Our Investment Beliefs
Modern Portfolio Theory is based on academic research by Harry Markowicz who
won the Nobel Prize for Economics in 1990 for his work.
He showed how risk can be reduced by diversification.
Further academic research* suggests that asset class
selection is accountable for 94% of a portfolio's
performance and only 2% comes from market timing
decisions and 4% from security selection.
We find it impossible to ignore such independent quality research and have adopted the Modern Portfolio Theory
which aims to construct a portfolio offering maximum investment returns for a given level of risk tolerance. You
will benefit from an investment portfolio based on
capturing market returns from different asset classes
rather than us trying to guess which way the markets will
move next.
You will be used to the investment adviser who will try to
find fund managers who will produce a better return than
the market return, but once you step away from the market return, you add an additional element of risk to your
portfolio. When you invest in a managed fund, there is no guarantee that you will benefit from better performance
but you will incur additional annual management charges.
Any increased return has to first of all cover the cost of
these additional charges before you see any benefit and as
the fund manager is only guessing that his/her stock
selection is going to out perform the market, is the risk
really worth taking? Citywire research last year revealed
that the average fund will only retain its fund management
team for two and a half years. Following a particular fund manager and switching every time that he or she moves
will add further costs to your investments.
Focused Financial Planning take the approach to wealth management which is recommended by academics and is strategic, structured, low-cost and easy to understand.
Whether seeking income or capital growth or whether for pension planning or personal investment, you will benefit from a low-cost, diversified, asset based portfolio, taking account
of your attitude to investment risk and tolerance of losses,
time frame and your objectives.
We believe that:
- Markets work efficiently
- Risk and Return go hand in hand
- Diversification spreads risk
- Portfolio structure (Asset Allocation) determines performance
- Costs and taxes must be considered
The investments will be held in a portfolio administration account which you will be able to access on-line with your
own personal security number. This means that you can
see how your investments are performing at any time.
For your protection, cheques are never made payable to
us, other than for fees.
In summary, you will benefit from a tailor-made, carefully constructed investment portfolio, with low costs and
simple administration which means that you will have
security and peace of mind. You will benefit from the
the quality of our service.
*Gary P Brinson, L Randolph Hood and Gilbert L Beebower. "Determinants
of Portfolio Performance" Financial Analysts Journal, July-August 1986,
pp. 39-44
Gary P Brinson, Brian D Singer and Gilbert L Beebower. "Revisiting
Determinants of Portfolio Performance: An Update" 1990 Working Paper.