Our approach
Our goal is simple. To support you in helping your clients achieve long-term investing success. We do that by sticking to some core investing principles.
- The information on this page is only suitable for financial professionals.
- Past performance is no indication of future returns and investors could get back less than they pay in.
- There’s no guarantee that models or funds will meet their objectives.
- The value of investments can go down as well as up.
A risk first philosophy
Markets don’t like surprises. Nor do your clients. They need to be clear about the possible upsides and downsides of their investment choices.
Our robust, evidence-based Risk Framework sets an upper limit on the range of volatility we consider acceptable for investors. Ten risk grades ensure every client can be matched as closely as possible to the level of risk they are comfortable with.
Deep diversification
Our skill in diversifying an investment portfolio is key to managing risk and return.
Our rigorous process ensures the right balance of investments across and within different asset classes, to help manage volatility and deliver returns that align with the risk your clients are prepared to take.
Discipline
We stick to what’s worked for us and our investors. We’re never driven by market momentum. And we won’t follow the herd towards the latest star fund manager or investment fad, in the hope of capturing short-term returns. Our solutions are structured around a considered, long-term view with the aim of delivering dependable and predictable outcomes.
Focus on quality
Our research process focuses on identifying funds that invest in high-quality companies.
Why? Because, in our experience, strong companies with a track record of generating superior and stable profitability deliver market-beating returns with lower risk over the longer term.
Delivering predictable outcomes
All solutions in our Outcomes Range are structured around a carefully considered, long-term view. They aim to deliver the dependable, predictable results that every client wants from their adviser, and which give them the best possible chance of achieving their investment goals.
Capital Market Assumptions
01Capital Market Assumptions
Our capital market assumptions (CMAs) are key in setting our long-term outlook and underpin our strategic asset allocation.
We monitor a wide variety of asset classes, looking at estimated returns, risks and correlations to assess how they might impact our portfolios. These assumptions offer an evidence-based, objective guide to the future, to balance the historical data of our risk framework.
While our data-driven CMAs play a valuable role in providing the best risk-adjusted returns, it’s important to remember that returns are cyclical, and it’s vital to maintain a disciplined investment approach through periods of market volatility.
Risk Framework
02Risk Framework
It’s important for your clients to understand the trade-off between risk and reward. They need to know what to expect.
Our Risk Framework does just that. It offers ten grades of risk for each of our solutions, so you can be confident in the suitability of your recommendation to clients.
We use 20 years of historical data and set maximum 12-month loss and volatility boundaries for each risk grade. This gives you a strong indication of the expected volatility for each level and the realistic experiences for investors.
Strategic Asset Allocation
03Strategic Asset Allocation
Our long-term strategic asset allocation provides the foundations for how we combine different asset classes to build diversified portfolios.
It aims to deliver the best possible client outcomes aligned with the level of risk that investors are prepared to take.
Three key principles guide our asset allocation. Firstly, we prioritise consistency of returns, so don’t take big bets on certain asset classes. Next, we continuously investigate, evolve and validate our strategic asset allocation to identify new sources of value and explore potential weaknesses. Finally, we produce our in-house capital market assumptions to provide forward-looking estimates of expected returns to support our asset allocation decisions.
Fund selection
04Fund selection
Our rigorous quantitative and qualitative research of the fund universe identifies and selects active fund managers within each asset class who can generate market-beating returns through complementary investment styles that increase diversification and opportunity.
We also identify and select passive fund strategies that can provide lower cost market returns to complement our active fund choices.
We are driven by detail, and your clients’ portfolios are constantly under close scrutiny. We carry out daily monitoring of all our strategy positions and fund selections, freeing you to focus on your clients and your business.
Tactical Asset Allocation
05Tactical Asset Allocation
While our strategic asset allocation is the major driver of long-term returns, we use our knowledge and analysis of investment markets to identify shorter term opportunities too.
Our tactical asset allocation committee is made up of representatives from the Parmenion investment management team. The committee meets monthly to assess our views on a range of factors, including the macroeconomic outlook, valuations, monetary policy, geopolitical risks and market trends.
The objective is to tilt the portfolios towards areas of the market that we believe provide attractive opportunities for outperformance over the next 12 to 18 months.
Markets move all the time, but by staying faithful to our risk-centric principles and not chasing short-term returns, to date we’ve consistently delivered dependable, above sector average returns for the level of risk accepted.
Jasper Thornton-Boelman
Investment Director
