Portfolio Construction approach

Our portfolio construction approach involves 2 steps:

  1. Set an asset allocation aiming to meet your investment goals, mindful of your risk/return profile and leaning to taking less risk if you can achieve those goals with lower risk investments; and
  2. Aim to at least achieve market returns in each asset class, through investing in a well-diversified portfolio across the chosen asset classes, as cheaply and efficiently as possible.

Some clients wish to take on more investment risk to seek higher returns, by:

  • Taking on "active" risk - picking fund managers who aim to do better than index funds, and so actively construct a portfolio different to index weightings; and/or
  • For more sophisticated investors, scientifically investing to exploit well known "risk premia", such as by tilting the portfolio to investments in "small cap" shares or "value" shares, by adding further diversification through specific allocations to infrastructure and low-correlated alternative assets, and including ETF holdings to allow nimble and cost efficient dynamic asset allocation decisions.

Of course, by taking on more risk, you also risk doing worse than a simple index-fund strategy.