Wise Investments Ltd, Investment Management and Financial Planning.
Our Investment Approach
Basic Philosophy
‘I know of no long-time practitioner who regrets adhering to a value philosophy; few investors who embrace the fundamental principles ever abandon this investment approach for another’
Seth Klarman
We are long-term, valuation-based investors. Our preference is to invest your portfolio in good quality assets that produce a reliable stream of cash-flows for you – predominately shares, bonds and property – when these cash-flows are undervalued by the market. We think this valuation-based approach is the most effective way of providing you with attractive returns on your savings, without taking big risks.
Risk Management
We appreciate that each of our clients, depending on their temperament and circumstances, will have a varying amount of tolerance to the price volatility of their investment portfolio. As a result, we have a choice of four investment risk profiles that form the basis for each client’s portfolio – low risk, cautious, medium risk and high risk. One of the most important elements of our initial meeting with you is a discussion of your personal financial circumstances, which helps us decide together which risk profile is most suitable to your needs.
Investment Selection
Once we have agreed on a risk profile, we can then build your portfolio using more or less volatile assets as appropriate. The basic building blocks we use are cash, bonds, shares and property. To gain exposure to each asset class we predominately use funds and investment trusts, but may also use direct investments in shares, bonds and other securities where appropriate.
Fund Selection
We like to invest with fund managers who:
- Are intelligent, objective thinkers.
- Have a consistent, easy-to-understand investment approach.
- Treat an investment security as the part-ownership of a real-life business, not just a piece of paper to take a short-term bet on.
- Are not obsessed with ‘beating the index’ over the next day, week or month, but instead focus on maximising long-term performance and minimising risk.
- ‘Eat their own cooking’ – investing their own savings alongside investors.
- Appear happy in their position and committed for the long-term. Many of our favoured managers have been in their current roles for a long time, indicating that they are more interested in the job in hand than in short-term career ‘opportunities’.
The fund management industry struggles to out-perform market indices, largely because few fund managers possess these characteristics. Those who do have been shown to outperform over the longer-term in almost all cases. These are the managers we focus on.
Share Selection
‘Although it’s easy to forget sometimes, a share is not a lottery ticket, it’s a part-ownership in a business’
Peter Lynch
In some instances we include direct shares in client portfolios. We have a wealth of experience of direct share investment in the Wise Funds, and can apply this knowledge to individual client portfolios too.
When analysing shares we view each investment as a stake in a real-life business that can create and destroy value for investors over time. We expect a large part of our return from any investment to come from growth in this fundamental value, thanks to favourable economics for the underlying business.
An important part of ongoing investment in companies is ensuring that the board’s strategy for the company continues to be in the best interests of investors. We will take action if this requirement is not satisfied. If you would like to read more about how we act on issues of corporate stewardship please look at our policy document via the link below.