The investment strategy process can be further expanded as shown in the diagram below.
When we present an investment strategy to our clients we believe it is important that Trustees understand:
the expected return arising from the strategy.
most importantly, the investment risk the strategy poses (measured as the expected volatility of returns).
the components of the return – income return being distinguished from capital return.
We present a number of scenarios with varying degrees of risk and return. The Trustees can then determine the level of risk/volatility they expect to receive.
Trust Management assists clients in setting their investment strategy by spending time to understand their requirements such as the level of income required from the portfolio, risk tolerance, investment horizon.
The diagram below depicts the investment management process we work through with clients. The blue section of the diagram reflects the setting of the investment strategy.