Investment management includes an element of art, but is primarily a quantifiable science. There are volumes of academic studies and empirical evidence that support certain basic investment principles:
- Risk and return are correlated.
- Diversification reduces risk.
- Costs, such as fees and taxes directly reduce an investor’s net return.
These simple fundamentals are often lost in the narrow pursuit of appealing product, or inconsistently applied in the dynamic exercise of managing portfolios. Logia Portfolio Management has designed an objective, process-driven approach based on fundamental investment principles.
- Client objectives are based on quantifiable criteria for risk capacity, as well as risk tolerance.
- Asset allocation models are set for each objective based on quantitative forecasts for capital markets.
- Where there is little evidence that active managers can generate sufficient return to justify their cost, we use passive products.
- Active managers are selected for asset classes where opportunity to outperform exists. Only managers with demonstrated security selection skill are selected, based on rigorous attribution analysis.
- We regularly monitor client portfolios for deviation from their target using advanced technology and generate trades when needed based on the mathematical trade-off between risk, cost, and taxes caused by rebalancing.