Investment

With over two thousand investment managers to choose from, it’s imperative that we find the right people to manage your money, in the right way. We uncover the appropriate managers through deep and thorough fundamental research that is not limited to the big investment names. We prefer to use specialists, not generalists, and look for a manager with a disciplined investment process and style, with long-term track records compared to their peers.

Asset allocation accounts for over 90% of the return that you may achieve from a well managed, diversified investment portfolio. We follow a highly structured process to determine the right strategic asset allocation that matches your needs and tolerance to risk. Strategic asset allocation involves taking a longer-term approach and making decisions based on a view of how asset/sub-asset classes will behave over long time periods. An appropriate exposure to growth assets, such as shares, is important to offset the impacts of inflation and preserve your future buying power.

Your goals, aspirations, fears and, most importantly, your behaviours are key considerations in the development and ongoing management of your investment portfolio. The world’s most famous investor, Warren Buffet, once stated, “It won’t be the economy that will do in investors; it will be investors themselves.”

Research has shown that when investors are left to their own devices, 60% of their potential returns can be destroyed that may have otherwise been gained from investing in the markets. The reality is, we are not hard wired to invest wisely – our investment decisions are often driven by emotional decisions. There are eight great behavioural mistakes that investors make and a key part of our role is to ensure that these mistakes are minimised. Read more in the attached article "Investor Behaviour - the unexpected influence on financial strategies".

A genuine way to reduce uncertainty without compromising expected future returns is diversification. Diversification involves spreading your investment among asset classes, investment managers and securities to reduce risk and the impact that any single one of these can have on your portfolio.While most people understand the basic concept of diversification, many still don’t fully diversify their portfolio. For example, just holding several stocks is not good diversification, especially if they have similar risk factors by belonging to a similar industry group, asset class, or even selected by investment managers using a similar investment process.

To fully benefit from diversification, we construct your portfolio so that it is diversified in many ways including:

1. across asset classes

2. within asset classes

3. across investment managers and investment styles

4. across regions

No single investment manager will be the best performer in a single asset class at all times, across different economic and market environments. Therefore, when selecting managers, we look beyond simply past performance. As markets move in cycles, certain market conditions will suit specific types of managers. Even the best managers are likely to experience short-term underperformance if market conditions don’t suit their investment strategy. We believe an investment manager’s fundamentals (investment philosophy, investment approach, people and ownership structure etc.) are much better indicators of their skill than past performance.

To supplement our extensive in-house experience, we have access to the leading research houses covering key issues, such as asset allocation, investment fund managers and Australian shares. We use the input from these quality consultants to assist in selecting and constructing investment portfolios.

There are many opportunities available to investors so it is important that they are evaluated from a risk and return perspective. We believe that investment portfolios should contain an appropriate exposure to the global markets. These offer access to attractive market sectors, not present in the Australian market, and high growth emerging markets. The exposure to foreign currencies is an attractive aspect of global investments, however the currency risks need to be carefully managed.

Within the Australian Global share markets, attractive investment opportunities can be found in all parts of the market, including large cap, medium cap and small cap shares. Finally, there are attractive opportunities in the Alternative style investments, such as Private Capital and Hedge Funds. To ensure risks, such as liquidity, are fully understood, it is essential to conduct extensive research on these asset classes.

We believe that successful investing is a medium to long-term process, so, as investors and not speculators, we take a long-term strategic approach. Instead of trying to outguess the market (for example, by trading in and out of asset classes and investment managers on a short-term basis), we look to set a target weighting to each asset class and manager based on our long term expectations. We then maintain these weightings via a disciplined rebalancing process.

At Strategic Wealth, we endeavour to truly understand the economic environment and the characteristics of your investments. We regularly review all aspects of the portfolio and make necessary changes to stay on track. As Warren Buffet once said, “The stock market is designed to transfer money from the Active to the Patient.” Hence, we encourage our clients to be patient so that you will be rewarded for adopting a highly disciplined approach to the ongoing management of your investment portfolio.

As mentioned earlier, our principles and practices guide us in the construction and ongoing management of your investment portfolio and ensure that you receive the appropriate reward for the level of risk taken. Our portfolio construction process is highly structured and we leverage a combination of different research data, academic thinking and practical experience.

You also have the choice in the style of portfolio to be adopted:

Our Core Solution is built around a world-class manager-of-manager type approach. This provides our clients with a highly efficient and diversified portfolio on a cost effective basis. We can then add satellite investments to tailor the portfolio with different exposures for increased return potential and greater risk control. Finally, we can offer highly tailored solutions that may include direct share holdings for an Australian share component for those investors with a strong interest in this area, or whose circumstances may benefit from this approach.

All three tailored approaches will provide you with a greatly structured investment portfolio that will meet your high-level investment needs. Yet, you may find that a particular solution is more attractive to you due to your level of interest in investments, concern over costs or other factors. We will work with you to identify the best approach to suit your specific needs.