Polson Higgs Wealth Management Investment Philosophy
 
Investment markets exist with different degrees of:

• Liquidity
• Transparency
• Price Discovery

Because listed securities rate highly in all of the above they are our preferred vehicle for client portfolios. We avoid hedge funds, for instance, as they are weak in all three areas.

Our rationale for investing is to create investment strategies where clients can achieve their objectives with a high degree of certainty and control by matching investors with portfolios that perform according to their risk profile.

Our investment philosophy springs from academic research commonly referred to as modern portfolio theory. The benefit of academic research lies in the rigour applied by peers in challenging the conclusions.

A summary of those conclusions are:

1. Share markets are relatively efficient and share prices indicate fair value. Inaccuracies in share prices occur but these inaccuracies are random and can’t be exploited on a systematic basis other than by luck.
2. Persistent differences in average portfolio returns are explained by differences in average risk.
3. We provide market returns for investors by investing across the market without paying a manager to pick winners.
4. Our portfolios are fully diversified across the broad market.
5. Small companies and value companies outperform the broader market over time and our portfolios include tilts to these sub-asset classes.
6. Fixed interest is used for smoothing volatility as it earns, on average, a lower return than shares over time.
7. We do not assume fixed interest credit risk of any significance as we allocate a minimum AA Standard and Poors rating to fixed interest.
8. The structure (asset class mix) of a portfolio is the most important factor in maximising risk-adjusted returns and we deliver pre-set strategies for our clients (Authorised Investment Mixes). 

PHWM will consider the use of other investment strategies in special situations as an exception (E.g. The Crown Guarantee offered to complying institutions from 12 October 2008 to 12 October 2010).

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Last updated: 21st January 2010 | 3:41 pm