Our guiding principle is that markets are far from perfect and that a research-based approach will reveal the imperfections and provide the best overall results in the long term. Indeed increasing levels of volatility suggest that markets are becoming less efficient in the short and medium term. This approach allows us to exploit such opportunities for advantage through a policy of active rather than passive management, but we are investors not traders.
Our investment philosophy acknowledges the dangers of being slavish to any single 'style' such as growth, value or momentum. We prefer to embody all three factors within our methodology and this offers the opportunity to outperform at all stages of the economic cycle. Over many years we have found that a disciplined approach to investment incorporating all of these (sometimes conflicting) factors, coupled with a flexibility to embrace change, has given us a performance track record of which we are extremely proud.
Because of the diversity and complexity of markets, no individual manager can hope to keep abreast of the wealth of information available. We therefore adopt a collegiate approach whereby all fund managers are involved in the investment process. This enables our clients to benefit from our combined experience and contributes significantly to our exceptionally low level of staff turnover. We believe that no two clients are totally alike although they may share similar financial goals. We therefore tailor each portfolio to meet precisely a client's objectives over both the medium and long term. We aim to maximise returns within the parameters set by our clients.
Fund Manager Discretion
It is important to differentiate between the concept of 'house policy' and a 'house model' portfolio. Our service-based culture is founded on this distinction, since we believe that a uniform model portfolio cannot be applied to all clients irrespective of their particular requirements. Thus, our investment process is designed to enable each fund manager to interpret our house view of markets and their prospects, within the unifying influence of our collegiate structure, for the benefit of individual clients within their agreed parameters. The final decision and responsibility for investment rests with your fund managers, who will be most familiar with your circumstances and preferences.
Research capacity
We have a research department which incorporates both strategists and sector/area specialists. The aim of this department is to make critical use of the wealth of primary research material available to us from external sources. We interpret, challenge and adapt this to suit our client requirements and format it to provide an 'agenda' for our internal investment process. We firmly believe that this interpretative approach offers the best route to understanding the market valuation of companies since it allows us to synthesise the views of the whole market, which ultimately determines the market price of shares, rather than relying on specific individual influences.
The task of our research analysts is to identify key trends in the principal economies, sectors and stocks and to facilitate the unlocking of the difference between a company's true value and its price as set by markets. We aim to embody long-term quality in our research process by ensuring that all our analysts pursue research as a career, rather than simply using it as a stepping-stone from graduate intake to fund management.
Our research capability is designed to cover both equity and bond markets. Our universe of direct UK equity coverage extends to about 150 companies, drawn from the largest 200 stocks in the London market. Exposure below this threshold is generally achieved through the selection of externally managed collectives (investment and unit trusts, and Open Ended Investment Companies (OEICs)). Bond research covers investment grade issues, whether they be denominated in sterling, dollars or euros, and concentrates on analysing credit quality trends (in conjunction with research on equity) and monitoring yield spreads over sovereign debt. We have specialist expertise within the department to monitor approximately 500 externally managed funds from 46 investment houses.
An important part of our research approach is the external input, both from meetings with company management and from discussion with sell-side analysts and strategists. We are also in the fortunate position, unlike many other institutional asset managers, of being able to meet and quiz other fund management houses, thanks to our use of their products within our own client portfolios.