Our Philosophy

WEALTH PRESERVATION IS OUR TOP PRIORITY

Our first priority is to preserve your savings. Growing your wealth is a second order priority.

What strategies do we use for wealth protection?

We believe the following investment principles are fundamental to managing your retirement money responsibly.

WE ARE DIVERSIFIED

This simply means having your money spread over a large number of investments, so that if any one should fail (it does happen), your retirement plans would not be jeopardised.
We practice diversification on several levels:

Economies
We spread investments across regions and countries.

Sectors
We spread investments across multiple sectors within economies.

Shares
Our guideline is that we don’t invest more than 5% of the portfolio in any one company. There will typically be 30 or more different companies or funds represented in the portfolios.

Fixed interest
The fixed interest portion of the portfolios will have no more than 7.5% in a single bond, and no more than 15% in a single issuer.

Cash
We hold a variety of currencies in cash portfolios, not just NZD.

WE FOCUS ON GLOBAL MARKETS

The share portion of GMI portfolios will mostly consist of foreign shares. Our view is that the only responsible way to protect your share investments from the world’s economic, natural and political crises is to spread them widely.
We are also mindful that most kiwi investors are already highly exposed to the New Zealand economy through their house and their job.

WE TAKE A CONSERVATIVE APPROACH

We pursue growth in the value of your savings only when we are satisfied that we are managing the downside risk. We are never 100% invested in share markets, and often we choose to hold substantially more cash than our benchmarks. When considering any investment, we always ask ourselves “What if we’re wrong?".

OUR INVESTMENTS ARE UNHEDGED BY DEFAULT

This means that our portfolio returns are subject to the gyrations of the New Zealand dollar, one of the world’s most volatile currencies. Why do we do this? For the same reason we would diversify our investments in any other asset – New Zealand is a tiny part of the world economy. The heavy indebtedness of New Zealand to foreign lenders just amplifies the risk.  

Although Kiwi investors tend to focus on New Zealand dollar returns, they are often oblivious to the fact that the global purchasing power of the New Zealand dollar has a large influence on their future standard of living. 

WE ARE NOT BENCHMARK CONSTRAINED

This is the important caveat to the points above. Managers who will not deviate from their benchmark’s asset weighting slavishly follow the benchmark up and down. But for us, the benchmark is a measuring stick, not a straightjacket. We can be overweight or underweight in sectors, countries, or stocks as long as it fits into the big picture of beating the benchmark while not taking on excess risk. This lack of constraint means we won’t track the benchmark as neatly as other funds – we think this is an acceptable price to pay for higher long-term returns and lower risk.