WHAT ARE THE OPTIONS?

It is generally recognised that the best way to invest is into a diversified portfolio of fixed interest, property and shares, both on and offshore.
  • Fixed interest provides income and stability but no growth
  • Property provides income and some growth
  • Shares are the “engine room” of any medium to long term portfolio – in good times they make some serious money
But which fixed interest, which property and which shares?  We do know that extensive diversification is essential, which means investors need to use some sort of fund. There are three ways to get the extensive diversification :
  • Actively managed funds (often underperform due to high costs)
  • Index funds (quite good)
  • Asset class investing  (efficient and low cost)

OUR RECOMMENDED STRATEGY

After two decades of actual experience as advisers, and over three years research, we now use asset class investment portfolios for all our clients. We believe that the benefits from lower costs and very broad global diversification provide our clients with the best opportunity for medium to long term investment success.
  • Asset class investing is grounded in academic knowledge and one of its founders, Professor Eugene Fama, School of Finance Chicago University, was the winner of the inaugural Onassis prize for services to  global finance in 2009.
  • We now know that that the extra costs of active investment all too often outweigh the benefits. Yet 80% to  90% of investors just keep on trying, and a huge stock broking & fund management industry gets very wealthy from this  illusion.  Asset class investing has emerged as a highly credible investment solution.

ASSET CLASS INVESTING

Asset class investing is similar to index investing, is still low cost, but much more sophisticated and efficient.
  • Asset class investing involves the use of some of Dimensional Fund Advisers (DFA) funds. DFA have several bond funds, and various share funds including large, value, small, and emerging markets shares.
  • They have developed some methods of avoiding the common inefficiencies of index funds and often outperform the index (after fees)
  • They also have done some fascinating work around share price momentum and these activities appear to increase returns over and above their (very low) fees.
  • Their research indicates that both methods are unlikely to pay off.
  • Since they are neither stock picking or forecasting, no expensive mistakes can occur either. (yes mistakes do happen to active managers and investors)
We blend DFA funds together with NZ bonds (A rated or higher) and listed property trusts.

​We think DFA and asset class investing offers you one of the best investment solutions available today.