Call us now: 0800 121 122
Appointment
Client Login
 Call us now: 0800 121 122
Appointment
Client Login
 Call us now: 0800 121 122

INVESTMENT PHILOSOPHY

Bradley Nuttall’s investment philosophy drives the way we build our portfolios for clients. It is an evidenced based philosophy which looks to achieve long-term enhanced market returns through a diversified, low-cost approach. Some of the key
papers

The portfolios Asset Allocation is paramount

The appropriate allocation of capital among asset classes (shares, bonds, fixed interest, etc ) will have a greater influence on long term portfolio returns than the selection of individual securities. Asset classes are a group of securities that share similar characteristics such as

  • Investment type – Shares, bonds or property
  • Geography – Domestic or International
  • Strategy – Small company, value company, profitability

Diversification reduces unnecessary risks

Unsystematic or company-specific risks can be dramatically reduced through appropriate diversification, enabling the portfolio to principally be exposed to market, or systematic risk. Diversification is enhanced by holding the majority of available securities within an asset class and including multiple asset classes (such as international shares and bonds) within the portfolio.

Higher returns are achieved by taking more risk

Generally, and in the long-term, to achieve higher returns an investor needs to take more risk. As shares are riskier than bonds, we expect shares to have a higher return than bonds in the long term. Therefore, to achieve a greater return a portfolio needs a higher proportion of shares relative to bonds.

Diversification reduces unnecessary risks

Unsystematic or company-specific risks can be dramatically reduced through appropriate
diversification, enabling the portfolio to principally be exposed to market, or systematic risk.
Diversification is enhanced by holding the majority of available securities within an asset class and including multiple asset classes (such as international shares and bonds) within the portfolio.

Higher returns are achieved by taking more risk

Generally, and in the long-term, to achieve higher returns an investor needs to take more risk. As shares are riskier than bonds, we expect shares to have a higher return than bonds in the long term. Therefore, to achieve a greater return a portfolio needs a higher proportion
of shares relative to bonds.

Portfolios can achieve higher returns by tilting to risk factors

Academic research by Ken French and Eugene Fama have identified that there are equity and fixed income dimensions that have higher expected returns. Their research showed that:

  • Small companies outperform large companies
  • Value companies outperform growth companies
  • Profitable companies outperform non-profitable companies
    Tilting portfolios to these factors increases the portfolios expected return.
Portfolio construction should reflect a clients investment horizon
Investors with a long-term time horizons of 10 to 15 years or more will be rewarded for any discomfort that they might suffer in the short term. Investing for the long term (preferably longer than ten years) is central to investment success because it allows the long term characteristics of asset classes to surface.
Liquidity is important
Liquidity is the ease that investments can be bought and sold. In times of market stress illiquid investments can be difficult to sell or need to be sold at a discount. The vast majority of a portfolio should be in liquid investments which can be realised within two weeks.
Managing fees and tax improves performance
Our portfolio fees are low attributed to having direct access to institutional fund managers, holding direct shares in some sectors and rebating all fee reductions to our clients where negotiated. Tax is another cost that needs to be managed on an ongoing basis. Whether our clients are local or overseas we ensure that the most tax effective structures are employed.