WE PUT YOUR MONEY TO WORK, DEPLOYING CAPITAL TO EQUITIES, FIXED INCOME, CASH AND ALTERNATIVE ASSETS. WE ASSESS THE VALUATION AND REWARD POTENTIAL IN THESE ASSET CLASSES together WITH our clients’ individual objectives and concerns to construct bespoke portfolios.
Use the Interactive Notebook below to understand our investment process
Interest rates are the price of money. Higher interest rates increase the cost of borrowing which can depress economic activity. Lower interest rates stimulate business activity as credit becomes cheaper.
Interest rates are particularly important for bond prices, as when yields go up, bond prices go down. We currently live in an era of historically low-interest rates. Central Banks have the ability to set short-term rates, and they use this ability to manage the economic cycle.
Inflation measures the increase in the price of goods and services over time. Inflation means fewer goods and services can be purchased with the same amount of cash.
Real assets such as property and commodities offer a hedge against inflation as their value tends to increase as the inflation rate increases. Conversely, instruments with fixed cash flows (eg fixed coupon bonds) perform poorly in inflationary environments.
Volatility refers to the fluctuation of asset prices – the magnitude and speed at which prices move up or down. A higher level of volatility is generally associated with higher potential returns, but also a greater risk. More volatile asset classes such as equities have historically generated higher returns than less volatile asset classes such as fixed income.
Valuation refers to the price you are paying to buy an asset, relative to the cash flows it is expected to produce. It is common practice to measure the relative valuation of a stock in terms of the multiple of earnings you are paying. This is known as the price-earnings ratio (“P/E ratio”). For bonds, the prospective yield is a good indicator of valuation. All else equal, it is preferable to buy assets at lower valuations rather than higher valuations.
What are the big driving forces behind the world we live in? Climate change, artificial intelligence and political shifts are just some examples of the mega-trends that will affect asset prices into the future. These slow-moving forces may not be evident on a day-to-day basis, but they are crucial for long-term asset returns and society at large.
Employment refers to the number of people currently working and earning an income. An economy in recession can have high unemployment rates, while an economy that is growing strongly typically has a low unemployment rate.
Employment indicators can be a useful guide as to where we are in the economic cycle. The level of employment is also important for gauging the potential for social unrest in a country.
Innovation starts with curiosity and a desire for knowledge. It means asking more and better questions. In terms of portfolio management, innovation is a driver of corporate profitability and investment returns.
Economic growth is what drives the living standards in a country upwards. GDP (Gross Domestic Product) growth is often used as a proxy for economic growth and is measured as the increase in the output of goods and services of a country.
In the long run, real GDP growth tends to be positively correlated with a country’s stock market. The increase in the total value of goods and services translates into higher earnings for companies, leading to an increase in security prices. GDP growth is also a guide as to where we are in the economic cycle.
Expected returns refer to the anticipated profit or loss of an investment. Your willingness to take risk and your personal financial situation will determine how high or low your expected returns are. It will also depend on asset valuation levels and the overall economy.
Geopolitical issues such as global trade tensions, US-China relations and Brexit can increase the volatility of asset prices. Our decisions around asset allocation for our clients will be affected by these geopolitical issues and whether they are more likely to be short-term or long-term in nature.
Our Investment Advisory Board contains political and economic experts with extensive experience in financial markets who inform our views on geopolitical issues.
Confidence refers to how consumers and businesses feel about the state of the economy. The key factors that drive consumer and business confidence are macroeconomic conditions and geopolitical developments. Consumer and business confidence tend to be positively related to the production of goods, the level of demand and the stock market.
Our investment strategy is different with each client. It’s based on your goals, your willingness to take risk and your personal financial situation. People’s reasons for investing vary, which is why it’s necessary to handle your money in a way that fits your unique investment goals and your personal circumstances.
We take your personal circumstances and then combine them with our outlook on asset valuations, the economic-cycle and geopolitics to create a personalized investment strategy.
Asset allocation is the process by which the mix of asset classes held your portfolio is determined (e.g. equities, fixed income, commodities, cash). Different asset classes behave differently under various market conditions. For example, fixed income instruments such as bonds tend to outperform equities and commodities during recessions.
Asset allocation decisions also depend on each client’s personal profile. Equities can have higher potential returns than fixed income but are also riskier. If clients aim to have higher returns and are willing to take more risk, their portfolio will be more weighted toward equities than bonds.
Security selection refers to how individual securities held in your portfolio are chosen. The securities picked can range from passive ETF’s (exchange-traded funds) that aim to track the performance of an index, to individual stock names that we believe have the potential to pay sustainable dividends and/or appreciate in price. In any case, a thorough analysis of the security is undertaken before any recommendations are made.
Factor investing involves selecting securities based on academically rooted “factors” that have been proven to deliver excess risk-adjusted returns. Some of the more established factors include value, momentum, minimum volatility, quality and size.
Value: Buying stocks that appear to trade at a level “cheaper” than the market average. Cheapness can be measured by several ratios including price-earnings (P/E), price-book (P/B) and price-cash-flow (P/CF).
Momentum: Momentum strategies involve buying securities that have had high returns over a recent time period. Numerous academic studies have shown that, on average, stocks that have recently risen will continue to trend upwards.
Size: Stocks with a smaller market capitalization have historically tended to outperform larger capitalization stocks. However, this higher return has been accompanied by higher risk.
Minimum Volatility: Stocks that have a lower than average volatility see smaller fluctuations in their price. This strategy expects to offer a lower level of risk without any significant reduction in returns.
Quality: Quality stocks are companies with a high level of sustainable earnings. This strategy aims to invest in companies that have higher profit margins that will not be eroded by competition.
Smart Beta strategies are built on factors. They aim to tilt away from the index and invest larger amounts in companies that exhibit characteristics consistent with one or more factors. For example, a smart beta strategy based on value would invest less in companies that trade at high multiples and more in those trading at lower valuations. Similarly, a momentum strategy would allocate more capital to companies that have recently risen in price and avoid those that have negative price momentum.
A custodian is responsible for the safekeeping, segregation and reporting of client assets.
We partner with Conexim Advisors Ltd to provide our clients with access to Pershing Securities International Ltd, the largest global provider of clearing and settlement solutions. The service and platform provided by Conexim and Pershing has been built according to international best practice and specifically adapted for the Irish market.
For more than 40 years, GMO has partnered with a broad range of sophisticated institutions, financial intermediaries, and families to provide the investment expertise they need to meet their goals and fulfil their missions.
Research Affiliates is a global leader in smart beta and asset allocation. Dedicated to creating value for investors, they seek to have a profound impact on the global investment community through our insights and products.
Amundi is uniquely positioned as Europe’s largest asset manager by assets under management and in the top 10 globally to provide high-quality service to over 100 million retail, institutional and government entities worldwide.
Gavekal is a financial services company headquartered in Hong Kong. The company was launched in 2001 and is today organized around three key activities: Financial Research for Institutional Investors, Money Management and Software Services for Investment Professionals.
Société Générale S.A., often nicknamed "SocGen", is a French multinational investment bank and financial services company headquartered in Paris.
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City. JPMorgan Chase is the largest bank in the United States, and is the sixth-largest bank in the world by total assets as of 2018, with assets of $2.623 trillion.
For 30 years, CLSA has consistently presented a differentiated, independent view. CLSA has built its reputation on providing global investors with unique insights into the companies, issues and themes driving global growth.
Ronan has a wealth of experience gained over 35 years of managing institutional and private client funds in fixed income and equities, spanning global and developed markets. Ronan is fascinated by and recognises the significance of long term macro trends and secular shifts. Ronan plays the key role in determining the firm’s portfolio strategies which reflect his perspectives. He is Chairperson of the Santiago Investment Advisory Board.
Bernard is a distinguished investment manager and strategist and is currently strategy coordinator for European Securities Network
Dan has had a long award-winning career as an economist, holding a variety of research roles in stockbroking and banking. (www.danmclaughlin.ie)
Helen is a political and economic expert with extensive experience in financial markets. She is the author of the influential blog BlondeMoney. (www.blondemoney.co.uk)