A Substantiated Approach
Our ultimate goal is to provide our clients with the greatest probability of achieving their goals and financial objectives. We offer thoughtful and independent wealth and investment management services throughout New Zealand with dedicated and ongoing advice from highly qualified and experienced advisers who are committed to your financial well-being.
Investment Management First Principles
To manage our client portfolios properly, Investment Management is concerned with two fundamental concepts:
This is the level of volatility of returns in your portfolio, measured by standard deviation. For example, if you own a high-risk portfolio it will increase fast in good markets and decrease fast in bad markets. In other words, over the short-term the portfolio’s value is very volatile.
If you own a low-risk portfolio, the opposite is true. Your portfolio’s value will increase at a steadier, slower pace, and is more insulated from downward movements.
This is essentially the growth-rate of your portfolio. Given enough time, a high-risk portfolio will earn higher returns than a low-risk portfolio.
Risk and return must be considered together. Although most investors want high return and low risk, this is not achievable in the long-run. The fastest way to find an investment charlatan is to look for the person offering high returns with low risks.
So, based on the level of risk you are willing to take, how do you achieve the highest returns?
Through diversification and exposure to the types of risk that compensate investors with higher returns.
The following chart demonstrates the risks and returns of Cambridge Partners investment management portfolios over 24 years from 1991 – 2014, compared to an index that represents the returns of the New Zealand stock market (NZSX 50) over the same period.
All investment management portfolio returns are shown net of management fees, but gross of adviser and custodial fees. The NZSX 50 Index has no fee.
As evident in the chart above, higher risk portfolios (seen on the horizontal axis) tend to lead to higher returns (demonstrated by the vertical axis). However, by diversifying portfolios, we are able (over a significant 20 year time period) to increase returns relative to the NZSX 50, while taking less risk. Our portfolios do not promise returns without risk; rather they employ financial science to identify those risk factors that lead to better investment outcomes.
Cambridge Partners is able to construct Bespoke Investment Portfolios tailored to your unique situation and objectives. We also offer a range of standard and Socially Responsible Investment Model Portfolios.
For more information about our standard model portfolios clich here.
For more information about our Social Responsible Investment portfolios click here.