A powerful, well-diversified, long-term investment strategy must be built and maintained in addition to excellent, ongoing financial planning if you want to meet your financial objectives and liberate yourself and your loved ones to live the lives you envision. The latter’s continuous governance is within the responsibility of the company’s Investment Committee.

When you hire a professional or artisan, you typically anticipate receiving some “action” in return for your money. More is usually preferable to less and now is usually preferable to later. This generalisation may not, however, hold in all situations. Consider the scenario where a patient visits a general practitioner (GP) complaining of flu-like symptoms and an extremely sore throat. Many general practitioners (GPs) today feel that patients are putting more and more pressure on them to offer a “scientific” answer to their problems, such as prescribing antibiotics. Some patients feel betrayed when they are given the simple advice to take a few paracetamol tablets and stay in bed for a day or two. Because of the counsel we receive, do we question the GP’s qualifications, expertise, and judgment? I hope not. Ultimately, research indicates that antibiotics are effective against bacteria and not viruses.

When it comes to investing, experts like us are subject to the same pressures. There may not seem to be much portfolio “action” when using an evidence-based, methodical approach to investing. The research suggests that instead of trying to time when to enter or exit markets, choose specific equities, or chase after recently “hot” funds, we should establish a long-term strategy, fill it with top-notch funds, and rebalance it frequently. This eliminates a large portion of the portfolio’s “action.” To assume that this is the outcome of a “set it and forget it” approach would be incorrect. Although it may appear that nothing is happening beneath the surface, that is not the case.

 

Figure 1: Systematic investing – the view from a client’s perspective

Image source: Albion, generated using ChatGPT*

 

The seeming lack of activity on a portfolio between periods conceals the significant amount of time, discipline, and work that is required to achieve this for our clients. The Investment Committee of the firm is at the centre of this endeavour, and its main focus is on whether the investment approach chosen still gives our clients the best chance of a profitable investment experience given the most recent data, theories, and fund products at our disposal. The Investment Committee welcomes challenges to the existing order at all times. Nevertheless, there is a lot of data to support a systematic approach, and any little portfolio adjustments that do occur are probably evolutionary rather than revolutionary.

In truth, the Investment Committee is working nonstop to ensure that client portfolios continue to be solidly formed, that problems are identified and addressed, and that the funds that are currently being used continue to be the best options available.

 

Figure 2: Systematic investing – the view from the Investment Committee’s perspective

Image source: Albion, generated using ChatGPT*

 

Continuous supervision is thorough and consistent. The Investment Committee’s primary duties are listed in the chart below.

 

Figure 3: The Investment Committee provides ongoing governance of the process

                                                                                   

 

External, independent input 

The company has a tight working relationship with Albion Strategic Consulting (Albion), who was brought in as a guest member of the Investment Committee to offer unbiased, third-party feedback and challenges. Albion conducts continuous research on investment-related issues, such as examining the most recent data that either validates or refutes our methodology at the philosophical, asset allocation, and fund levels. In the meetings, its inputs are examined and discussed.

 

Less is more when it comes to investing

To maintain composure during market crises, to stay invested, and to rebalance the portfolio when needed, requires strength and discipline. Restructuring the portfolio to take advantage of perceived short-term opportunities and challenges, giving up on certain parts of the diversified portfolio that happen to be suffering at any given time, or chasing “hot” managers or “hot” markets (bitcoin, gold, tech stocks, etc.) all require fortitude and discipline.

It also requires tenacity and self-control to continue meeting with clients and assure them that their portfolio doesn’t need to be changed, even though they are paying fees (keep in mind that the majority of the fee is related to the financial planning services and advice they receive, not the portfolio management). We never alter a portfolio only to make it appear busy—rather, we only make changes when they truly make a difference.

The next time you view your most recent portfolio valuation report, keep in mind that the Investment Committee is still working extremely hard behind the scenes to make this possible despite the apparent lack of activity. The immortal words of investing guru and writer Charles Ellis are as follows:

“In investing, activity is almost always in surplus.”

Maybe we should change this a little to:

“In investing, activity is – except for within the Investment Committee – almost always in surplus.”