Page 11 - Ives, Martyn - Review Report - July 2020

Principle 3: Liquidity Principle 7: Portfolio investment
management style
As financial markets offer the opportunity
to buy and sell assets easily (with minimal No single investment management style
transaction costs and risk involved), they can produce superior returns in a
provide a high level of liquidity. The funds particular asset over the long term. This
selected and the assets in which model makes it important to hold a mix of
portfolios invest predominantly offer daily different management styles in a portfolio
liquidity, meaning your funds are readily to take advantage of opportunities as they
available with short notice if unforeseen arise in the economic cycle.
events require this to occur.
Principle 8: Currency management
Principle 4: Markets
The portfolios will utilise both managers
Model portfolios only include assets that that hedge their currency exposures and
are readily available in public markets those that do not – this positioning will be
where there are liquidity, regulatory and dependent on market events and our
transparency regulations in place to longer-term views.
protect your interests.
Principle 9: Fees and taxes
Principle 5: Active investment
management Fees and taxation implications are
included in a portfolio analysis due to the
During periods of market inefficiency, impact high fees and poor tax
active fund managers can outperform management can have on an investors’
competitors and the relevant market index returns over the short and long term.
through prudent investment selection and Portfolios are constructed with
ongoing monitoring. investments that charge competitive fees,
with a preference for those that have fee
The better-quality active managers have structures aligned to the interests of
demonstrated their ability to outperform investors and aim to be tax efficient.
index funds over the long term. We select
fund managers on the basis of their quality
and the likelihood of achieving superior
returns relative to competitors and/or the
relevant index over the long term.
Principle 6: Strategic versus dynamic
asset allocation

Strategic asset allocation (SAA) involves
allocating assets in a portfolio to get the
best return for a given level of risk. SAA is
determined based on expected long term
asset class returns and is guided largely
by historical data.

Dynamic asset allocation (DAA) adds
value to a portfolio by taking medium term
positions in an asset class that differ from
the SAA position. It is intended that these
medium-term tilts or deviations will both
protect the portfolio in a downturn and
potentially boost returns in an upturn.