Three key ideas underpin portfolio construction:
1. Capital Preservation
The belief that long term investment success is critically dependent on the ability to preserve capital in difficult markets. All the managers we allocate to also adhere to this investment philosophy, also known as ‘absolute return’.
By allocating to a diversified portfolio of about 20 global managers we generate returns from a variety of regions, markets and investment styles. As such, the source of returns is much broader than simply whether ‘the market’ is up or down.
3. Alignment of Interests
It is critical that there is alignment of interests between our clients and those managing their capital. Primarily this is achieved by our managers having most of their own capital invested in their own funds alongside our clients. This in turn encourages them to keep their funds at an appropriate size to maximise investor returns and minimise risk.