Over the last 25 years, I’ve been privileged to work with some of the best investors and advisors in both asset managers and consulting firms. This has taught me there is no right way and no right answers. At the root of most of investment's structural errors and poor advice, is over-precision or over-certainty. It's a belief that a number, an allocation, a benchmark represents “the answer”. In reality, we don’t know. The best we can hope for is an edge, a tilt in our favour. If it’s obvious, then it’s already priced. There are plenty of other investors in the world, no one needs your money to make money.
Creating a robust investment strategy means finding investments that we believe will tilt the odds in our favour. It’s understanding our own position within a hyper-competitive arena & evaluating our potential as long term patient investors. But to succeed we need to understand our position and psyche deeply: eg are we truly patient? What risks are we best aligned to taking? When considered against all the other institutional investors, how patient do we need to be to have an advantage? And how long term?
Whilst markets are mostly efficient, there are ripples of inefficiencies, curious bumps – eg smart beta, skilled active managers – that can add value. Accessing these requires diligence, patience and fortitude. They require investors to move against the herd, to seek to evaluate timing but to persist with patience when they are out of favour. Moreover, timing and implementation are often overlooked by institutional investors. Yet, the best investors I’ve observed are always focused on timing and rapacious in seeking the most effective implementation.
Finally, what matters? I’ve long been an advocate for ESG-integration but that’s an easy rationale. ESG a ripple of risk and opportunity for business that adds value. But there are deeper trends in creating a sustainable future. Humanity is having a measurable planetary impact on the world. A smart investor evaluates the risks and seeks opportunities, they align their whole approach with their values and purpose, embedding responsibility throughout.