Protecting your wealth is our top priority. You work hard to accumulate your wealth; managing it is about ensuring its real purchasing power is at least maintained.
Two key considerations are:
Diversification – investing your funds across a large number of assets so that if any one of them fails you lose a button not your shirt.
Liquidity – being able to sell an asset quickly and at as close to reported prices as possible.
Funds allocated to shares are invested in companies on world share markets. We do this because New Zealand and Australian share markets account for only a small percentage of the world’s capital markets (around 4%) and there are clear liquidity and diversification benefits to investing on a larger scale.
Funds allocated to fixed interest securities are invested in a mix of local and foreign bonds.
In the New Zealand investment industry, where international equities and fixed interest are typically outsourced to an external manager, our in-house global capability is a key point of difference.
As an active manager, we seek to buy shares in high quality companies at a reasonable price. Our definition of a high quality company is one that will ideally have four or more of the following characteristics:
a proven track record through the business cycle
a sustainable competitive advantage
a clear and consistent strategy
strong corporate governance and capital management practices
a global revenue base
Given these bottom-up investment criteria, many of our share holdings are large, multinational companies.
For fixed interest investing we use broadly the same criteria. We look to invest in high quality companies that generate cash sustainably in order to pay their obligations in a timely manner. Selected securities will come from strong New Zealand issuers as well as large international issuers.
GMI has a strong background in macro-economic analysis and forecasting, which underpins our asset allocation decisions and risk management practices. We look at the threats to, and drivers of, growth in the major economies, and how these factors might impact the companies in our portfolio and world markets overall. Our macro-economic views also guide the appropriate maturity and risk profile for fixed interest investments.
Our investment objective is to deliver returns, after all fees, costs and taxes, greater than the relevant benchmarks for each portfolio but only after we are satisfied that risk is managed. The benchmarks are clearly defined for each of the main portfolios and provide an appropriate base for determining the value we add as an investment manager.
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