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At Malloch Melville we believe that achieving the optimal starting point for an investment portfolio is the most critical factor in determining short and long term success in meeting its objectives.
We have developed an asset allocation strategy based on Modern Portfolio Theory (MPT), which states that investors can achieve better risk adjusted returns by investing in a diverse portfolio of assets. Strategic asset allocation is the foundation upon which a portfolio is built. It is the process of allocating assets based on a client’s objectives, attitude to risk, capacity for loss and investment time horizon.
The main issue we have with MPT and correlation is that it looks at how asset classes have performed in the past. It is not always a useful indicator of future performance, and can thus lead to returns that do not pan out as expected. Mindful of this Malloch Melville have developed a proprietary asset allocation tool that modifies some of MPTs longer term variables and allows us to overcome the inherent weakness in MPT. Essentially it allows us to buy the dips and sell into rallies.
Although Warren Buffett was not an advocate of diversification, his mentor, Benjamin Graham believed in holding a diverse portfolio of assets. We share Graham’s beliefs for managing our client’s portfolios, especially in the increasingly volatile world we live in at present.
Our stock selection process is driven by company fundamentals and technical analysis. We are style agnostic and aim to utilise elements of both value and growth investing. It is our belief that the most valuable traits an investor can possess are a healthy dose of common sense and scepticism.
Our fund selection process seeks to identify the most consistent fund managers over the medium to long term. Their proven track records are a result of having sound investment processes that have served them well in a variety of market conditions.