As children, most of us were excited to visit a sweet shop – I definitely was. Dazzled by the bright display of shelf upon shelf of glass jars, there were sweets of every possible shape, colour and taste – all covered in sugar. Some coins lay in my hand, but which sweets would I choose?
As an adult, the same feeling of excitement is sometimes evoked through the privilege and responsibility of being part of Nedbank Private Wealth’s Investment Committee, where we are presented with investment choices to include in clients’ investment portfolios and help them achieve their financial goals.
As global, mixed asset portfolio managers, the world is quite literally a pick ‘n’ mix of different types of equity, bonds, cash, property and (the so called) alternative investments. And the choices within these options are seemingly endless across geographies, sectors and companies.
Furthermore, when you have a truly global bias as we do, what do you do about the resulting currency exposure? Can you leave it unchecked? Even when all the choices are made, it may not be the end of the selection process if those choices are too concentrated in one area. We also need to make sure we have a breadth of assets across the ‘jars’ and we haven’t ended up with too many flying saucers!
It’s this complexity of choice about investing that really requires a high degree of skill and understanding to negotiate. As investors, we have widened our lens to include global financial markets, with varying degrees of regulation, transparency and risk. Wider possibilities require greater and more specific expertise because, unlike our sweet shop scenario, not all investment jars are filled with nice outcomes; some are, quite literally, toxic!
How do we ensure that we tap into the opportunities open to us, without taking a bite of out of a poisoned apple? Some would shroud the answer to this vital question in complexity, but perhaps the answer is actually very simple.
At Nedbank Private Wealth, we have adopted a series of investment principles. These are the quality control for the ingredients that will form part of our investment strategies, and they are unshakable.
So, even if everyone is buying something that doesn’t meet our criteria (Woodford funds, for example, invested in significant levels of unquoted investments), we steer clear…no matter how compelling the investment returns appear to be!
Here, I go into five of these yardsticks so you have a flavour of the discussions we have:
Do we have a transparent view of the investment, the possible downside and where the future growth prospects or cash flows are coming from? What can we do to mitigate any possible downside?
The first principle is that we only invest in things we have a full view on. We adopt a predominantly funded approach, using both passive and active investment vehicles. During the active fund manager selection process, we require full transparency of the shortlisted managers’ portfolios, holdings, teams and end-to-end decision making process.
This is vitally important as we need to judge the validity and repeatability of their track record. Because of this requirement to always have a full view of the holdings that underlie each of our funds, we will not invest in hedge funds, given they do not tend to share their intellectual property.
The second principle is liquidity, or the ability to dispose of an investment quickly and efficiently. When things go wrong, liquidity (or lack of it) is part of the problem. The world of investing offers a huge amount of choice, and each of those choices has a different liquidity profile.
Property is an obvious example: selling a second home or a warehouse is a more protracted process than selling shares in companies that are involved in real estate.
As managers of our clients’ discretionary portfolios, when considering our choices, we normally opt for as much liquidity as possible. The rationale is simple: if we want to sell for a whole variety of reasons – risk mitigation, having identified a better opportunity or profit taking after a substantial rise, to name a few – we can.
The third consideration surrounds value and costs. The price we pay for an investment and the costs associated with it impact the returns we deliver to you. We use low-cost, passive investments when we feel there is little opportunity for active managers to consistently add value.
However, cost does not have the final say over an investment decision. Some opportunities are worth paying slightly more for if they deliver value.
We have already flagged that the world offers a huge array of opportunity. So we don’t limit your pick ‘n’ mix options to UK equity and bonds, for instance. We diversify across asset classes and sectors globally.
Many moons ago, when I was studying, I was taught a diversified portfolio had at least 20 stocks. We have thousands of companies underlying our strategies. I was also taught a global strategy had at least 20% exposure to global stocks. Given that the UK represents 6% of the world’s financial markets, I propose that any exposure greater than this should be justified as part of the investment strategy.
We have no home bias. We diversify globally because opportunity is everywhere.
Finally, we retain a long-term focus instead of heeding short-term noise. Did you know that the average holding period for a stock has gone down from eight years, four months in the 1960s to just eight months now?
This is despite us hearing time and time again that we should invest for the long term since it is impossible to predict the short term in markets.
We can, however, be more confident about the medium to long term for a number of reasons. It is also likely that your financial goals have a longer time horizon than just eight months, and matching up your long-term goals to a long-term investment strategy makes sense.
One of the benefits of appointing a discretionary investment manager is that you effectively remove the emotion associated with investing. This is key if you want to avoid the typical buy high and sell low cycle that the news headlines encourage.
Our disciplined and rigorous approach allows us to carefully consider the short-term noise in markets (we will use market highs to profit take and market lows to buy more), but throughout, we will keep our eye firmly fixed on your long-term requirements.
So when one of our private bankers or wealth planners assesses your particular family position and aspirations, they might, as part of this, formulate proposals for an investment portfolio. And whatever strategy they recommend, these principles will be at the heart of it. As our track record demonstrates, we’re confident the long-term outcome is more likely to be sweet.
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Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are diversified across asset types, geographies, industry sectors, as well as currencies, or call +44 (0)1624 645000 to speak to our client services team.
If you would like to find out more about how we can help you manage your investments, please contact us on the same number as above, or complete the contact us form using the link below.
Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned may be included in clients’
portfolios. They are referred to for information only and are not intended as a recommendation, not least as they may not be suitable. You should always seek professional advice before making any investment decisions.
Rebecca joined Nedbank Private Wealth in May 2004 having moved to the Isle of Man from Barcelona to pursue a course in Business Studies with the Isle of Man Business School. Rebecca was appointed to the role of investment counsellor in March 2019 to focus exclusively on the company’s discretionary investment management services.
She works closely with our teams of private bankers to provide support in advising our clients with integrity, and to give additional technical investment expertise where more complex portfolio requirements exist.
Rebecca is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
Rebecca joined Nedbank Private Wealth in May 2004 having moved to the Isle of Man from Barcelona to pursue a course in Business Studies with the Isle of Man Business School. Rebecca was appointed to the role of investment counsellor in March 2019 to focus exclusively on the company’s discretionary investment management services.
She works closely with our teams of private bankers to provide support in advising our clients with integrity, and to give additional technical investment expertise where more complex portfolio requirements exist.
Rebecca is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
+44 (0)1624 645813
Nedbank Private Wealth manages mainly multi-asset portfolios, so our communications don’t tend to focus exclusively on one asset class. However, today we propose discussing equities. Why? Because when you consider the news headlines, and then consider equity markets, we appear to be living in a parallel universe.
Read moreThe news feed from the coronavirus is all consuming, and rightly so. A disease that was widely touted, just a couple of months ago, as ‘similar’ to influenza has infected millions and killed hundreds of thousands of people.
Read moreTwo major disasters have crossed paths and it seems that the only good news we read about these days relates to how the coronavirus pandemic is slowing down climate change. Otherwise the press is full of heart-breaking stories of loss, peppered with acts of kindness and a sense of us trying to pull together. No one can tell us with absolute certainty what the future looks like, or when this will end. It can feel like we are staring into the deep unknown.
Read moreOne of the first lessons you are taught when studying anything investment related is the role diversification plays. For my investment exams, I was taught a diversified portfolio consisted of around 20 stocks ‒ a mere nod to today’s view. Instead, your portfolios – if you are a client of Nedbank Private Wealth that is – are invested across thousands of companies.
Read moreAs we witnessed in our latest webinar (click here for the Q&A), investors are struggling to understand everything given the tsunami of news. Markets have begun to claw back losses in some areas, but there may well be more bad news ahead, before we see a sustained trend in positive headlines. So what’s next?
Read more“He allowed himself to be swayed by his conviction that human beings are not born once and for all on the day their mothers give birth to them, but that life obliges them over and over again to give birth to themselves.” ― Gabriel García Márquez, Love in the Time of Cholera
Read moreAs children, most of us were excited to visit a sweet shop – I definitely was. Dazzled by the bright display of shelf upon shelf of glass jars, there were sweets of every possible shape, colour and taste – all covered in sugar. Some coins lay in my hand, but which sweets would I choose?
Read moreToo often we believe clients sit in too much cash. We understand why people do this, but we think that too much can be an issue. How much do you really need?
Read moreWe are one of only a handful of wealth managers who use currency management as part of our investment approach. In this short 45-second video, we explain why.
Read moreInternational Women’s Day was on Sunday 8 March, a day that since 1910 has focused attention on women’s rights. The day – and the invitation to speak on the topic at the Institute of Directors on 6 March – prompted me to think through how much has changed for women in the last 110 years. While there are still challenges ahead, this is pivotal time for women.
Read moreAllie Kirk, private banker, speaks to Rebecca Cretney, one of our investment specialists, about the current market turbulence.
Read moreIf you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.
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