Long-term views enhance investment returns
The ability to look beyond short-term events and take longer-term views can enable investors to deliver more consistent results; harness illiquidity premia; and avoid potentially sub-optimal, overreactive, or irrational decisions.
Scale can provide greater access and capabilities
Scale allows investors to gain access to opportunities and information which would not otherwise be available to smaller entities and encourages the internalization of capabilities which in turn reduces costs. The type of value that can be created, and whether diseconomies of scale are realized, depends on the unique size of the organization.
Effective risk management is vital to achieving investment objectives
Investors are also risk managers as all investments carry some degree of risk. The more effectively investors can measure and execute against risk relative to client appetites, the greater value they can unlock from a properly diversified portfolio.
Asset allocation is a major determinant in total returns
Understanding how to allocate assets — across asset classes, sectors, themes, and more — is rudimentary for all investors. The ability to navigate multiple different dimensions, adapt to market conditions, and match allocations to client needs enables more effective diversification and ability to more effectively meet holistic client objectives.
Active investment choices expand opportunities and return potential
Every investment decision is an active choice. Where active management is chosen, investors need to confidently believe that opportunity exists in the market and that they have the sufficient skills and systems in place to consistently deliver outperformance, net of fees.
ESG factor integration in investment processes helps to enhance returns and manage risks
ESG is increasingly relevant to all portfolios from risk and return standpoints and should be integrated throughout the investment process. Understanding and acting on the implications of ESG factors presents opportunities to enhance returns on specific topics where a market gap is identified and can also enhance risk management.
Decision-making quality is a function of culture and process
An organization’s investment decision-making process is improved by transparency; a diligent challenge function; a risk-aware culture; emphasis on responsiveness and agility; diversity and inclusion; and intellectual rigour, all of which creates accountability on total results in alignment with client objectives.