Our core investment principles

Despite the ongoing economic instability and negative headlines, it is vital to maintain a long-term investment approach to avoid short-term, knee-jerk responses that could damage your clients' portfolios for the future.

Analysts are forecasting that global economic growth will slow significantly over the next 12 months, so it is now increasingly important that clients understand how portfolios are constructed and remain resolute in their investment approach. As a global, multi-asset class investor, we have built our discretionary investment management services around a number of fundamental investment principles that we believe in and implement within our investment process:

Asset allocation is an important driver of returns

Research published over the last two decades has concluded that asset allocation is the major driver of returns for the investor. We define five major asset classes: cash, bonds, property, equities and alternative investments. The latter asset class includes commodities. Through our client profiling process we agree a client's investment objectives and time frame, and then decide on the most appropriate investment solution. This initial recommendation is then reviewed regularly and can be adjusted to ensure the investment portfolio continues to meet your clients' changing needs and circumstances.

Diversification can reduce risk

By combining a range of assets with different risk and return characteristics, we seek to maximise the potential return of our investment strategies for a given level of risk. The increasingly complex array of financial vehicles and strategies available means considerable skill and expertise is needed in order to deliver attractive 'risk-adjusted' returns.

Risks need to be properly understood

Risk management is key to portfolio construction and it is important to consider the range of risks faced. In addition to volatility, which looks at historical price movements and short-term falls in the value of a portfolio, probably the most important risk to manage is shortfall risk - the possibility your client's portfolio will not achieve their wealth objective. Our investment team will regularly review the risks created by, for example, volatility, liquidity, inflation, interest rate movements and geopolitical events, to ensure your client's agreed risk and reward balance is maintained and the investment achieves the stated objectives.

The table below helps to demonstrate the successful performance of our discretionary investment management services from inception up to the end of October 2011.

Portfolio	Return since inception * (annualised)	Inception date
Multi-asset class:
Low-medium risk	3.71%	30/09/2005
Medium-high risk	5.14%	30/09/2005
High risk	6.87%	31/07/2006
Global bond strategy	9.62%	30/11/2008

* All returns quoted in sterling and net of fees. Past performance is not necessarily a guide to future performance.

Investment is for the long term

Investments should be made with an appropriate time frame in mind, and measured over a similar appropriate period to ensure a long-term view for your investment and reduce any emotional response to short-term volatility.

Value investing and minimising costs are important

We believe the price paid for assets is an important determinant of future returns. Minimising costs is also vitally important as the return on investments will be adversely affected by the fees, expenses and taxes that are deducted. Net investment returns represent economic reality and are what investors should always focus on.

We are committed to the sound stewardship of our clients' investments. There are a number of layers to our investment approach that combine to create a framework for disciplined decision-making and consistent evaluation of the key factors prevailing in the investment environment. These include the analysis of valuation measures, macroeconomic factors and sentiment indicators.

If you would like to find out more about our discretionary investment management services, please call your relationship manager or our client services team on +44 (0) 1624 645000.