Our Investment Strategy

How do we make decisions about where we invest your money?

At GMI we actively manage portfolios. We are what’s called a discretionary manager, which means we will take an active view on the economic backdrop and the investment cycle and position client portfolios accordingly. What this means for your portfolio is that we will vary the amount you have invested in shares and we will vary the currency allocation. Our long-term track record suggests we add value in this respect. Here’s a snapshot of the steps we follow.

ASSET ALLOCATION

We believe the biggest driver of growth in a properly diversified investment portfolio is asset allocation. This simply means, at any given time, what portion of the portfolio is invested in cash, fixed interest or shares. So our decision-making process places most emphasis on getting the asset allocation correct.

We take an active or dynamic approach
Although we agree on an investment mandate for each client, we reserve the right to vary asset allocations depending on our view of investment or economic cycles, and the relative pricing of cash, bonds and shares. In short we make tactical moves to preserve wealth or enhance returns when we feel that is prudent. We make these moves with due consideration for risk and proper diversification in the portfolios. Our discretion is limited to the conservative side of the portfolio mandate—we can only hold less of the portfolio in shares, not more, than agreed in the mandate.

 CURRENCY ALLOCATION

We believe currency allocation has the next strongest influence on returns, with the ability to boost or corrode the impact of the asset class allocation.

We do not have explicit target weights for any currency. Just as the asset allocation will vary, so will the currencies held in the portfolio. Our currency allocation calls are based primarily on expected rates of return—both from currency movements and interest rates—balanced against the need to remain properly diversified and to manage risk.

INVESTMENT THEMES

After asset and currency allocation we identify investment themes (for example, emerging markets, technology, resources, etc.). Identifying investment themes is an ongoing process, and draws on the research of our investment analysts and economists.

SELECTING SHARES

We consider the following factors when deciding which shares or funds to include in the portfolios:

Liquidity
Could we sell the shares in a timely manner with limited impact on price?

Transparency
Do we understand the source of returns? If it’s a fund, do we know and understand the underlying assets?

Cost-effectiveness
Are management fees and transaction costs defendable?

Valuations
Do we think the shares are undervalued?