Philosophy & Approach
We believe every investor is unique; therefore, we do not subscribe to any wholesale adoption of any particular investment strategy nor recommend the superiority of any particular strategy over another. Our approach is to gain a better understanding of the investment goals, risks, and constraints of all investors before adopting an appropriate strategy. The most important issue is satisfying the needs of investors rather than trying to outperform the market; there is no need outperforming the market when a client is not satisfied. The whole business of investment advisory is assisting investors to achieve their objectives at the level of risk they are willing and able to take.
Our Portfolio Management Process
We have adopted the portfolio management process recommended by the CFA Institute. The process has been illustrated and explained below:
- Policy Statement
Focus: Investor’s short-term and long-term needs, familiarity with capital market history, and expectations
- Examine current and projected financial, economic, political, and social conditions
Focus: Short-term and intermediate-term expected conditions to use in constructing a specific portfolio
- Implement the plan by constructing the portfolio
Focus: Meet the investor’s needs at minimum risk levels.
- Feedback loop: Monitor and update investor needs, environmental conditions, evaluate portfolio performance…
Source: CFA Institute
The investment process begins with an adoption of a policy statement. A sound policy statement helps protect investors against a fund manager’s inappropriate investments or unethical behaviour, helps prevent costly delays on monitoring and rebalancing portfolios, and helps create a seamless transition from one Fund Manager to another. A typical investment policy statement includes the following elements: a brief client description; the duties and responsibilities of the trustees, fund manager, and the custodian; the investment goals, objectives, constraints, and unique circumstances, performance review schedule, measures and benchmarks; any considerations to be taken into account in developing the asset allocation; investment strategies and investment style(s); and guidelines for re-balancing the portfolio based on feedback.
We always undertake a reliable study of economic, financial, political, and social conditions to determine the appropriate investment strategy before the construction of a specific portfolio and its subsequent implementation to ensure that, the needs of our clients are met at a minimized risk level.
The fourth step of the process is the continual monitoring of investor’s needs, financial, economic, political, and social conditions and, when necessary updating the policy statement and investment strategy.
Total Return Approach
A total return approach to setting return requirements looks first at the individual’s investment goals and then identifies the annual after-tax portfolio return necessary to meet those goals. That return is then reconciled with the individual’s separately determined risk tolerance and investment constraints. The reason being that each investor is different and has peculiar investment goals or objectives (risks and returns), and faced with different investment constraints. Therefore, the investment strategies to be adopted must be appropriate to satisfy the unique investment goals of the individual investor. In the light of the above, we subscribe to the Total Return Strategy which allows us to have a very good understanding of the client’s needs, risk tolerance level, constraints, and unique circumstances. This ensures that investors are better helped to achieve their investment needs.
The total return strategy tends to blend both the risks and return characteristics of both the capital appreciation and current income strategies. The strategy seeks to grow a portfolio by both capital gains and the reinvesting of current income. In addition, it is a highly flexible investment strategy which offers investors the chance to earn higher returns than capital preservation strategy, while striving to minimise the risk of losing investments. The strategy also enables us to switch between investment products (bonds, cash, equities, etc.) depending on which asset class is expected to perform the best in the prevailing economic, financial, and market environments.