It all starts with our investment philosophy. The table below demonstrates the clear difference between Goals Based Investing using a Dynamic Asset Allocation approach and Risk Profile Based Investing using a Strategic Asset Allocation approach. A simple way to consider which method you think is the most appropriate is to ask yourself how you’d want your money to be managed.
Goals based investing
Investors actual needs and goals are the most important starting point when developing an investment strategy
Every investor has numerous different goals - so no one strategy will suit all needs
Forward-looking insights are the best guide to future outcomes
Risk is defined as the probability of not meeting investor goals
Markets are not always efficient and repeatable
The world is continuously changing - more flexible, and broad-ranging Dynamic Asset Allocation tolerances can help derive value and protect against capital losses
Risk profile based investing
Risk profiling is the most important starting point when developing an investment strategy
Your risk profile is appropriate for all your investing needs
Optimal portfolios based on historical data is the best guide to future outcomes
Risk is defined as volatility of capital
Markets are always efficient and repeatable
Markets always revert to historical rates and ratios, so there is little value in managing asset allocation
Dynamic Asset believes that the conventional Risk Profile (SAA) approach is failing too many investors and, by extension, adviser’s businesses.
For example, according to research by Schroders the Strategic Asset Allocation approach does not deliver reliable results to investors. Their study showed that SAA underperforms a 5% real return objective 49% of the time on a rolling 5-year basis, and 47% of the time on a rolling ten-year basis. Mark Wills from State Street Global Advisors found that a static balanced fund fails in 35% of market cycles.
These studies demonstrate that over time between one-third and one-half of investors may not reach their financial goals using the SAA approach. That is a significant risk to the wealth and lifestyle of clients.
There is a better way.
Dynamic Asset understands that the world is complex, constantly changing and uncertain. By focusing solely on achieving specific goals and considering them proactively in the current investment landscape, we aim to provide a high probability of meeting portfolios objectives overstated timeframes.
Clients usually have more than one investment need. At Dynamic Asset we look to resolve this through providing portfolios that satisfy:
Investors will require one or all of these investment solutions at one point or another. Dynamic Asset provides a practical and seamless solution. There is the option to move between goals or blend them as needs to deliver a bespoke approach to meeting each client’s investment needs.
We believe in helping investors to achieve their goals.
We believe that:
LEARN MORE IN THIS VIDEO
Watch Jerome Lander, Portfolio Manager and Goals Based Investing specialist, discuss the Dynamic Asset approach to managing Goals Based Investment Portfolios.
To achieve specific investment outcomes, we need to be mindful of history, carefully consider the dynamics of the current investment landscape and then take a forward-looking approach to manage our investment portfolios. We dedicate significant time and resources to carefully consider to objectives of each portfolio in this context and follow a robust and disciplined three-step investment approach.
1. asset allocation
Asset Allocation is often referred to as the most important driver of investment returns. We start our process by carefully determining the most appropriate asset allocation to achieve the portfolios stated objectives.
The asset allocation of each portfolio is regularly modelled and reviewed using expected returns and potential risks. The results are considered alongside current asset allocations, valuations, outlooks for markets, sentiment and momentum to determine whether any adjustments to the asset allocation of each portfolio is appropriate.
2. investment selection
Once the appropriate asset allocation is determined, it is implemented by selecting those investments and managers which are considered best placed to produce the targeted risk-adjusted returns when combined as an overall portfolio across the relevant timeframe.
During this stage, detailed investment and investment manager due diligence is conducted to ensure they meet the required objectives. We select based on quality, competitive advantage, independent thinking and the ability to deliver strong returns relative to cost. Performance is monitored and managed.
3. portfolio management
The final element involves the implementation of the investment strategy and management of the ongoing compliance and operational requirements of each portfolio.
Every selected investment is managed according to a target weighting, determined by:
In keeping with our purpose of making the investment experience better for investors, we have taken great care in creating a robust system of governance and security that overlays the management of your clients’ investments. We want to ensure that we not only manage investments towards your clients’ goals but also make sure that their money is secure if something goes wrong.
The mechanics of this process are very involved as you would expect. Every detail of this is provided within the offer documents. The summary is:
In short, our business focus and reputation hinges on taking great care of your client’s money. However, if something does go wrong, then there are layers of protection that ensure their money stays under their legal ownership, giving you and your clients ultimate control and surety.