Our client is at the heart of our investment process, and we mean that literally. We take the time to listen and understand. We start with a carefully thought out and well-documented long-term investment policy. It will be developed closely with each client to ensure representation, association, and an ability to stick to it over long periods of time. It will also help the client to make the really hard decisions in moments of crisis or exuberance. While the investment policy will provide the guiding light for long-term investment success, it should also be organic and will change as circumstances change.
Investment Goals and Risk Preferences
Part of the investment policy setting process is a thorough discussion on the financial goals and risk preferences of the client. The goals could be of personal, family, philanthropic, or of other nature. Most of these goals are competing against each other, and it is therefore important to prioritize them accordingly.
Long Term Policy Allocation and Active Asset Allocation
The long-term allocation policy sets the overall portfolio risk limits, and ensures the realization of long-term investment goals. The decision on the maximum amount of capital allocated to growth (= higher risk) and capital preservation (=lower risk) strategies lies at the heart of this policy setting process. This policy allocation provides the framework within which we actively allocate depending on the attractiveness of each asset class, or instrument.
Expectations and Governance
To us it is of critical importance to engage the client in the investment process. Only this way will we be able to find out how the client really feels about portfolio diversification, volatility, capital loss, specific asset classes or liquidity. Engagement also means offering education on investment issues, and creating realistic risk and return expectations. We want to provide the client with a sense of ownership in the investment process, as we believe strong and informed governance on the client’s part is an essential ingredient for a successful long-term relationship.
Monitoring and Review
A review of the investment policy and monitoring of the portfolio performance are critical. Portfolios need a regular checkup to review the policy objectives and their implementation over the previous year. If the objectives are no longer appropriate, then they need to be changed.