Investment Philosophy

Nobody really knows what’s going to happen tomorrow, next week, next year or in 20 years.

It’s our job to understand the nature of these uncertainties and create a financial strategy that improves the probability of long term success.

Our approach to investing is based on Modern Portfolio Theory
which has four basic premises:

1. All investors are risk averse

Meaning that given two assets that offer the same expected return, an investor will opt for the less risky one. Further more an investor will only take on an increased risk if compensated by higher expected returns. Conversely, an investor who wants a higher return must accept a higher degree of risk to achieve this. The exact trade off will differ on an individual basis based on that investor’s attitude to risk.

2. Markets are efficient

The rationale behind this is that financial markets allegedly form an efficient system for assigning each security the most adequate price given the available information.

3. Focus on the whole portfolio

Attention should be shifted away from individual stock selection and analysis to consideration of the portfolio as a whole. Asset allocation is key and enables you to spread your risk and improve your potential returns.

4. Optimisation

For every risk level there is an optimal combination of asset classes that will maximise potential returns.

Our six golden rules of investing

Cube Investment Philosophy

1. Clarify

If it is an investment, treat it as such. Don’t speculate. To be classified as an investment, there must be a time horizon of at least 5 years.

2. Understand

Invest in accordance with your tolerance to risk. Know your appetite for risk and as importantly your tolerance for short term loss and volatility.

3. Diversify

Spread your risk. History shows us that different asset classes react very differently to each other. By investing across the market, you increase your chance of having a stable investment outcome.

4. Maximise

Look to maximise your returns in a cost efficient manner. You should not pay for active management that does not add value.

5. Rebalance

Different asset classes perform at different rates, so over time your portfolio will drift away from the original asset allocation. If left unchecked this can result in a portfolio that in time will no longer meet your risk profile which may also change.

6. Stay invested

Don’t try and play the market. No one knows the next star nor the next under performer. Once you have agreed an investment strategy, stick to it. No short term-ism.

Our investment approach incorporates

  • The need for liquidity perhaps to generate income or as an emergency fund
  • Risk profiling to understand your tolerance for risk
  • Asset allocation using non-correlated assets which gives diversification or not putting all your eggs in one basket
  • Understanding time horizons
  • Working with strategic partners for fund selection
  • Effective tax planning to minimise your liability.
The value of your investment can fall as well as rise and you may not get back to the original amount invested.
The Financial Conduct Authority does not regulate taxation advice.