Model Portfolios

KMI Cautious​

Investment Objective

The portfolio aims to provide a balance between capital preservation and consistent real returns in excess of normal cash deposit rates. The Portfolio will invest into a range of assets including collective investment schemes, transferable securities, money market instruments and cash/deposits.

The Portfolio will also seek investment diversification by obtaining indirect exposure to alternative asset classes including hedge funds, and commodities.

The investment objective will be to achieve returns with a reduced level of volatility versus peers (in class), via strategic exposures to a wide range of asset classes.

Investment Strategy

Our approach to providing effective and efficient investment strategies for our clients leans on the multi-asset theory, that invests into five core asset classes.

Complimentary diversification amongst asset classes, investment styles and strategies are essential to enhancing returns and reducing risks inherent within a portfolio. By ensuring that our allocation is appropriate at all stages within an economic cycle, we are able to increase the probability of all assets adding value.

The problem of most packaged investment solutions remains actual investment selection, making excessive investments into illiquid strategies or risks of excessive turnover. By using a “Modern Portfolio Theory” approach to investing we can alleviate the majority of these risks relatively easily and focus on optimising returns within a diversified range of asset classes including fixed income, equities, property, cash and ‘alternative assets’.

Investment Philosophy

In order to deliver the returns which our clients expect, we have formed a forward looking philosophy that combines both fundamental and technical analysis with modern portfolio theory; together forming an innovative multi asset solution. We seek positive real returns over relative returns, whilst also seeking to smooth out the volatilities that can be associated with any particular asset or time period.

The key components – “four pillars” of the KMI philosophy are:

1. Manager Driven Focus – Our continuous manager research programme concentrates on identifying, evaluating and understanding a manager. Our analysis process seeks out managers who have demonstrated an ability to consistently apply a clearly defined investment discipline and who are prepared to express their investment conviction in their portfolios. These individuals must have a passion for investing and operate within an environment that cultivates rather than stifles their talent.

2. Combining Traditional and Alternative Asset Classes to generate long term real returns – Over the medium to long term (3 to 5 years), traditional and alternative asset classes generate a return above inflation (real return). Alternative asset classes have embedded sources of real return combined with attractive volatility and correlation properties.

3. Strategic Asset Allocation Drives the Majority of Portfolio Return and Risk – The Strategic Asset Allocation of a portfolio will determine the vast majority of the portfolio’s return and risk. Market timing and tactical asset allocation activities are unlikely to add value over time: additional trading increases cost and potentially increases portfolio risk.

4. Modern Portfolio Theory: Diversification Increases Risk-adjusted Returns – Diversification across multiple asset classes with varied correlations increases portfolio risk-adjusted return creating a more “efficient” portfolio.