Boutique Investment Philosophy
The art to making sure long-term investing matches your life’s needs.
At Boutique, our Investment Committee has over 30 years of investment market experience and draws on the very best research and advice from our independent investment consultants.
We believe that no one firm can provide strategic advice as well as understand the full investment markets, so we have partnered with several industry-leading consultants that provide us with advice to create the best investment outcomes for our clients. With the help of our independent consultants, our investment committee is constantly reviewing the investment landscape to ensure our client’s needs are fulfilled and that they are on track to achieve what they want in life.
Our Investment Process.
Understand your current position and what you want out of life.
Assess your tolerance to risk taking and create an investment plan that suit.
Structure the investments to suit the risk you want to take – and model out these outcomes.
Overlay a globally diversified investment exposure with consideration on fees and tax management.
Manage and stress test outcomes to make sure on track.
When investing at a more granular level we focus on the following 6 Core Principles
1
Specialist & Evidence Based Investment Research is fundamental in underpinning our investment teams recommendations. Investment management is a specialist area which requires a team approach to ensure the breadth of the investment markets are covered both domestically and internationally. We believe that although our Boutique Financial Advisers team are highly experienced, investment research should be performed by those who ‘do this every day’. To act as our research team, we appointed Zenith Investment Partners who review our portfolios daily, recommend investment changes, and provide our Investment Committee with macro views of the investment landscape. In addition, each month our team are provided with advice and commentary on our manager selection, asset allocation and risk position.
2
Diversification is essential to enhance long term risk-adjusted returns. Research shows that a well-diversified portfolio is the best way to achieve our clients’ investment objectives over the long term. Diversification is achieved primarily through asset allocation, but also via a blending of strategies and investment styles within each of the main asset classes. We believe that having exposure to Australian or International shares shouldn’t be limited to the top 100 companies on the stock exchange. Small weightings to emerging and midcap companies assists in capturing different stages of investment cycles alongside exposure to Australian & International Property, Cash, Fixed Interest and Alternate Investments such as domestic and international infrastructure. We also know from research that tactical tilts across all of these sectors can add value over time rather than being stagnant, and that timing of enacting any changes is important. Rebalancing of portfolios will also occur if market weights drift from strategic asset allocations.
3
Cost & tax efficiency is at the forefront of our mind to ensure clients are not paying investment fees or taxes that are unjustified. Using a Separately Managed Account (SMA), not only allows us to access preferred institutional pricing through our investment consultants but also gives us the ability to control the mix of index and active managers to align with our policy on acceptable manager costs. We are also very mindful of tax consequences so with our consultants we have developed a range of specific portfolios to accommodate our client’s individual taxation needs.
4
An Index and Active blend of investments, in our opinion, will work well during differing stages of the investment cycle and assist in the longer-term balancing of risk and return. We also believe that certain segment markets such as emerging companies (that is companies not in the top 100 or 200 tier), emerging countries and alternate investments, such as infrastructure, can be accessed more effectively by active managers who have control over investment selection. We use active management where it can be justified to trade off the higher cost with potential benefits including outperformance potential, reduction of portfolio volatility and in some cases for specific clients, that may be chasing a specific investment outcome such as income generation.
5
Cashflow being the cornerstone of our set of portfolio principals as the income generation from investments within portfolios can assist with ongoing cash needs and liquidity in environments where capital growth returns are challenged. Whilst this need is different for every client, what is consistent is that every client needs a plan that suits their circumstances. As clients are still working or accumulating assets, generally the income from core portfolios are reinvested back into the market automatically to help maximise long-term returns and assist with the timing risk of investing. As our clients’ circumstances change this can be varied to ensure funds are held in a ready accessible solution to help fund lifestyle needs.
6
And finally, liquidity of funds which is essential to our client’s financial security and for this reason (for the bulk of our passive investor clients) we prioritise liquid investments and minimise exposure to unlisted growth assets. Market cycles cannot be controlled so we believe that being able to have a ‘see-through’ valuation on investments is always important. Decisions around asset allocation changes, access and disbursement of these core funds can then be made with the full picture available.