This article is the first of a 3 Part series describing our Portfolio Management Styles. We hope this provides additional transparency and helps you better understand our offering. You can read about it in more detail in our whitepaper and check our Investors Corner at any point to access videos and quotes from experts.
Starter Portfolios are our most straight-forward portfolio management style, allowing our clients to simply “plug and play”. We make it incredibly easy for anyone to select a portfolio that matches their long term risk profile based on three broad risk categories: Conservative, Balanced and Aggressive. Choosing amongst these three risk categories will result in a portfolios with different asset allocations. More conservative risk profiles will have a higher allocation to bonds (historically safer investments) while more aggressive portfolios will have a higher allocation to equities (growth assets).
The primary aim of our starter portfolios is to allow you to easily and simply invest in an asset allocation combination that matches your long term risk profile. This target asset allocation that you select can be seen as the “True North” of your portfolio. As markets and therefore your investment change in value over time, the percentage weights of those investments will naturally fluctuate and drift. Our aim is to periodically bring those drifted weights back to their target so that the combinations of equities and bonds, and therefore risk in the portfolio, matches the risk category you selected at the outset.
Once you have selected the right asset allocation you then simply hand over the portfolio management to us. As your investment manager we select the underlying ETFs for every asset class . We invest your cash in the same proportion as your target weights and then periodically rebalance your portfolio by bringing any drifted weights, back to target. As starter portfolios have fixed weights, the risk and combination of assets will not dynamically adjust based on market movements.
Have a look at how a Starter Portfolio responds over time.
Starter Portfolios are our most straight-forward portfolio management style. When you are ready, you can switch your portfolio style to an Investment Plan or Custom Goal. But you don't need to, many investors including Warren Buffett recommend the strategy implemented in the Starter style.