period. This measure looks at the appreciation or depreciation, expressed as a percentage, that an asset, such as a stock or a mutual fund, achieves over a given period.
Absolute return differs from relative return because it is concerned with the return of a particular asset and does not compare it to any other measure or benchmark.
Key Concepts
- Absolute return is the return that an asset achieves over a certain period.
- Returns can be positive or negative and may be considered unrelated to other market activities.
- Absolute return, unlike relative return, does not make any comparison against other possible investments or to a benchmark.
How Absolute Return Works
Absolute return refers to the amount of funds that an investment has earned. Also referred to as the total return, the absolute return measures the gain or loss experienced by an asset or portfolio independent of any benchmark or other standard. Returns can be positive or negative and may be considered uncorrelated to other market activities.
Relative and Absolute Returns
In general, a mutual fund seeks to produce returns that are better than its peers, its fund category, and the market as a whole. This type of fund management is referred to as a relative return approach to fund investing. The success of the asset is often based on a comparison to a chosen benchmark, industry standard, or overall market performance.
As an investment vehicle, an absolute return fund seeks to make positive returns by employing investment management techniques that differ from traditional mutual funds. Absolute return investment strategies include using short selling, futures, options, derivatives, arbitrage, leverage, and unconventional assets. Absolute returns are examined separately from any other performance measure, so only gains or losses on the investment are considered.
SMART BETA
Smart beta defines a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization-based indices. Smart beta emphasizes capturing investment factors or market inefficiencies in a rules-based and transparent way. The increased popularity of smart beta is linked to a desire for portfolio risk management and diversification along factor dimensions, as well as seeking to enhance risk-adjusted returns above cap-weighted indices.
Smart beta strategies seek to passively follow indices, while also considering alternative weighting schemes such as volatility, liquidity, quality, value, size and momentum. That’s because smart beta strategies are implemented like typical index strategies in that the index rules are set and transparent. These funds don’t always track standard indices, such as the S&P 500 or the Nasdaq 100 Index, but instead, focus on areas of the market that offer an opportunity for exploitation.
Key Concepts
- Smart beta seeks to combine the benefits of passive investing and the advantages of active investing strategies.
- Smart beta uses alternative index construction rules to traditional market capitalization-based indices.
- Smart beta emphasizes capturing investment factors or market inefficiencies in a rules-based and transparent way.
- Smart beta strategies may use alternative weighting schemes such as volatility, liquidity, quality, value, size and momentum.
- In 2019, smart beta funds command $880 billion in total cumulative assets.
CAPITAL GUARANTEED
A typical structured product (usually with a maturity of between three and five years), will have 100% capital protection, or with protection of losses up to a certain percentage (say 20% or 30%). This feature is attractive for investors concerned about stock market volatility over the medium term.
Geared returns
This simply means that investors earn a multiple of the return of the underlying index or group of indices. Returns are often capped at a certain level, but investors will still earn the multiple up to that level, at which point the investment return is capped. For example, the structure may give the investor two times the return of the underlying index, capped at 60%. So, if the index grows by 50% over five years, the investor will earn a 100% return. If the index grows by more than the 60% cap, the investor will earn 120% (the 60% times two). Only if the index returns more than 120%, will the investor lose out on the upside beyond that level. These payoffs are therefore very useful for investors only mildly bullish about the underlying market.
CONTACT DETAILS
Get in touch
Give us a call or drop by anytime, we endeavour to answer all enquiries within 24 hours on business days. We will be happy to answer your questions.