Portfolio Structure

Structured Investing
We embrace a structured-passive approach to investing. This approach is based on research by leading academics in the field of finance, Eugene Fama and Kenneth French and creates the building blocks for our portfolios.

Structured-passive investing is also known as “asset class investing”. It involves the construction of portfolios that reliably target returns in specific asset classes – groups of securities that share common risk and return characteristics. There is no forecasting of market or economic conditions involved and no attempt is made to pick individual stocks.

Risk Profiling
An important decision is to determine the level of risk you are willing to take to achieve the return you require. By completing a risk profile questionnaire, we can assist you to make a decision regarding your risk tolerance vs the returns you want to achieve.

We use independent risk-profiling tools that provide a scientifically validated technique for assessing a client’s tolerance for risk. The results of this questionnaire are incorporated into our investment planning process and used to assist with the construction of your portfolio.

Academic Research
We work with fund managers, including Dimensional Fund Advisors (DFA), that are pioneers in their industry. They invest heavily in research and continue to work with leading financial economists around the world to develop tomorrow’s solutions today.

Their early research included analysis of share markets over a 70-year period and the development of a 3-factor model that had surprising results:

• Shares are riskier than fixed interest
• Small company shares have higher expected returns than large company shares
• Lower priced “value” shares have higher expected returns that higher priced “growth” stocks

These findings lead to the development of structured portfolios that target specific risk/return factors such as value companies or small stocks.

Portfolio Construction
The building blocks we use to create your portfolio are based on science, not guesswork and are structured around your tolerance to risk, investment goals and allocation of assets.

By using a disciplined approach to portfolio engineering, the asset allocation decisions we make will determine more than 90% of your portfolio’s performance. In contrast, picking individual stocks and trying to time the market have far less influence on performance.

 

Custodial Administration
Administration and management of client portfolios is completed by Stewart Group’s specialised support team using software provided by a third party custodian.

Rebalancing
Portfolios are reviewed and rebalanced on a 6 monthly basis to ensure they continue to meet strategic benchmarks and remain in line with your risk tolerance and longer term objectives.