Evidence based or passive investing aims to capture the returns of the market through a low-cost, diversified and long-term investment strategy.
We have adopted an evidence-based approach to investing that seeks to provide the greatest likelihood of a successful outcome for our clients.
The evidence provides very clear guidance as to the investment activities that organisations such as our own should be focusing on.
Passive, or index fund investing refers to an investment methodology that attempts to track a specific market index as closely as possible. The theory behind indexing as an investment strategy focuses on the zero-sum game: before costs, for every investment that outperforms the index of a chosen market, there has to be another one that underperforms it. But once costs are taken into account, it means that the low-cost index funds will have a greater probability of outperforming higher-cost actively managed funds.
Our three key beliefs which drive investment decisions for our clients are:
1) markets work efficiently;
2) risk and reward go hand-in-hand; and
3) diversification is a vital tool, described by Warren Buffet as ‘the only free lunch in investing’.
Therefore, when constructing portfolios, we focus on structure, cost management and risk control.
The combination of this evidence-based investment approach coupled with disciplined international financial planning, and the management of behavioural bias, means the best financial solutions are delivered for our clients.