Investment Philosophy

Our focus when looking after clients’ assets is the long term creation of wealth within defined and acceptable levels of risk. We monitor various market risks and the ways losses may occur and ensure that portfolio risks are consistent with client expectations.

When designing investment portfolios for clients, we match their desired level of risk with the highest level of return. This occurs through meaningful discussions and the use of tools such as risk tolerance assessments, portfolio analytics and Monte Carlo simulations. By combining these together, AFL can make an intelligent decision on the appropriate asset allocation and ongoing investment decisions.

In order to achieve this, our investment solutions share these common attributes:

  1. Investment Policy Statement
  2. Forward Looking Strategic Asset Allocation
  3. Global Exposure
  4. Quarterly Assessment of Macro Conditions
  5. Regular Rebalancing

To implement our philosophy, we employ a mixture of active and passive strategies.
We engage active managers only where we feel they can add value over passive (index-based) alternatives.

We Focus on Strategic (Long-term) Asset Allocation

Determining the appropriate weighting across different asset classes is the most important investment decision when constructing a portfolio.

A landmark study (Brinson & Beebower, 1986) illustrates the importance of asset allocation when determining portfolio returns.

Graph showing landmark study (Brinson & Beebower, 1986)
Asset Allocation91%
Security Selection5%
Market Timing2%
Other Factors2%