Designed to both uncover new opportunities and tend to those already in place, our equity approach is characterized by four broad attributes:
Prudence – every position and transaction in DM equity mandates is the product of extensive in-house research, the end goal of which is to harvest the prosperity of a small group of companies while respecting what we pay for this income and growth. We would sooner miss an opportunity as we work through our analysis than enter a position hastily and expose client assets to risks that would have been identified by a completed evaluation.
Partnership – we believe that the strength of a company’s management team and the spirit of its guiding philosophy are vital to the success of the enterprise. To this end, our equity process places considerable emphasis on executive leadership and corporate culture as we assess whether capital allocated to the company will be treated with the same care that we devote to client assets.
Patience – long term investing is simple but not easy. Even though the greatest wealth creation and most favourable tax consequences come from holding compounding assets for long periods, the fickleness and unpredictability of equity markets can make such perseverance difficult to maintain. By supporting our positions with extensive research, investing with conviction, and communicating our thoughts through meetings and regular publications, our goal is to strengthen client resolve and help each to become a successful long-term investor.
Pragmatism – patience does not mean benign neglect. Company narratives shift, valuations fluctuate, and industry conditions change. Our process is designed to identify these inflection points and act on those which will materially alter the outlook of an investment, either by adjusting position weights within portfolio mandates or by liquidating names entirely if their risk/reward tradeoff has deteriorated beyond our tolerance.
Interest rates have been on a steady downward path for three decades and now sit at or near all-time lows. The low yields offered on investment grade corporate and government bonds, combined with the likelihood that such conditions will persist well into the future, mean that quality fixed income holdings are unlikely to enhance return in a balanced portfolio.
At the same time, bonds remain integral to the risk management component of a portfolio’s performance. To this end, we blend fixed income into unique asset mixes for each client to deliver certain capital for known requirements, to provide a source of liquidity for unforeseen needs, and to temper the volatility of equity investment. Our allocation recommendations flow from our client discovery process, through which investor time horizon, risk tolerance, and other considerations guide the formation of investment policy and portfolio structure.