Investment Pillars
1) Long term Investing
Outperformance requires a long-term outlook with continuous adjustments to the portfolio
Compounding is a powerful force: reasonable returns compounded over long periods can produce astonishing results and is more effective if large losses are avoided
Costs and taxes have a significant impact on net returns and should be minimized
2) Asset Allocation (the mix of asset classes) is an important driver of return
Diversification has benefits, allowing investors to reduce risk without necessarily sacrificing return
Assets that are uncorrelated (or have low correlations) help to reduce total portfolio risk
Tactical asset allocation and security selection and also contribute to returns
3) Valuation is an important determinant of future returns
Price and value ultimately converge, creating opportunity when they deviate
Over the short term, market psychology, sentiment and emotions play a strong role in market movements, creating noise which can mask the fundamental characteristics of An investor is often rewarded for assuming the short-term discomfort of other investors by doing the opposite trade
Have patience in identifying opportunities and be willing to hold cash in the absence of attractive valuations
4) Stewardship principles increase the odd of meeting our clients’ goals
Risk is not simply the “volatility” of an investment but also the “shortfall risk” of not achieving a client’s goal
Investing, by definition, involves assuming risk. We strive to effectively manage this risk through diversification at the asset class, manager and security level, and also by adhering to a robust, valuation-based investment process
Investor education and effective communication are critical (and often overlooked) components of a successful investment strategy