How we build our portfolios
We build sustainable portfolios by utilising our team’s extensive expertise and partnering with a highly respected external research provider.
All of our advisers are members of our Investment Committee and as such take an active role in building and reviewing our portfolios.
With more and more of our clients wanting to ‘make a difference’, in 2021 we made a fundamental shift by partnering with MyFiduciary, a highly respected, independent research and portfolio construction organisation, to build bespoke portfolios that met our strict ethical investing criteria. From this, the Sustainable Portfolio series was born.
Chris Douglas Director, Principal
Developing award winning portfolios takes a well thought out and researched process. As an advisory business that is not aligned to any provider, we have access to a diverse range of fund managers within NZ. In order to condense this down, our investment committee, with the help of our experienced research partner, MyFiduciary, adopt the following key principles when building portfolios:
We invest in the main types of assets, shares, property, bonds and cash. The single most important factor affecting risk and return in an investment portfolio is the allocation between growth and defensive assets.
Diversifying across many investment types increases returns, reduces risks. We favour investment funds that have a tilt towards smaller companies, value companies and more profitable companies.
Our portfolios are broadly diversified, with the bulk of investments being overseas, spread across many countries. Some of these investments will be “hedged” back to New Zealand dollar (i.e. protects against fluctuations in exchange rates) where the evidence suggests this helps.
We design portfolios based on the long term averages, not short-term attempts to predict what markets will do well and what will do badly. We will not make recommendations to change based simply on short-term movements in markets, particularly sharemarkets.
Where possible, we avoid high cost “active” funds in our model portfolios and have a bias towards low-cost, indexed type managers that meet specific criteria. We may use active funds as part of our Sustainable Impact portfolios where clients typically want to invest positively in firms that make a sustainable difference, rather than simply avoid particular types of investments, or to meet a particular investment preference.
Invest for the long-term. Making knee jerk reactions when markets are volatile can cause significant reductions in the long term returns achieved.
Choose easily-understandable, liquid, quality investments. We prefer investments that are either listed or are easily-redeemable managed funds, and avoid investments which are hard to price or to liquidate easily and quickly.
Our innovative range of sustainable investment portfolios are curated using extensive research and are constantly improved.
These portfolios are designed for people who not only want to avoid certain types of investments, but also actively support and invest in sustainable-focused companies. They are a powerful combination of our low-cost index-based approach (which keeps costs low) and selected “active” funds (favouring companies that are actively supporting sections of the United Nation Sustainable Development Goals). Although these funds would incur slightly higher annual costs, the long term returns would not be compromised.
These portfolios are based on using low-cost index-type ethical funds. They have a strong focus on the financial sustainability side, while also covering off key social values and energy use. The portfolios remain well diversified with a low annual cost.
In either case, we can also add in one or more ‘satellite’ funds to match your areas of interest or where you want to make a particular positive impact.
We also offer a range of low costs portfolios that still incorporate some broad screening but have a wider range of assets available and less stringent screening out of companies.