Our investment philosophy
At Tilton Conway, we purposefully focus on more than just your finances because we know that financial security is just one factor among many that contribute towards your overall wellbeing.
We’re well-qualified to help you make the most of your money and make smart decisions about your investments. And we’ll help you achieve this by placing your life and future plans at the very centre of your financial planning.
While there are no guarantees, investing presents opportunities for financial success that have historically been hard to beat. We define a successful experience as one where our clients can sleep soundly at night, have a strong chance of achieving their future lifestyle goals, and both understand and believe in the investment journey they are taking.
Our approach to investing has been developed using the core principles of Evidence-Based Investing (EBI). EBI portfolios are guided by a hundred years of empirical data, decades of academic research by renowned economists and the practices of leading institutional investors.
Those principles, which form the basis of our investment philosophy, and which, in turn, guide the decisions we make on behalf of our clients, are laid out below.
Please note: The value of your investments, and any income derived from them, may go down as well as up. Past performance is no guarantee of future returns.
Risk and return are related
There is good risk and bad risk. Higher exposure to the right risk factors or premia leads to higher expected returns but is no guarantee of them. Risk is the premium investors pay for the expectation of a greater return.
Capital markets work
The prices of securities reflect the expectations of all market participants. The capital markets are far from perfect, but they do a good job of fairly pricing all available information and investor expectations about publicly traded securities.
Asset allocation and portfolio structure drive portfolio return
The most important factor determining the level of risk and variability of return in a portfolio is asset allocation.
Consistent out-performance is rare
Economic uncertainties, random market movements, and the rise and fall of individual companies mean it is extremely difficult for anyone – including professional fund managers – to beat the market in the long term. There is a significant body of research to suggest that out-performance by most fund managers is down to luck rather than skill.
Costs reduce an investor’s net return and represent a hurdle for a fund. Before a fund can outperform, it must first add enough value to cover its costs. Sadly, the vast majority of professional fund managers fail to add value and high cost is a strong predictor of poor fund performance.
Investor behaviour is a key determinant of long-term outcome
All too often, investors let their emotions get the better of them with dire consequences for investment returns. We expect that planners working with Betafolio, the turnkey asset management provider, add significant value by helping clients maintain a disciplined approach, especially in extreme market conditions.
Diversification is essential
Diversification is the principle of spreading your investment risk around. Our investment portfolios hold the shares and bonds of many companies and governments in many countries around the world, allowing diversification for our clients.
Rebalancing should be driven by market movements
Unnecessary portfolio rebalancing, often arbitrarily timed around client review meetings, damages investment returns. Rebalancing should be driven by market movements to ensure portfolios remain in line with risk parameters and return objectives.