Our Investment Philosophy
Different Financial Advisers tend to hold different investment philosophies when it comes to making recommendations for their clients.
In the spirit of being open and transparent, here is what we think.
This was authored by our Financial Adviser, Michaela Pashley.
We believe that most investors are best served by using low-cost “passive” funds which “track” investment markets.
They are more efficient than pricier “active” ones which hire human investment managers to try to beat it. Academic evidence suggests that most active fund managers fail to outperform their markets, once charges and risk are considered. While some may outperform, this is likely due to luck rather than skill, and there’s no reliable way to tell who is likely to outperform in the future.
The most reliable price for an asset is its current market value as it incorporates the combined knowledge of all market participants. The only thing that can move asset prices significantly is the provision of new information, which often occurs at random and without notice.
Therefore, most investors are better off in passive trackers, saving money with lower charges, which means their money doesn’t have to work as hard to achieve their objectives.
A typical active fund will charge somewhere between 0.75% and 1.5% a year (known as the ongoing charges figure), which is higher than the majority of passive funds. Our portfolio recommendations typically cost between 0.10% and 0.25% - a significant cost difference which over the long term adds up.
We build our portfolios for clients typically using quality index funds that track global financial markets, from some of the biggest investment managers in the world.
Where clients have a preference for values-based or sustainable investment (commonly referred to as environmental, social, and governance, or ESG) we often use index trackers that exclude companies involved in tobacco, alcohol, and fossil fuels.
