How we build our 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.

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.