Investment Philosophy
Our investment philosophy is the overall set of principles or strategies that guides and steers our investment decisions. It helps us to simplify a complex industry, allowing us to concentrate on our relationships with our clients, safe in the knowledge that we are doing our best to protect and grow their assets.
While investment performance hinges on many factors out of our control, most notably the return on markets, we can control other factors. These are ones we deem important in creating and managing a portfolio, such as the types of funds we invest your funds into, the cost of the investments we choose and what to look for when selecting the investment companies to do business with.
There are three primary factors which influence portfolio performance.
1: Asset allocation
2: Stock selection
3: Market timing
One of the most important things to arise from modern portfolio theory is that of DIVERSIFICATION. Investors should avoid concentrated sources of risk by holding a diversified portfolio.
This is based on the assumption that different assets may see price movements that are independent of each other.
Diversification of an investment portfolio across a variety of different asset classes should help to reduce the overall level of risk compared with, say, a portfolio which only includes a single asset type.
We believe in diversification and tactical asset allocation
Diversification is in essence a defensive strategy. The focus tends to be on capital preservation – although this focus may shift for clients with a greater risk appetite.
In practice, portfolio construction that centres on diversification through asset allocation, geography and sector, tends to follow a top down process, whereby risk appetite determines asset allocation, which then determines geographical distribution, leading to sector weightings and fund or indeed stock selection.
An effective combination of different asset classes can significantly reduce the risk of a portfolio without reducing its potential for growth.
For further information,
please call us on 020 7256 9878
or email us advice@professionalassured.co.uk
and we will get back to you.